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Auto Part Suppliers Study Jobs

Automotive jobs will continue to leave Michigan, but there are remedies, says a report on the future of manufacturing to be delivered today at the opening session of the Society of Automotive Engineers World Congress in Cobo Center in Detroit. The U.S. is expected to see an 11 percent drop in its automotive production jobs by 2010, according to “The Odyssey of the Auto Industry” a study conducted by Roland Berger Strategy Consultants for the Original Equipment Suppliers Association.

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From Detroit Free Press

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DETROIT — Automotive jobs will continue to leave Michigan, but there are remedies, says a report on the future of manufacturing to be delivered today at the opening session of the Society of Automotive Engineers World Congress in Cobo Center in Detroit.

The U.S. is expected to see an 11 percent drop in its automotive production jobs by 2010, according to “The Odyssey of the Auto Industry” a study conducted by Roland Berger Strategy Consultants for the Original Equipment Suppliers Association.

“I don’t want this to be used as a case for protectionism,” said David Andrea, vice president of business development for the association. “The message should be: How do we lower the cost of doing business in Michigan or the U.S.?”

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The study found the share of global manufacturing done in North America and Western Europe will drop 18 to 22 percent in the next six years, a combination of other markets growing and some local manufacturing ending.

“This does not mean that manufacturing is going to finish here, certainly not,” said Andreas Mai, who managed the study for Roland Berger’s Troy, Mich., office.

The auto industry contributes 3.4 to 3.8 percent to America’s gross national product, “and that is unlikely to change going forward.”

Michigan-based suppliers are under particular pressure because Detroit automakers are losing market share to European and Asian automakers. The pressures to reduce parts prices forces them to be more efficient, which often means doing business with fewer employees.

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Michigan and Ohio lost 46,000 hourly manufacturing jobs between 1997 and 2001. If suppliers are to survive and keep any jobs in Michigan, they must consider several points, the study says:

The industry is global, so suppliers must organize themselves to compete against anyone in the world that makes the same thing.

Major growth will be in new markets, and suppliers need to be there.

Labor is not the only cost of manufacturing, so new factories should not be built somewhere based solely on low wages. Transportation can be expensive, and moving into a new culture can be an expensive hassle.

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As a rule of thumb, “it’s not worth the risk of extending your supply chain if you’re within 10 percent” of the benchmark cost, Mai said. At the same time, “it’s a fact that most new manufacturing will take place in other regions. Suppliers cannot overlook that.”

The fact that cars are developed in Michigan research and development centers ought to help suppliers who can come up with innovations and new technologies.

Antonio Benecchi, a Roland Berger partner who worked on the study, said U.S. suppliers could learn from those in Germany who export parts made with proprietary technology.

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“Every time I read in the news the concerns about jobs going away, I wonder why there isn’t more attention on the opposite problem,” he said.

“Why shouldn’t we think of ways to turn us into an export nation? Because we have the biggest global customers, we have more chance than others to grow.”

Copyright 2004 Detroit Free Press. All Rights Reserved.

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