The Oakland Press (http://www.theoaklandpress.com)
Officials: Diversification of automotive manufacturers credited for industry
turnaround in Oakland County
By Paul Kampe, The Oakland Press
Tuesday, January 12, 2016
As the national spotlight shines on Detroit and the North
American International Auto Show and, in the wake of record
automotive sales, it could be easy to forget the industry’s
struggles of the last half-decade.
Without the efforts of the county’s ubiquitous automotive
suppliers as well as county leaders, though, the industry’s
turnaround would not have been possible, according to officials
and educators.
“If you were in Michigan, it was very scary and depressing,” Oakland County director of economic
development and community affairs Irene Spanos said. “It was hard going to Tier 1 companies and
hearing they weren’t going to make payroll.
“2008 and 2009 scarred us all for life.”
Those suppliers were anchored to large auto manufacturers which had fallen on hard times, including
bankruptcies for two of Detroit’s “Big Three,” due to the economic recession.
“They all had to go along with Chrysler and General Motors ... to meet their needs in rather (poor)
conditions,” Oakland University marketing professor John Henke said. “They had their own (problems).
... The easy thing to do would have been to issue layoffs.
“What’s happening now is indicative of the resilience of the people in that industry.”
The suppliers persevered, Henke said, and through tactics such as adjusting responsibilities and paying
full-time employees for fewer than 40 hours of work allowed them to save jobs.
“In many cases, (employees) went along with it,” he said. “They toughed it out and made it through.”
Otherwise, tens of thousands more employees could have lost their jobs due to the trickle down effect of
bankruptcies declared by two of the “Detroit Three” automakers and other economic woes of the time.
“It would have been catastrophic for the county,” Henke said. “Oakland County would have been an
economic wasteland, at least in the short term.”
Henke credited Oakland County officials and, in particular, the forward-thinking of longtime county
Executive L. Brooks Patterson, which was instrumental for stopping the free fall, he said. “He always
looking three to five years down the road,” Henke said. “That’s very unusual for a politician.”
Prior the recession, Patterson and other county officials partnered with the Michigan Economic
Development Corporation to implore suppliers to diversify their offerings and customer base. Some
adapted by adding components like medical device manufacturing, others took up defense and aerospace
markets.
“They were really manufacturers, not just for automotive,” Spanos said.
Automotive companies are now more engaged with the local schools to foster the next crop of talent,
Spanos said, and they’ve also taken on a global focus.
Much of the county’s foreign direct investment, which refers to contributions made by a company
headquartered outside the United States, comes from the auto industry.
Canada-based supplier Magna International and Germany-based auto supplier BASF Corp. accounted
for total investment of more than $225 million in 2015, which resulted in more than 2,100 jobs.
“There’s no other place in the world where you can have access to the U.S., Chinese, Japanese and
German auto industries in one place, and that is Oakland County,” Spanos said. “They just need one
office in Oakland County to reach those markets.”
Today’s trends
Within Oakland County’s workforce of more than 625,000, nearly 36,000 employees’ livelihoods are
tied to the auto industry.
During the turnaround, the county’s various automotive companies have begun specializing in research
and development.
The field generated more than $6.5 billion sales and more than $1 billion of investment in the past year,
according to county officials, with parts suppliers like Continental, Faurecia and BorgWarner leading the
way.
The field is one of the county’s fastest-growing sectors, including a rise in autonomous and connected
car technology, according to Spanos.
“It’s because of our technology focus,” she said. “We’re seeing our auto companies wanting to get to
know our technology companies.
“It makes sense the resurgence is happening here. ... This is where the expertise is.”
Three-quarters of the industry’s top 100 suppliers have operations in Oakland.
Fiat Chrysler Automobiles. The county’s largest employer, makes it 5.3 million-square-foot North
American headquarters in Auburn Hills.
Automakers like General Motors and Nissan are also two of the county’s top employers, as are several
automotive suppliers such as Troy-based Magna International.
In neighboring Macomb County, where Detroit’s “Big Three” collectively employ more than 35,000 of
the county’s more than 44,000 auto-related employees, the industry has invested more than $5.3 billion
since 2010, according to county officials.
“Macomb County is home to some of the industry’s most advanced capabilities,” Macomb County
Executive Mark Hackel said in a press release. “Our steadfast commitment to Macomb County’s
automotive and advanced manufacturing base is fueling sustainable economic growth.”
In particular, the auto industry there has seen a significant increase in manufacturing.
The county’s workforce has had a 52-percent job growth in vehicle manufacturing since 2009 and last
year ranked third in the nation for manufacturing job growth.
“We’re seeing a massive push in advance manufacturing including technology and innovation,” assistant
county executive John Paul Rea said. “It’s the whole product life cycle.”
The uptick is predicted to continue for “some time,” he added.
In Oakland, many of the county’s nearly 2,000 manufacturing companies and their more than 62,000
employees are tied to the automotive industry in some fashion, officials said.
Despite the boom, though, the automotive industry may never reach pre-recession employment levels
due to improved efficiencies, but “the industry is more capable of meeting consumer demands,” Rea
added.
The next crash
U.S. Sen. Gary Peters was a newly elected representative in 2009 when the atmosphere surrounding the
annual auto show was much less festive.
“People weren’t sure anyone was going to survive and now we have a booming industry that is creating
good paying, middle class jobs and is a big part of the Southeast Michigan economy,” he said.
“Oakland County will benefit from a strong and vibrant auto industry. ... Certainly, attempts continue to
be made to diversify the economy, which are positive, but we cannot forget the central underpinning of
Oakland County and Southeast Michigan’s economy is the U.S. auto industry.”
While the industry reported approximately 17.5 million in sales in 2015, Peters said sales will continue
to gain in 2016.
“We think this year may be even better,” he said. “Many experts are forecasting 18 million vehicles
sold.”
Despite the predicted increase, slowdowns are inevitable, Henke said.
However, suppliers and manufacturers are working diligently to ensure the depression that crippled the
American automotive industry less than a decade ago does not come along again, according to Henke.
Leaders are looking toward continued efficiencies to avoid a letdown, he said.
“They’re not making unwise decisions, despite profits,” Henke said. “Everybody in the industry knows
there’s another slowdown coming, but we don’t know when.”
Spanos said automotive companies operate much more lean than in the previous decade, producing less
waste.
“They’re able to adjust much quicker to meet demand,” she said. “Our companies and OEMs are smarter
now and know how to more effectively produce for the materials they’re selling.”
The next slowdown imminent, though. Experts have said there are still “several” more positive years
ahead for the industry, Henke noted.
(Staff writer Aftab Borka contributed to this story.)
URL: http://www.theoaklandpress.com/general-news/20160112/officials-diversification-of-automotive-manufacturers-credited-for-industry-turnaroundin-oakland-county
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