A decade of anguish for Detroit 3: 250,000 jobs vanish since 2000
02-08-09, 09:22 PM
#1
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A decade of anguish for Detroit 3: 250,000 jobs vanish since 2000
April Wortham
Automotive News
February 9, 2009 - 12:01 am ET
It's official: North American employment at the Detroit 3 has been cut in half in this dismal decade.
That's more than 250,000 jobs in eight years — vanished. And it doesn't count jobs that have disappeared at suppliers or dealers.
Most of the losses have come since the middle of the decade. Since 2005, General Motors, Ford Motor Co. and Chrysler LLC have shed about 142,000 jobs. Last year the Detroit 3 cut 53,551 jobs in North America or almost 18 percent of their combined work force in the region.
And the trend isn't abating.
"When we talk about job protection, we're not talking about saving all the jobs that exist at the moment," says James Rubenstein, a consultant at the Federal Reserve Bank of Chicago. "It's about making sure at least some jobs are left. Any number is better than zero."
Hourly buyouts
Most of the Detroit 3 jobs lost in 2008 were U.S. hourly positions eliminated through buyouts similar to those offered last week by Chrysler and GM.
What impact the latest round of buyouts — and those likely to come — will have on 2009 employment is difficult to say. For example, GM currently has about 22,000 hourly employees who are eligible to retire, says spokesman Tony Sapienza. But they may be reluctant to retire voluntarily in the midst of the weakest economy in decades.
To some extent, the losses work to the advantage of the Detroit 3, says Kim Hill, associate director of the economics and business group at the Center for Automotive Research in Ann Arbor, Mich. The companies have been trying to shrink to match current market shares.
The problem, Hill says, is that it's difficult to figure out what that share will be when the market stabilizes.
"You can't have month after month of double-digit sales drops and not be laying people off," Hill says. "The question is: Is it temporary, or is it long-term?"
In a study last February, the Center for Automotive Research predicted that in 2011, U.S. hourly employment for the Detroit 3 will be 145,160. That encompasses 33,420 at Chrysler, 43,540 at Ford and 68,200 at GM.
"But now all bets are off," Hill says. "These were all predicated on a sales market that we're not sure we're going to get back to."
Rubenstein says that even if the U.S. market were to return to 16 million vehicles, auto industry employment, and employment at the Detroit 3, never will return to the peak levels seen at the beginning of the decade.
Fewer workers needed
Productivity gains and the growth of foreign brand manufacturing in the United States mean fewer Detroit 3 employees will be needed in the future, he says. That's why any talk of job protection among the Detroit 3 is not about saving all the jobs that exist at the moment, but trying to minimize the impact and save suppliers.
The good news, Rubenstein says, is most vehicles sold in the United States will be assembled here. What's up for grabs is who will build those 10 to 15 million vehicles.
"Sales will come back in America. Production will come back, but the jobs won't," Rubenstein says. "It's never going to be what it once was."
While the Detroit 3 cut back, some foreign brand automakers continue to add jobs in North America. Kia Motors Corp. is hiring about 2,500 workers for its assembly plant in West Point, Ga., where production is scheduled to begin in November.
But the Detroit 3 are not alone in cutting jobs. Nissan, Mercedes and Mitsubishi plants in the United States also offered buyouts to workers last year.
In 2008, the biggest job cuts came at Chrysler, which slashed its hourly work force by 27.5 percent and its salaried work force by 33.5 percent. Chrysler's total North American employment dropped 31.1 percent to 52,581 in 2008 from 76,332 in 2007.
Ford reduced its hourly work force by 18.4 percent and its salaried work force by 7.8 percent. Its total work force dropped 15.5 percent to 75,200.
GM cut the least. The automaker does not break down its North American employment by hourly and salaried positions. But it reduced U.S. hourly head count by 20.5 percent and its U.S. salaried head count by 7.8 percent. It estimates its total North American labor force fell 11.5 percent to 123,000.
Automotive News
February 9, 2009 - 12:01 am ET
It's official: North American employment at the Detroit 3 has been cut in half in this dismal decade.
That's more than 250,000 jobs in eight years — vanished. And it doesn't count jobs that have disappeared at suppliers or dealers.
Most of the losses have come since the middle of the decade. Since 2005, General Motors, Ford Motor Co. and Chrysler LLC have shed about 142,000 jobs. Last year the Detroit 3 cut 53,551 jobs in North America or almost 18 percent of their combined work force in the region.
And the trend isn't abating.
"When we talk about job protection, we're not talking about saving all the jobs that exist at the moment," says James Rubenstein, a consultant at the Federal Reserve Bank of Chicago. "It's about making sure at least some jobs are left. Any number is better than zero."
Hourly buyouts
Most of the Detroit 3 jobs lost in 2008 were U.S. hourly positions eliminated through buyouts similar to those offered last week by Chrysler and GM.
What impact the latest round of buyouts — and those likely to come — will have on 2009 employment is difficult to say. For example, GM currently has about 22,000 hourly employees who are eligible to retire, says spokesman Tony Sapienza. But they may be reluctant to retire voluntarily in the midst of the weakest economy in decades.
To some extent, the losses work to the advantage of the Detroit 3, says Kim Hill, associate director of the economics and business group at the Center for Automotive Research in Ann Arbor, Mich. The companies have been trying to shrink to match current market shares.
The problem, Hill says, is that it's difficult to figure out what that share will be when the market stabilizes.
"You can't have month after month of double-digit sales drops and not be laying people off," Hill says. "The question is: Is it temporary, or is it long-term?"
In a study last February, the Center for Automotive Research predicted that in 2011, U.S. hourly employment for the Detroit 3 will be 145,160. That encompasses 33,420 at Chrysler, 43,540 at Ford and 68,200 at GM.
"But now all bets are off," Hill says. "These were all predicated on a sales market that we're not sure we're going to get back to."
Rubenstein says that even if the U.S. market were to return to 16 million vehicles, auto industry employment, and employment at the Detroit 3, never will return to the peak levels seen at the beginning of the decade.
Fewer workers needed
Productivity gains and the growth of foreign brand manufacturing in the United States mean fewer Detroit 3 employees will be needed in the future, he says. That's why any talk of job protection among the Detroit 3 is not about saving all the jobs that exist at the moment, but trying to minimize the impact and save suppliers.
The good news, Rubenstein says, is most vehicles sold in the United States will be assembled here. What's up for grabs is who will build those 10 to 15 million vehicles.
"Sales will come back in America. Production will come back, but the jobs won't," Rubenstein says. "It's never going to be what it once was."
While the Detroit 3 cut back, some foreign brand automakers continue to add jobs in North America. Kia Motors Corp. is hiring about 2,500 workers for its assembly plant in West Point, Ga., where production is scheduled to begin in November.
But the Detroit 3 are not alone in cutting jobs. Nissan, Mercedes and Mitsubishi plants in the United States also offered buyouts to workers last year.
In 2008, the biggest job cuts came at Chrysler, which slashed its hourly work force by 27.5 percent and its salaried work force by 33.5 percent. Chrysler's total North American employment dropped 31.1 percent to 52,581 in 2008 from 76,332 in 2007.
Ford reduced its hourly work force by 18.4 percent and its salaried work force by 7.8 percent. Its total work force dropped 15.5 percent to 75,200.
GM cut the least. The automaker does not break down its North American employment by hourly and salaried positions. But it reduced U.S. hourly head count by 20.5 percent and its U.S. salaried head count by 7.8 percent. It estimates its total North American labor force fell 11.5 percent to 123,000.
02-09-09, 02:33 AM
#2
Lexus Fanatic
Job losses on auto assembly lines have not just been because of market conditions. Many of the factory jobs that used to be done manually by workers are now done by robots, especially in the painting process and mounting wheels/tires.
Yet, the way that I see it, the auto manufacturers have still shot themselves in the foot by laying people off, even if machines can do some jobs more efficiently than humans. Those 250,000 lost jobs mean (potentially) 250,000 new vehicles that will NOT be sold. A robot cannot buy one of the company's vehicles. A company cannot have its cake and eat it too. Lay off a worker, and he or she can't afford to buy a car from your company.....or any other company. Why CEO's can't see that simple lesson is beyond me. Sure, it costs money to pay a UAW worker and give him/her health benefits....that goes without saying. But, with that investment, goes sold vehicles....most workers are loyal to their company and buy its products (at the reduced employee prices).
Yet, the way that I see it, the auto manufacturers have still shot themselves in the foot by laying people off, even if machines can do some jobs more efficiently than humans. Those 250,000 lost jobs mean (potentially) 250,000 new vehicles that will NOT be sold. A robot cannot buy one of the company's vehicles. A company cannot have its cake and eat it too. Lay off a worker, and he or she can't afford to buy a car from your company.....or any other company. Why CEO's can't see that simple lesson is beyond me. Sure, it costs money to pay a UAW worker and give him/her health benefits....that goes without saying. But, with that investment, goes sold vehicles....most workers are loyal to their company and buy its products (at the reduced employee prices).
Last edited by mmarshall; 02-09-09 at 02:49 AM.
02-09-09, 02:40 AM
#3
Lexus Fanatic
Will the public, as a whole, actually do that?
Possibly, but I wouldn't bet on it. The average American car buyer (including many of us here at CL) doesn't care much where the vehicle is built...they are more interested in if it suits their needs or not.
02-09-09, 06:01 PM
#4
Lexus Fanatic
"Sales will come back in America. Production will come back, but the jobs won't," Rubenstein says. "It's never going to be what it once was."
Sad, but the trends are not favoring a comeback of the Big 3, more like a drastically downsized and hopefully better run set of companies.
Sad, but the trends are not favoring a comeback of the Big 3, more like a drastically downsized and hopefully better run set of companies.
02-09-09, 06:07 PM
#5
Lexus Fanatic
Back to the point, GM is broke, out of cash, debt ridden and mismanaged. Even if they attempted to retain all this dead weight on the payrolls, the checks would bounce and the people would be working (or more likely standing around doing little or nothing) for free/zero pay.
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02-10-09, 11:02 AM
#8
Lexus Fanatic
True to some extent, but I'd say the Most-Improved Award has to go to Hyundai/Kia, a Korean manufacturer.
And a number of Chrysler/Dodge/Jeep products, IMO, are still poorly built, with cheap materials. Some of them, like the Dodge Caliber, Dodge Nitro, and Jeep Compass, IMO, border on junk.....though their overall reliability is not bad.
02-10-09, 10:20 PM
#9
Lexus Fanatic
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