Industry response to uptick: We're hiring!
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As new-vehicle sales enter a third year of recovery, hiring in the auto industry has begun to accelerate at a brisker pace.
The signs of expansion -- both large and small -- are everywhere.
Ford Motor Co. announced recently that it plans to add 12,000 jobs around the world. Supplier Continental sent recruiters to the Detroit auto show this month to fill 150 openings.
General Motors and Volkswagen are ramping up production at new or retooled plants in Michigan and Tennessee. Hyundai is adding 50 engineers at its Ann Arbor, Mich., technical center.
Nissan says it will build a new assembly plant in Aquascalientes, Mexico, but also needs 150 more engineers this year at its r&d center near Detroit.
BMW is adding workers as it increases capacity at its assembly plant in Spartanburg, S.C.. Denso wants 50 new engineers in North America.
In fact, the Center for Automotive Research in Ann Arbor, Mich., expects U.S. auto manufacturing hiring to outpace North American auto production this year.
CAR estimates that the industry only added 26,000 auto factory jobs last year when U.S. vehicle production grew 11 percent. But it says new hires will jump to 58,000 this year even though production is expected to grow only half as much as it did in 2011.
Why? CAR says automakers and suppliers can't continue to depend on heavy overtime and temporary workers and must hire more permanent employees.
"There's less and less uncertainty about the economy, so more temps are moving to permanent employees," said Kristin Dziczek, CAR's director of labor and industry.
Neil De Koker, CEO of the Original Equipment Suppliers Association, said the 410 suppliers he represents are struggling to fill key job openings and control overtime costs as their automaker customers demand more parts.
"Suppliers are facing the issue of just how much capacity they shed to survive," he said. "Even counting production lines that need 90 days to get up and running, we're in the mid-80s [percent] of capacity utilization."
Suppliers slashed payrolls and capacity to get through 2008 and 2009. But rather than hire additional workers as the industry bounced back, De Koker said they gave existing workers more hours.
That worked for small increases in parts demand from one or two automaker customers. But now with bigger increases from multiple customers, the ongoing cost of overtime and shift premiums is starting to pinch.
"You can't sustain that much overtime over long periods," De Koker said. "Eventually people rebel."
In a survey of OESA members this month, 76 percent reported production-premium costs have become a problem. And more than half said they can't make more parts with existing capacity.
Adding permanent employees to handle demand lets manufacturers eliminate most regularly scheduled overtime.
But for some suppliers, even the decision to expand capacity isn't a quick solution, De Koker said.
Machine tool and production equipment makers are backed up, too, largely because they cut capacity during the recession.
"It's normally nine to 12 months to get new tools," he said. "Now it's often 15 to 18 months."
1999: 1,130,000
2009: 524,000
2010: 566,000
2011: 592,000
2012 (est.): 650,000
Source: Center for Automotive Research
You can reach Jesse Snyder at jsnyder@crain.com.
