Detroit Bureau on Twitter

Auto Industry on Hiring Binge

Domestics and imports both putting out “Help Wanted” signs.

by on Jul.07, 2011

VW has already hired 2,000 workers at its new Chattanooga plant and will add still more for a planned second shift.

It seemed like the best of times; following its takeover by the German Daimler AG, Chrysler counted nearly 71,000 hourly workers on its U.S. payroll.  But by the time the partnership collapsed and the maker was rapidly plunging into bankruptcy, in 2009, the blue collar workforce had slipped to just 21,000.

The situation wasn’t all that different across town.  As the industry sank into its worst recession since the Great Depression of the 1930s, and many analysts began to doubt whether Detroit’s Big Three makers would survive, the makers raced to close plants, abandon unpopular brands and slash employment.  Once employing close to a million hourly and salaried workers worldwide, General Motors emerged from its own run through Chapter 11 with a workforce barely a tenth that size.

Job News!

But two years later, there’s a very different situation.  Chrysler, for one, has boosted its blue collar headcount by more than 2,000 since hitting bottom in ’09, and several company sources tell TheDetroitBureau.com that the maker is likely to keep rebuilding its factory rolls, especially if sales and share keep rebounding.  GM and Ford are also hiring.

And the “Help Wanted” signs aren’t just out in Detroit.  The new Volkswagen plant in Chattanooga, Tennessee has already hired 2,000 workers, while that number will grow by at least another thousand when the maker adds an anticipated second shift at the sprawling factory, which is producing an all-new version of the midsize Passat designed specifically for the American market.

Hyundai is expected to add more workers to keep up with booming demand, while Honda is adding 1,000 more new hourly “associates” at the Indiana plant producing the redesigned 2012 Civic.

Meanwhile, as production increases, tens of thousands of additional jobs are being created at supplier plants across the United States as parts manufacturers press to keep up with increased demand for everything from tires to electric motors.

General Motors is adding 2,500 workers at the Detroit plant producing its new Chevrolet Volt, but it has also added 100s of jobs at plants producing motors and assembling battery packs for the plug-in hybrid.  In the months ahead, South Korean supplier LG Chem will add to the automotive workforce when it opens a new lithium-ion battery plant near Grand Rapids, Michigan.

The push to “electrify” the automobile is one of the factors that could continue to expand automotive employment in the coming years.  Nissan, for one, will add production of the Leaf battery-electric vehicle at its factory in Smyrna, Tennessee – though it recently cautioned that project may be slightly delayed due to March 11 Japanese earthquake and tsunami.

Even without the addition of the Leaf, Smyrna and a second Nissan plant in Canton, Mississippi – and two others in Mexico – are pressing up against their capacity.

“What’s clear is if we look at our aspirations for growth in the U.S. and the role the (two Nissan) Mexican plants play for our growth in North and South America we’re going to have to have more capacity,” Simon Sproule, Nissan Motor Co.’s Chief Marketing Officer, tells TheDetroitBureau.com.

A tally by the Associated Press found that total U.S. automotive employment plunged to just 623,000 in 2009, a third less than GM alone employed at its peak.  The wire service reports the figure is now closing on 700,000, a 12% increase.

And it’s not likely to stop there.

General Motors is investing billions to upgrade its U.S. assembly plant network, expecting to create perhaps 9,000 new jobs in the process.  Chrysler is not only adding jobs as it increases production at plants like the Jeep line in Detroit, but it is also looking to pull work back in-house that it had previously outsourced to suppliers.

That reflects one of the factors working in Detroit’s favor.  Just before the start of the new millennium, Big Three union workers were earning about $47 an hour in wages and benefits.  By 2007, just before renegotiating their contracts with the three domestic makers, that had surged to about $75 – about $25 an hour more than what “transplant” assembly lines operated by major foreign makers, like Toyota and Honda, were paying.

The domestics outsourced whatever they could and, finding themselves increasingly uncompetitive, raced to close unprofitable plants.

More than a score of factories shut down, many following the 2009 Chrysler and GM bankruptcies.  GM, meanwhile, abandoned four of its weaker brands, including long-lived Pontiac.  Ford, meanwhile, sold off its foreign marques, such as Jaguar, and shuttered struggling Mercury.

But in 2007, the wage gap suddenly began to close, the United Auto Workers Union agreeing to significant concessions designed to help the flailing domestic industry.  Even more cuts were approved in 2009, bringing average labor costs to just over $50 an hour, on a par with the transplants – and creating a long-taboo second-tier wage structure.

With new hires at its Lake Orion, Michigan plant working for closer to $25 an hour, GM was able to import production of the new Chevrolet Sonic minicar.  The model it replaced, the Aveo, was built in Korea.

Lower costs have all three makers looking at other vehicles – and parts and components – they can now produce in-house, company officials privately reveal.

The UAW is set to renegotiate its contracts in the coming months.  But while many workers are demanding they get back their concessions, union leaders appear willing to accept company demands that there’ll be more jobs only if total labor costs hold at current levels – or even drop a bit more.

“In a global economy,” said UAW President Bob King, “if you really want job security for your members, you really have to be a partner with the corporation.”

The UAW itself is struggling from the impact of years of job declines.  Membership is now barely 350,000, down from 1.5 million three decades ago.  Union leaders admit that the Auto Workers likely cannot survive at that level – and they have set a priority of organizing the transplants, a challenge they have so far failed to achieve.

Whether unionized or not, the U.S. automotive workforce is likely to continue growing over the next few years as the industry continues to recover from the devastating downturn of 2008 to 2010.  Sales this year are expected to rise as much as 50% compared to the 2009 low, but reaching the 13 million mark is still well short of the domestic market’s previous 17 million peak.

Even if the market returns to that level, however, analysts warn that employment will never reach past records.  Factories that once employed 5,000 or more now need less than half that due to productivity gains, for one thing.

But automotive employment is nonetheless on the rise at both the old Detroit plants and the newer factories opened by the imported.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , ,

One Response to “Auto Industry on Hiring Binge”

  1. [...] From the Detroit Bureau: It seemed like the best of times; following its takeover by the German Daimler AG, Chrysler counted nearly 71,000 hourly workers on its U.S. payroll. But by the time the partnership collapsed and the maker was rapidly plunging into bankruptcy, in 2009, the blue collar workforce had slipped to just 21,000. [...]