The Future of American Auto Jobs

— John Rossheim

The January 2006 headlines announcing General Motors and Ford would cut 60,000 jobs caused a feeling of deja vu for workers at the Big Three American carmakers. As plant closings loom for the Rust Belt, employees -- especially those who aren't close to planned retirement -- wonder what will become of them.

There is no quick answer, and the trends driving shrinkage at GM, Ford and Chrysler aren't likely to be reversed anytime soon.

General Motors, Ford and Chrysler owned 73 percent of the US market in 1995. That number fell to just 60 percent in 2005. "The Asian invasion of the North American market is unrelenting and almost predictable -- 1 [percentage point] of the market each year will go someplace other than the Big Three," says Gerald Meyers, a professor of business at the University of Michigan and former chairman of American Motors.

Jobs Are Migrating, Not Disappearing

But big trouble at the Big Three is only half the story of the US auto industry. "The jobs aren't lost, they're just moved -- from Detroit to Nashville," Meyers says. There are still about a million jobs in the US auto industry, roughly the same level of employment as in 1990. What Michigan has lost, other states, mainly in the South, have gained. Foreign-based automakers like Toyota, Honda and Nissan have created hundreds of thousands of US jobs. Just take a look at the numbers:

• Michigan was by far the biggest job loser over the past few decades, according to a 2005 Congressional Research Service report. Of the more than 394,000 jobs the state boasted in 1979, some 124,000 were gone by 2003.
• Kentucky ended the same period with 53,000 jobs for a gain of 39,000; Tennessee added 23,000 jobs for a total of 38,000 in 2003. Including jobs at foreign-owned plants, Ohio added 16,000 jobs and Indiana gained 58,000 positions over the same time period. Several other states also saw gains.

Big Three Healthcare and Pension Costs Soar

Even if Detroit somehow reclaims market share, it must also control pension and healthcare costs for retirees, who number greater at Ford and GM than active employees.

Many autoworkers will benefit from generous separation terms their union has negotiated over the years. "A lot of workers are protected by agreements, so they won't be out the door with two weeks' severance," says Paul Krell, a spokesman for United Auto Workers (UAW), the Detroit union that covers most production workers at GM, Ford and Chrysler.

Japanese Automakers Create Jobs for a New Generation

Foreign automakers operating in the United States offer attractive compensation and benefits -- especially to those in the South.

"The Japanese carmakers offer fairly good benefits but not as lavish as the Big Three have had," says Paul Eisenstein, publisher of The Car Connection. "They're careful to avoid giving away the kitchen-sink benefits that the UAW has won over the years."

When Torrance, California-based American Honda Motor Co. opened a plant in Alabama, "tens of thousands" of workers applied for 2,000 jobs, says spokesman Stephen Keeney.

Like other Asia-based automakers, Honda is hiring judiciously and has no plans to expand its US workforce on a large scale. "Our employment is fairly steady at the moment," Keeney says. "We have very low turnover."

The new generation of American autoworkers doesn't look much like its Detroit-centered predecessor. Foreign automakers' US workers "are young, healthy and antiunion," Meyers says. "Asian management mans plants with people who will do what they're told. They make a wonderful workforce that's highly flexible, works like crazy and is happy to be on the job."

Alternatives for Displaced Autoworkers

Where can displaced Big Three autoworkers turn? Work is available at parts suppliers -- there are now more US jobs making parts and equipment than positions in vehicle assembly plants. But suppliers like Delphi Corp. are under intense competitive pressure.

Another option is to seek education for a new career direction. Over the years, the UAW has negotiated tuition assistance for workers, their kids and retirees for any school, whether it's a community college, technical school or other educational institution, says Krell.

This article originally appeared on Monster.com.

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