Ways to save Md.'s auto industry

June 26, 1998|By Michael A. Conte

RECENT layoffs at the General Motors Corp. plant on Broening Highway have again raised questions about the future of the region's economy, particularly its manufacturing base. Because of the United Auto Workers union strikes at GM parts plants in Flint, Mich., the Baltimore plant doesn't have enough parts to continue production. Some 3,000 GM employees here have been forced to sign up for unemployment benefits.

The strike is causing massive pain as workers lose between $500 and $1,000 a week in income -- roughly $2 million per week in lost earnings. That amounts to about $1.3 million per week in lost spending power. But that's not the extent of the losses. For every 100 GM employees in the city, there are roughly 175 other individuals who depend on the GM plant for work, including many suppliers in surrounding counties, most of whom supply parts on a just-in-time basis.

A costly strike

For example, Johnson Controls in Belcamp laid off half of its work force -- 180 people -- on June 12 because of the GM shutdown at Broening Highway. Total lost income to Maryland residents as a result of the strike probably totals about $7 million per week. A month-long shutdown reduces Maryland's personal disposable income by $28 million or so. In a year, that would translate to about $336 million.

No one thinks the strikes will last a year. But in the midst of these strikes, this question is raised: What would happen if Baltimore's GM plant closed forever? In the context of that question, the $336 million figure becomes ominous.

But consider this: The van produced at the Baltimore plant is an older model that's scheduled to be phased out over the next few years. And GM is looking to protect its new stars -- the only plant that the company has insulated from the effects of the strike produces light trucks, the stars of the line.

Some other trends underscore Maryland's peril in auto manufacturing. The good news is that Maryland has gained auto manufacturing jobs in the 1990s. There are about 5 percent more auto and parts manufacturing jobs in the Baltimore area now than in 1990.

The bad news is that the nation added auto manufacturing jobs at four times that rate. U.S. auto manufacturing jobs have increased by more than 20 percent since 1990. The states that won big increases in automobile manufacturing include Indiana, a 50 percent increase in such jobs; Wisconsin, 20 percent increase; and Ohio, 17.8 percent increase.

Government data for Southeast states were not available, but they saw significant increases in such employment there. New York and New Jersey saw significant losses, and Pennsylvania stayed about even. Notice a regional trend?

Michigan is the only big auto producing state that has lost steam in these boom years, but it can afford to diversify a little -- almost 30 percent of the Michigan economy is allocated directly to auto production. That compares with about 6.5 percent nationwide and about 2.5 percent in Maryland. Nonetheless, that 2.5 percent is concentrated in the Baltimore area, and it certainly bears watching, considering the amount of income involved.

Losing battle

The unfortunate people of Flint are facing a disaster that they probably can't avoid.

GM wants to get out of there.

Baltimore is a different story. The plant here is known for high productivity and an industrious labor force. The problem is that manufacturing is increasingly a regional matter. It doesn't do a manufacturer of consumer products any good to have a highly productive plant in a territory far from suppliers. While the 10 or so suppliers of auto parts in the area are of excellent quality, the nexus of suppliers is growing more rapidly elsewhere -- and the product of the Baltimore plant is on the verge of extinction.

Maryland can change the apparent future by working with surrounding states. Already, port of Baltimore officials are pushing for two new auto-import facilities on the banks of the Patapsco. If the state's import strategy could be combined with a plan to foster a network of auto parts and service suppliers throughout the mid-Atlantic, perhaps we could save auto manufacturing in Maryland.

Michael A. Conte is director of RESI, a research institute of Towson University.

Pub Date: 6/26/98

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