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Do the Clouds Hovering Over the U.S. Auto Industry Have a Silver Lining?

Automotive Site Guide 2008
The feeling is inescapable: automotive manufacturing seems to be an industry that's run out of gas. That's certainly the story that can be gleaned from the business headlines these days. This is the industry that states and local communities have bent over backward trying to woo?

OK, the news right now is definitely bleak, but industry watchers say that's no reason to give up on automotive, or be any less interested in attracting an auto plant to town. It won't be long before the auto industry - shrinking though it may currently be - will be hard-pressed to find enough good help and will be casting kind glances toward communities that can offer qualified workers.

"One of the key issues is that with the retirement of baby-boomers, there will likely be thousands of new jobs in the industry, even though the industry is getting smaller," says David Cole, chairman of the Center for Automotive Research in Michigan. "There will be thousands of new people who are not in the industry now."

Consider the numbers from a study Cole's organization recently released: American automotive manufacturing employment is clearly on the decline - having peaked at 1.13 million in 1999, it had fallen 27 percent to 820,000 by 2007. The trend has hit the traditional auto-making capital, Michigan, particularly hard. Employment there dropped 45 percent, from 316,300 in 1999 to 173,600 in 2007. And it's expected to get even worse. The study forecasts that the Detroit Three - General Motors, Ford, and Chrysler - will shed another 20,000 jobs in the next eight years.

Meanwhile, the international automakers have slowed the pace of their facility building lately, and like the domestic car builders, some of them are doing some retooling as they try to find the right mix of vehicles to please the newly energy-conscious public. The internationals have fought their way to an American market share that's nearly even with the domestics, and they're not eager to give up any gains.

So what's the silver lining? Despite the ominous-sounding trends, the future holds a lot of great job opportunities in automotive design and manufacturing, according to Beyond the Big Leave: The Future of U.S. Automotive Human Resources, the study from the Center for Automotive Research. "Baby Boomer production and salaried employees are leaving (and will leave) in such numbers that the companies such as the Detroit Three must still hire many thousands of new employees in the years ahead," the report states. "This massive replacement of auto labor represents an opportunity for many in Michigan and other Midwest States."

But it also represents a challenge, according to the report. The jobs that are declining are not exactly coming back: "Instead, they will be replaced by different jobs involving different tasks and requiring different qualifications and experience."

No longer will there be good auto-manufacturing jobs for high school dropouts, Cole says. It'll take at least a two-year community-college degree to land the jobs of the future, he says. Communities that recognize this and plan for that future will be the winners of the current shakeout.

"There needs to be significant training for states to be able to compete," says Andy Mace, principal with Cushman & Wakefield Business Consulting.

The size and quality of the work force is the key to success in attracting automotive businesses, Cole agrees. "If I were a community looking at economic development, I'd make sure I understand the demographics of the work force and the education of the work force."

It will certainly be worth all the trouble to do what it takes to land new auto-manufacturing jobs, Mace says. "They are the jewel of manufacturing, because they bring a lot of investment from the supplier base," he says. Communities that spend a lot winning the site-selection battles rarely have buyer's remorse. "You can heavily invest in an auto plant and capture a lot of return for your investment."

"These are jobs that have an extremely high value in a community," Cole agrees. The economic multiplier for auto plants is about 10, he says: "For every new job there, there are nine new jobs elsewhere in the community."

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