Big 3 may start hiring in Sept.

Report finds carmakers to add 46K workers by 2016

Mark Hornbeck / Detroit News Lansing Bureau

LANSING — A distant light amid Michigan’s economic darkness: Detroit’s Big Three automakers will start hiring as soon as September and will employ nearly 46,000 new workers in this state over the next eight years.

That’s the somewhat upbeat conclusion of a new report issued by the Ann Arbor-based Center for Automotive Research and presented at Lansing Community College’s auto tech center Monday. The study is based on interviews with Big Three officials and others in the auto industry.

"The bleeding will stop," said Kristin Dziczek, a project manager for the center and co-author of the report.

Overall employment by the domestic car companies will be down between now and 2016. In Michigan, the number of auto workers will drop from the current 129,000 to 114,254 by 2011 and 108,430 by 2016.

But due to buyouts and thousands of retirements of baby boomers and reduction of legacy costs, the auto companies will be in a hiring mode in the years to come, the report says.

"It’s easy to overlook that the buyouts are occurring so the Detroit three can hire," Dziczek said.

Of the 45,955 total new employees needed by 2016, the automakers will hire more than 24,000 hourly production workers and nearly 22,000 salaried employees including more than 8,800 engineering and technical workers and 1,200 skilled trades people, according to the report.

"Our automakers are clearly making the tough decisions that will make them stronger in the days to come," said Liz Boyd, spokeswoman for Gov. Jennifer Granholm. "And while that strength could result in thousands of area hires it doesn’t detract from the need to diversify the state’s economy."

Gary Olson, an economist and director of the Senate Fiscal Agency, said the auto companies are moving older employees out and bringing new workers in at much lower hourly wages. "If they’re paying $14 an hour instead of $25, that will have a negative impact on income tax and sales tax revenue, even property tax revenue because somebody at that pay level can’t buy as much house," Olson said. "But $14 an hour is better than no job.

"This is part of a transitioning into a new economy in Michigan."

The auto companies are concerned about the state’s available labor supply.

"While the domestic manufacturers struggle with a current oversupply of trades workers in nearly all classifications, all of the automakers interviewed for this study expressed concern about the future pipeline of skilled workers," the report said. The new employees will need math, computer, technical reading, teamwork and communications skills, said Bernard Swiecki, a project manager and co-author of the report, titled "Beyond the Big Leave: The Future of U.S. Automotive Resources." At the same time, there will be less physical demand on the auto workers of the future.

Chuck Hadden, vice president of government affairs for the Michigan Manufacturing Association, said the center’s figures on Big Three employment sounded realistic.

"The average age of a UAW worker is about 50. Not all of those who retire will be replaced. And the replacements will have to have a lot of skills that current workers don’t have. In some cases, they’ll have to replace two or three workers, they’ll have a machine to help them and they’ll need to know how to recalibrate that machine," Hadden said.

Because newly hired production workers will earn between $14 and $16 an hour under the recently negotiated UAW contracts, competition for those employees will be fierce from other employers paying similar wages, according to the study.

The companies are relatively comfortable about an adequate supply of engineers. Engineers will need a combination of expertise in mechanical, electronic and software engineering for vehicle design and manufacturing.

At this week’s SAE International World Congress, a record number of employers are looking to hire engineers. Forty-one companies are interviewing, including Chrysler LLC, GE Transportation, General Motors Corp., Toyota Motor Corp., and Mercedes-Benz, and many tier one auto suppliers.

"There is still more automotive engineering talent in southeast Michigan and the upper Midwest than anywhere else," said David Amati, SAE’s director of global automotive business.

Government agencies and military contractors, including the Missile Defense Agency and U.S. Army Contracting Command, also are recruiting, as are other companies such as Caterpillar Inc., consulting firm Booz Allen Hamilton and Cessna Aircraft Co.

Michael LaFaive, director of fiscal policy for the Midland-based Mackinac Center for Public Policy Research, said he’s optimistic about the future hiring of engineers, technicians and other salaried workers in Michigan.

"This is about an entire industry reorganizing," LaFaive said.

But LaFaive said he’s concerned that auto manufacturing jobs will continue to move south because of an unfavorable tax climate and labor laws in Michigan.

The presentation of the report was made in Lansing partly because the area boasts North America’s two newest General Motors auto plants. The study did not address whether future plants might be built in Michigan. The trend has been for those plants to go to southern states.

But Swiecki said Michigan remains the hub for the intellectual side of the industry.

"When it comes to research and development, engineering, and design, this area is safer," he said.

In the United States, auto employment will level off near 355,000 employees. But the mix between domestic and foreign automakers will change, according to the report. Foreign manufacturers employ 32 percent of auto workers today and that will increase to 43 percent by 2016.

New auto hires

Projected hiring by the Big Three auto companies in Michigan over the next eight years.