Detroit 3 near $14-an-hour hiring blitz
Detroit 3 near $14-an-hour hiring blitz
New production employees could start work in ‘09
Detroit’s automakers, while undergoing great efforts to eliminate jobs, are perhaps a year away from the largest local hiring spree in recent years.
The bulk of those Michigan jobs will be hourly production positions.
New high school graduates could see the benefit of the hiring boom next year, researchers from the Ann Arbor-based center say, largely because the new, non-assembly production jobs will pay $14 an hour, about half of what automotive jobs have paid, and they won’t include retiree health care benefits or a defined pension.
The lower rate for so-called non-assembly positions is allowed under the labor agreements approved by the UAW and the automakers last year. The union and automakers have not yet announced which jobs will be considered non-assembly positions, but it could likely include jobs such as subassembly and material movement. Workers would have the chance to move to higher-paid jobs.
Detroit’s automakers are in the middle of reducing their workforces. GM last week offered buyout packages to all 74,000 of its UAW hourly workers after posting a record $38.7-billion loss for 2007.
Ford has offered buyouts in an effort to get rid of at least 8,000 of its hourly workers. Chrysler is seeking to decrease its hourly workforce by 21,000.
Since 1999, Michigan has dropped from 316,300 auto industry jobs to around 129,000 at the end of last year, according to the center’s research.
In 2009, the Detroit car companies are predicted to hire around 19,000 hourly workers in Michigan. That is roughly equivalent to 17% of how many high school students are expected to graduate in Michigan next year or as much as 40% of those graduates who are expected to enter the workplace instead of going to college or the military.
The companies are expected to hire about 24,000 hourly workers in Michigan through 2011, after which new production positions are not expected. A total of 36,000 people are expected to be hired in Michigan in the next four years.
"The strain on Michigan’s labor market supply could be considerable in 2009, and perhaps into 2010. … Historically, the Detroit Three have not hired new high school graduates directly into the plants in decades," the report said. "The newly negotiated second-tier compensation level ($14 an hour and a lower level of benefits) will mean that, for the first time, the Detroit Three will be competing directly with the supplier sector for new hires."
About 40% of hourly local workers at the Detroit automakers were hired between 1991 and 2000, according to the study. Less than 7% of overall hourly workers were hired in the past seven years.
"Even if the projected hiring does not take place until a market recovery in 2009 or 2010, there may not be sufficient time to train and prepare new hires for the automotive jobs of the future," the study warned. "This is a critical issue for community colleges and technical schools that will be expected to prepare this future labor force. The training and education programs at these institutions have been in a state of semi-hibernation over the past decade, since the Detroit Three have not been in a large-scale hiring mode for that many years."
The reports says Detroit automakers plan to eliminate a total of 38,000 jobs through 2016 because of falling production but that the companies also plan to do a lot of hiring to replace an aging workforce. Through 2016, the Detroit Three are expected to hire about 77,000 people in the United States, according to the report, of which 57,000 are to be hired in the next four years.
"These new hires are necessary because the Detroit Three are projecting large-scale employee attrition through ‘baby boomer’ retirements," the report said.
Richard McMillan, vice president of economic and workforce development at Macomb Community College, said automakers are more likely to turn to young people with work experience than to somebody straight out of high school.
"They don’t have the experience. You can’t depend upon them to show up at 5 o’clock in the morning, that kind of stuff," he said. "That doesn’t mean we don’t try to get high school students capacitized to do that. But it does mean there’s a bias in the industry for performance."
He also said there are plenty of young people in the Detroit community looking for work. "You’re probably forgetting that there are a lot of people out there 18, 19, 20 … that will take that job and they’ll get it before the high school students," he said.
There may be a disconnect between what the automakers are willing to pay and the skills they want from new workers.
Kristin Dziczek, the Center for Automotive Research’s senior project manager and an author of the new study, said the automakers want new production workers to be able to handle the growing complexities of manufacturing work by having high levels of literacy and math and possess computer, communication and teamwork skills.
"They want a very mature worker and up until now they’ve been able to get that with the allure of higher wages and benefits at the Detroit Three by hiring from suppliers, by hiring from the dealer tech population, by hiring workers with 8 to 10 years of experience already. Paying 14 bucks an hour with no discernible difference in their benefit package is going to dip down to high school students," she said.
CAR’s economist Sean McAlinden said the state’s labor market could shrink by 10% to 15% as it did in the late 1990s, when the state faced a labor shortage.
The outlook for engineers is good. McAlinden said research and design spending should increase. "We think that it will get better based on the technical challenges that are ahead of this industry," he said. From now until 2016, automakers in the U.S. will hire about 13,000 engineers. About 9,000 engineers will be hired in Michigan.
Chrysler, Ford and GM took part in the study with Honda of America and Toyota Motor North America.
It was prepared for the Charles Stewart Mott Foundation and the Mid-Michigan Innovation Team/U.S. Department of Labor Workforce Innovation for Regional Economic Development Initiative.
