Southeast auto parts makers feel Detroit’s economic pain
Posted: Tuesday, May 12, 2009 9:11 pm
By ROSE FRENCH
Associated Press Writer
LINDEN (AP) — Like one out of every four residents of Perry County, Frances Banks is unemployed. But after 20 years at the Fisher & Co. car-seat factory, Banks faces even longer odds of finding work in a place where auto industry jobs — once central to the local economy — are becoming obsolete.
Auto industry upheaval is devastating local economies across the Southeast, forcing layoffs at factories that make car parts and driving some counties’ unemployment rates far higher than the national average.
Tending to a garden of potatoes, green beans and corn when not job-hunting, Banks, who is 55, is extremely worried about not having health insurance, let alone steady income to take care of herself and a disabled husband. “I’m not old enough to retire,” frets Banks, who was laid off in August.
If Michigan is the epicenter of the auto industry earthquake, Tennessee, South Carolina, Kentucky and neighboring states heavily dependent on auto parts factories are feeling powerful reverberations that are likely to get stronger as Chrysler navigates bankruptcy court and General Motors tries to keep itself out of Chapter 11.
“The (auto parts) suppliers are entirely dependent on these car companies,” said Jeremy Anwyl, CEO of the auto Web site Edmunds.com.
Before last year’s wave of layoffs, auto parts suppliers were the leading private employers in Kentucky, South Carolina and Tennessee, accounting for a combined nearly 102,000 jobs, according to a 2007 report by the Center for Automotive Research. Today it’s about 98,222, down nearly 4 percent.
In Alabama, Georgia and North Carolina, there were nearly 66,255 parts supplier jobs, according to the report. But now about 2,358 of those jobs are gone.
The overall losses have been mitigated some because many of the suppliers’ customers are foreign-based automakers, which have fared better than U.S. brands in this downturn.
Still, in places like Perry County, Tenn., the loss of jobs at plants that make parts for auto companies has pushed unemployment to a Depression-level 25.4 percent, the fourth-highest rate among U.S. counties in March. Perry County has had the highest unemployment rate in Tennessee since December 2007.
Nearly half the county’s work force of 3,000 worked in the auto industry in 2000. Today, that’s down to less than 5 percent.
Along Main Street and side streets, the pace of life has shifted from idyllic to idle.
In Linden, the county seat, “For Rent” signs hang outside empty storefronts where cafes, clothing stores and beauty parlors once prospered serving auto parts plant workers and their families. Amid rolling hills dotted with cattle and modest ranch-style homes, the unemployed residents of Perry County — like Banks — are passing the time by tending their yards and raw emotions.
Allison Kimble was crushed when her husband, Scott, was laid off a year ago from Fisher, where he’d worked for 12 years. Shortly thereafter, she also lost her job at the plant, where she spent 15 years on an assembly line making seat tracks and recliners for Ford and others.
“The day I got laid off, I just cried and cried,” said Kimble, who is 35 and has three kids. “I really don’t know how people in this area are going to make it.”
The lack of diversity in the local economy makes it extra difficult for those who’ve been laid off to find new jobs.
Perry County is representative of what’s going on in counties across the Southeast.
— In Lee County, Ala., Michelin North America announced earlier this month it will permanently close its BFGoodrich Tire plant, a move that will cost about 1,000 jobs. The March unemployment rate for the county — 7.4 percent — was reported before the plant closure was announced and is expected to shoot up.
— In Trigg County, Ky. — which had a March unemployment rate of 15.3 percent — car seat frame manufacturer Johnson Controls Inc. announced last fall it planned to close its plant in Cadiz that employed 559 workers due to the automotive downturn.
The Southeast has its share of auto plants, though most of them are foreign-owned and have had relatively few layoffs compared with their U.S. counterparts concentrated in Detroit and other midwestern cities.
BMW employs close to 5,000 people in South Carolina, while Alabama is home to Honda, Mercedes-Benz and Hyundai Motor Co. plants, employing some 10,500 people. In 2008, there were approximately 55,311 auto manufacturing jobs in Tennessee: a GM plant, two Nissan plants and Volkswagen’s only U.S. factory, which is expected to start production of a new midsize sedan in early 2011. Tennessee is also home to Nissan’s North American headquarters.
Anwyl and other auto analysts say the joblessness will intensify if auto sales, which fell 34 percent in April from a year earlier, continue to shrink.
In just the last year, two of the largest employers in Perry County have shed close to 800 auto parts jobs.
Fisher & Co. moved its operations to Mexico in September while Bates Acquisition LLC — which makes plastic and rubber hoses for automobiles — has also laid off hundreds. At Bates’ peak 10 years ago, it employed 1,100; now it’s around 200. Both made parts for General Motors Corp., Ford Motor Corp., Chrysler LLC, Nissan Motor Co., Honda Motor Co. among other automakers.
The economy of Perry County, which is about 70 miles southwest of Nashville and along the Tennessee River, made the switch from agriculture to manufacturing decades ago.
Initially, garment factories dominated. But the jobs started moving to Mexico in the late 1970s and early 1980s, at which point automotive plants started moving.
“People could go on and almost literally never miss a paycheck,” Perry County Mayor John Carroll recalled. “But in today’s economy, there’s nothing there to absorb these job losses. There’s not an industry coming in on the coattails of automotive.”