Auto job loss put at 150,000

Analysis of future of Big 3 sector is dour

November 06, 2007|By Detroit Free Press

DETROIT -- With Chrysler LLC's announcement last week of an additional 12,000 job cuts, the number of jobs to be eliminated from U.S. and Canadian automakers and their former parts divisions in the second half of this decade has grown to 150,000 - and counting.

With buyouts or early retirement offers expected at all three Detroit automakers after the new United Auto Workers union contracts that allow new hires to get less in pay or benefits, the number is sure to grow.

And in the future, as the American automakers face competition from more and more rivals from low-cost countries, analysts say, more painful cuts will almost certainly follow.

Just days after hourly workers ratified a new labor contract, Chrysler said it plans to nearly double the 13,000 job cuts it announced in February, now targeting the elimination of more than 25,000 hourly and salaried workers, or nearly a third of its work force.

Add the Chrysler cuts to the expected job cuts - at least 137,400 of them - already in the works at General Motors Corp., Ford Motor Co. and its parts unit, and Delphi Corp. and the total American job reductions rise to about 150,000 between 2005 and 2009.

The total is derived from an analysis by the Center for Automotive Research earlier this year and subsequent company announcements. It includes the 34,410 hourly buyouts and retirements at GM last year, and the more than 30,000 jobs eliminated at Ford since 2005, plus the planned shutdowns and sale of 35 parts plants at Delphi or at Ford's Automotive Component Holdings Inc.

That doesn't include the thousands of jobs lost at other auto suppliers affected by the downsizing. And still, analysts, union officials and autoworkers say the pain isn't over.

"We've been overbuilding for years and years, and now it's catching up to us because we're losing market share," said Kenyon Hall, a 31-year-old assembly worker at Chrysler's plant in Belvidere, Ill., where the automaker plans to eliminate a shift. "They waited too long to do something. Now it's going to be painful for a while."

Analysts expect that even the latest restructurings leave Detroit automakers larger than they will need to be in future.

"Unless there's significant changes, you will have more cuts," said Kevin Tynan, auto analyst at Argus Research. "My target for where the market settles out has GM with 20 percent of the U.S. market, Ford with 10 percent and Chrysler at 10 percent."

Through October this year, GM sales were almost 24 percent of the market, Ford owned nearly 16 percent and Chrysler sales made up almost 13 percent. Combined, they share less than 52 percent of the U.S. market. A decade ago, they had almost 72 percent of the market.

Further job reductions are contingent on continued shrinkage among the three Detroit automakers, analysts acknowledge.

Any of the automakers could suddenly hit home runs with new products or could benefit from the government addressing trade or policy issues.

Of the Detroit automakers, analysts generally consider GM to be the furthest along in its turnaround and say that if the automaker can take its Chevrolet Volt electric car to market by the end of the decade, it has the potential to change the game.

For the most part, however, analysts agree that the U.S. automakers will continue to lose market share and therefore will continue to shed jobs and close and consolidate plants to align production with demand.

"It's hard to say the worst is over for the industry because we're looking at a moving target and it's moving down, not up," said George Magliano, president of consulting firm Global Insight.

Erich Merkle, analyst and chief forecaster at IRN Inc., an automotive consulting firm in Grand Rapids, Mich., agreed the domestic auto industry hasn't reached bottom yet. "In terms of pain, I don't have a solid number," Merkle said, "but in my opinion, they're still working around the edges."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.