Crain’s Detroit Business

MACKINAC ISLAND – The talent attraction problems in the automotive industry may not be solved until the industry itself manages to reposition itself as desirable, according to a panel of automotive executives who discussed the industry Wednesday afternoon.

Participants on the panel at the Detroit Regional Chamber‘s Mackinac Policy Conference were Colleen Haley, executive vice president, U.S. OEM Business Unit, Yazaki North America, Canton Township; John Kennedy, president and CEO, Autocam Corp., Kentwood; and Timothy Leuliette, president and CEO, Visteon Corp., Van Buren Township.

“There’s a lack of excitement around manufacturing,” said Leuliette. “Stay home from work for one day and watch CNBC and you think the only thing going on is high tech and pharmaceuticals.”

But the automobile is no longer just automotive, “it’s becoming the largest consumer device people buy. In the old days, when new technology came forward, it went in Lincolns and BMWs and Mercedes,” he said.

Now it’s being added from the bottom up as cars become the largest mobile device – younger buyers are the first audience for that kind of technology.

Haley said a repositioning of the industry can’t come too soon. She cited a 2010 student of mostly female college students conducted by Inforum and Deloitte that found the only industry that the group liked less than automotive was real estate. No. 1? Consumer products.

“Our take on this as a group of female executives in automotive is this is a consumer product, it’s probably the largest you’ll ever buy,” Haley said. “So let’s make this about consumer products.”

Image is just one of the areas where the domestic auto industry finds itself caught in the crosshairs.

Two others:

  • Only 12 percent of all vehicles are built in the U.S.
  • Even so, there’s a lack of qualified employees for skilled manufacturing jobs, likely in part because wages have plummeted to become globally competitive.

Leuiliette, who became CEO of Visteon in October, said the history of Visteon exemplifies the trajectory of the U.S. auto industry.

Visteon was spun off from Ford Motor Co. in 2000 and had 27,000 U.S. employees, Leuliette said. Now it’s 1,200, with 800 of those in Michigan. That’s representative of how sales are growing globally.

“The United States today only represents 12 percent of vehicles produced on earth,” Leuliette said, noting that Visteon now has 110 plants in China and is building about 10 more a year. “We build in China for China. When Visteon was spun off, China built fewer vehicles than Belgium. Now it’s more than the U.S.”

Even so, a talent gap exists in manufacturing.

Kennedy, who founded Autocam in 1988, said his biggest issue is recruiting middle-skilled technicians for the factory floor, a need driven by growth in fuel systems demand and high-precision engineered products generally.

Those jobs require geometry and trigonometry, Kennedy said, and too many high school graduates have graduated without high-school competency.

“So we’re struggling with trying to upgrade talent that we have,” Kennedy said. “Yes, we can hire people that are 50 years old with some of the skill, but the concern I have is that that can gets us through today but not through the long haul. … We have to do a better job of marketing ourselves to families.”

Those could include “earn and learn” programs where employees can work and the employer pays for college expenses.

Haley said that Yazaki also can recruit engineers out of school for some jobs, but “we can’t staff every program with green engineers, so our gap is with experienced engineers.”

Because many engineers left the industry during the downturn, in effect, suppliers and the carmakers are battling it out for the available talent.

There’s still significant engineering capability in Southeast Michigan, but it’s important to keep leveraging it, Haley said, noting that her company is doing work for carmaker clients globally, not just in North America.

“We take talent from Southeastern Michigan and send it around the world. We need to keep that capability because in our company, at least, we’re teaching the rest of the world,” she said.

Other points made:

  • Leuliette noted that when he had his first plant manager’s job in 1983, employees were paid $24 an hour – the equivalent of more than $40 today – and they didn’t contribute to health care. Today, that same job pays about $17 an hour and the employee contributes about $200 a month toward health insurance. That’s moved employees from “the middle of the middle class” to the working poor.

    “We have repotted the American manufacturing industry to be globally competitive, but at a cost.”

  • Kennedy said it’s important for Michigan voters next year to approve a shift of the state use tax paid on out-of-state purchases. The approval, which would compensate local governments for lost revenue, is necessary to ensure a phase-out of the personal property tax paid by businesses.

    “We spend 50-60 cents of capital for every dollar of revenue when we’re investing. Personal property tax is very high in Michigan relative to other states. It makes the cost of capital significant.”

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