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Looking Up: Pockets Of Economic Strength
Auto Parts Suppliers Hiring As Fast As They Can
Originally published on Wed March 14, 2012 8:17 am
Detroit automakers are creating thousands of new jobs amid a sales boom. And as they expand, their suppliers are racing to keep up, adding tens of thousands of new jobs.
At Bridgewater Interiors in Warren, Mich., for example, the pace is intense. Hundreds of union employees scurry to fill a growing list of orders. The factory floor is packed with stacks of foam cushions, seat covers and headrests.
Vice President Ron Hall, wearing safety glasses and a bright yellow vest, provides a tour. He points out a large, blinking screen overhead. It's linked to a Ford Motor Co. truck plant. That electronic information enables Ford to tell Bridgewater exactly what kind of seats it needs for each truck moving down the auto company's assembly line 30 miles away.
"And so we've got to be able to get that exact configuration and do it in a 3 1/2-hour window, and do it all in sequence," Hall says.
This factory was not so busy just a few years ago. During the Great Recession, consumer demand fell so fast and far that people who study the industry had to go back to the World War II era to find another time when, per capita, Americans had bought so few cars.
And with two big customers, General Motors and Chrysler, going bankrupt, suppliers were "terrified," said Sean McAlinden, an economist with the Center for Automotive Research.
"A lot of them thought they'd go down to one plant, like one heartbeat a minute," he said.
Locking The Plant Doors
In fact, for many, the heart stopped beating. As average revenues plummeted 40 percent in a matter of months, hundreds of suppliers went bankrupt. In many cases, the companies didn't even bother to file for bankruptcy: The owners simply sent their workers home, locked the doors and walked away.
Bridgewater Interiors was among those companies that laid off hundreds of their workers.
At another company, Michigan Automotive Compressor, the nonunion plant in Jackson, Mich., offered its employees a buyout. For those who stayed, there were no layoffs, but there were mandatory cuts in hours
"They actually allowed us to have Fridays off — for no pay," said Darrin Dungy, who has worked at the company that workers call MACI for 11 years.
Laurie Cervantes has been there 16 years. She survived the hard times. "Just had to cut out on things that weren't important until things got better," she said. "We just rode out the storm."
The outlook is much different now. Bridgewater Interiors has rehired everyone it had laid off. At MACI, workers are sometimes putting in as many as three hours of overtime a day, six days a week.
Dungy says he doesn't hear many complaints. "Going through that spell, what I found out on my [assembly] line, is the associates are a little more thankful for what they got," he said.
A Shortage Of Workers
In a dramatic reversal, many suppliers, after improving efficiency — through downsizing and buyouts — find themselves short-handed. At the same time, when it comes to hiring new people, "we're trying to be very careful," said Jerry Kurfess, head of human resources at MACI.
With the memory of the Great Recession still so fresh, companies are still wary about hiring too freely.
But McAlinden says there actually is a danger of having a shortage of parts and workers. He says the supplier industry will need 174,000 additional workers by 2015, and the pace of hiring right now appears to be too slow.
Even when suppliers intend to hire right away, it's not easy. When all those supply companies went dark, many skilled tradesmen, machinists and engineers moved on.
Hall, of Bridgewater Interiors, suspects many potential workers are on the sidelines right now, not realizing it's time to get back in the labor pool.
"They don't know whether to believe the recovery is real," he said. "We're here living it, and we've been living it long enough now, for two years, that we know that it's real."
STEVE INSKEEP, HOST:
American automakers have created thousands of new jobs, and the auto industry's expansion has created tens of thousands of jobs at auto suppliers.
Michigan Radio's Tracy Samilton has the latest in our economic series "Looking Up."
(SOUNDBITE OF MACHINERY)
TRACY SAMILTON, BYLINE: Bridgewater Interiors in Warren, Michigan, has picked up the pace. The factory's hundreds of union employees are busy filling a growing number of orders. The factory floor is jam-packed with stacks of foam cushions and seat covers and headrests.
Ron Hall is vice president of the company. He slaps on some safety glasses and a bright-yellow vest for the tour. He points to a big, blinking screen overhead.
RON HALL: So we have a computer system that's linked to, in this case, Ford Motor Company's Dearborn truck plant.
SAMILTON: That link enables Ford to tell Bridgewater exactly what kind of seats it needs for each truck moving down the auto company's assembly line, 30 miles away.
HALL: And so, you know, we've got to be able to get that exact configuration and do it in about a three-and-a-half-hour window, and do it all in sequence.
SAMILTON: This factory was not so busy a few years ago. Consumer demand fell so fast, so hard, that people who study the industry had to go way, way back to World War II to find another time when per capita, Americans had bought so few cars. And with two big customers, GM and Chrysler, going bankrupt...
SEAN MCALINDEN: Suppliers were terrified.
SAMILTON: Sean McAlinden is an economist with the Center for Automotive Research.
MCALINDEN: A lot of them thought they'd go down to one plant, you know, like one heartbeat a minute.
SAMILTON: In fact, for many, the heart stopped beating. Hundreds of suppliers went bankrupt. Hundreds more didn't even bother to file for bankruptcy. The owners just sent their workers home, locked the doors, and walked away.
MCALINDEN: There's machinery inside with no tooling. But it's covered in dust and no workers, right? Such plants would take months to fire back up.
SAMILTON: Bridgewater Interiors laid off hundreds of its workers. Michigan Automotive Compressor, a non-union plant in Jackson, Michigan, offered a buyout to its employees. For those who stayed, at least there were no layoffs.
DARRIN DUNGY: They actually allowed us to have Fridays off.
SAMILTON: For no pay. Darrin Dungy has worked at the company they call MACI for 11 years; Laurie Cervantes, for 16.
LAURIE CERVANTES: Just had to cut out on things that weren't important until things got better. We just rode out the storm.
SAMILTON: While Bridgewater Interiors has rehired everybody it laid off, workers at MACI are sometimes putting in as much as three hours overtime a day, six days a week. Still, Dungy says he doesn't hear many complaints.
DUNGY: Going through that spell, what I found out on my line, is associates are a little bit more appreciative of what they got.
SAMILTON: In a dramatic reversal, many suppliers, after improving efficiency, downsizing, giving buyouts and the like, find themselves shorthanded. At the same time, when it comes to hiring new people...
JERRY KURFESS: We're trying to be very careful.
SAMILTON: Jerry Kurfess is head of human resources at MACI.
KURFESS: You know, there's still a lot of hesitancy about the future just because of where we've been in '09 and, you know - and seeing companies come so close to the brink - and wanting to make sure that we don't go there.
MCALINDEN: This is a very major concern. If we reach the $15 million sales level for a year...
SAMILTON: And sales were nearly $13 million just last year...
MCALINDEN: ...the industry will reach a choke point.
SAMILTON: Meaning, says economist Sean McAlinden, a shortage of parts; hence, a shortage of cars. He says the supplier industry will need 174,000 additional workers by 2015. And the pace of hiring right now appears to be too slow.
When all those supply companies went dark, many skilled tradesmen, machinists and engineers moved on. Ron Hall, of Bridgewater Interiors, suspects a lot of people are on the sidelines right now.
HALL: They don't know whether to believe if the recovery is real. We're here living it. And we've been living it long enough now - for you know, two years - that we know that it's real.
SAMILTON: Meanwhile, car companies are upping their forecasts for car sales this year. Suppliers say no matter what happens, they're absolutely committed to doing what it takes to meet the demand today, and the demand tomorrow.
For NPR News, I'm Tracy Samilton in Ann Arbor. Transcript provided by NPR, Copyright NPR.