ANN ARBOR—Michigan firms that supply automakers with parts and equipment expect to add nearly 9,600 jobs in 1999—more than offsetting job cuts predicted at the state’s auto companies this year, according to a new University of Michigan study.

While vehicle manufacturing employment in Michigan is forecast to decline by about 3 percent (a loss of some 6,800 jobs), automotive pre-production firms (those that provide capital equipment, special tooling and engineering services to automakers) and component companies are expected to increase their employment in the state this year by 5.3 percent and 4.1 percent, respectively.

In fact, about two-thirds of the state’s automotive parts suppliers and a third of pre-production companies anticipate increased hiring of workers in Michigan, the study’s authors say.

Overall, the survey predicts a net increase of nearly 2,800 jobs for the state’s entire automotive sector this year—a 0.6 percent rise over last year.

“A general theme that appears in our forecast is that of general optimism and growth for Michigan automotive supplier firms,” says U-M researcher Sean P. McAlinden. “The expectations for these companies regarding not only employment, but also future capital spending, current dollar sales and changes in capacity are high.

“It is clear that Michigan’s overall supplier industry has arrived as a major economic sector in the state, with about 47 percent of the state’s automotive employment now located in this sector.”

In their study, “The Michigan Automotive Policy Survey,” McAlinden and colleague Brett C. Smith of the U-M Transportation Research Institute‘s Office for the Study of Automotive Transportation (OSAT) polled representatives of four major vehicle manufacturers, 101 automotive suppliers (54 components manufacturers and 47 pre-production companies) in Michigan and 36 non-Michigan automotive firms on employment and wages, education and training, expansion and location, impact of global climate change, and health care benefits.

The researchers predict at least 5 percent increases in the employment of engineers, technicians and skilled trades workers at both pre-production companies and components firms. By contrast, employment in these areas, as well as for other salaried and hourly employees, is expected to decline at the vehicle manufacturers surveyed.

Despite the predicted loss of jobs in the auto manufacturing sector, McAlinden and Smith found that automakers will continue to face labor shortages this year and next in information technology systems, computer programming and product engineering. Michigan’s auto suppliers also expect to experience a scarcity of labor in these areas, and especially among the skilled trades.

Strong competition for workers from other automotive employers and the lack of recent graduates are both chief reasons for the dearth of qualified employees in these areas, the researchers say. The unpopularity of manufacturing careers, a strong economy and the lack of quality training are other key factors contributing to the shortfall.

“A common misconception among the general public—and, in particular, educators and their students—is that automotive manufacturing takes place in dark, dirty, smoky environments,” Smith says. “While in some cases this is still true, many modern manufacturing facilities are vastly different from the factories of the past.”

Smith says that the lack of understanding about the manufacturing work environment, along with little knowledge regarding job requirements, is one of the biggest challenges in attracting young people to such careers.

“The education system has emphasized, at the cost of technical training, that a four-year college degree was the only way to achieve a good-paying, career-oriented job,” he says. “But our results indicate that by learning a skill, many have achieved well-paying jobs without a four-year degree.

“Importantly, our study suggests that the lack of quality training by both the vocational education system and company internal training programs have contributed to the current labor shortage.”

McAlinden and Smith say that 84 percent of the Michigan suppliers in the study have been adversely affected by recent labor shortages and that more than a third have complained of a severe lack of workers.

“This viewpoint is critical in Michigan’s continuing efforts to develop and maintain its world-competitive economy,” McAlinden says. “Our study shows that access to local quality labor is among the most important criteria used by supplier firms in their location and expansion decisions.

“Human resources and skills remain paramount. An inability to locate, hire and retain such resources could jeopardize our generally positive forecast.”

The U-M study was sponsored by the Michigan Jobs Commission. It is part of an overall contract granted to OSAT to help the Jobs Commission maintain the Michigan Automotive Partnership, a special industry group that consists of the state’s largest vehicle manufacturers and 25 automotive component, engineering service and capital equipment firms.

Michigan Jobs Commission