North Carolina is no Michigan, but the auto industry recession is punishing this state.
While North Carolina officials have never attracted a major assembly plant, the state is a large supplier to auto makers. Roughly a quarter of manufacturing employment is tied to motor vehicles, including cars, buses and heavy trucks.
That underscores the importance of discussions in Washington, where politicians are arguing over a bailout for the domestic auto industry. But the head of the Senate banking committee said Thursday he did not believe there would be enough GOP support for efforts to aid floundering automobile manufacturers, raising doubts about whether congressional leaders will call the House into a lame-duck session next week.
The Big Three – General Motors, Ford and Chrysler – are pleading for assistance, and Democratic leaders are pushing a $25 billion rescue plan. Without aid, GM, which last week reported a $2.5 billion quarterly loss, says it could run out of cash before year's end.
“This industry has been brutalized,” said James Sampson, chief executive of Blue Water Automotive Systems. “It's horrible. It's just horrible.”
Until August, the Michigan company made cup holders and other plastic parts at a Burlington plant for Ford's F-150, Focus and other vehicles. Forced into bankruptcy, it almost shut the factory. A buyer emerged, but it was most interested in the equipment and the lease.
Of 120 in Burlington who worked for Blue Water, only six were taken on by the new company.
The motor-vehicle sector has been contracting in North Carolina since 2005, with total employment falling to 130,155 by the end of last year. The global economic downturn has accelerated the decline.
In October, Guilford Performance Textiles said it would close a Fuquay-Varina plant that made fabric for car interiors. That put as many as 115 employees out of work. Last week, ASMO North Carolina, which makes motors to power windows and air conditioning blowers, said it would shut down plants in Thomasville and Mount Airy. Combined, those actions will affect 202 employees.
Many of the Charlotte region's auto parts companies are not wedded to just one company, but are more diverse and deal with both foreign and domestic producers, said Kenny McDonald, executive vice president of the Charlotte Regional Partnership. He said the after-market industry, supplying replacement products for cars after they are sold, is doing better than companies that deal more in new car business.
That's the case at the Wix filters plant in Gastonia, where only about 10 percent of the business involves air filters for new vehicles; the rest goes into used cars or as replacement parts.
The plant has about 1,500 workers. It has shortened work schedules from five to four days in some cases, and also has cut back on its temporary labor force, said Keith Wilson. He is president of Affinia Group, global filtration, which includes the Gaston plant.
Sales are off about 10 to 12 percent of where the company expected them to be, Wilson said, but attributes the decline to problems in the overall economy, not just Detroit's woes.
There also have been some expansions in the Charlotte region.
In Catawba County over the past few years, ZF Lemforder Corp. spent about $40 million to $45 million to open a plant for making parts that connects wheels to the chassis of an auto, and Getrag Corp., a German powertrain manufacturer, spent $80 million on expanding its Maiden plant, said Scott Millar, president of the county Economic Development Corp.
A trio of auto parts supply companies in Lincoln County have spent a total of about $46 million on new or expanded projects, said Barry Matherly, who runs the county Economic Development Association. He said a number of auto parts companies in the county have told him about a slowdown in business.
The problems that GM, Ford and Chrysler face, though, are not all their own making. Foreign automakers are also hurting amid the global economic slowdown.
That's an important undercurrent in the debate about auto industry assistance, especially in North Carolina, which has amassed a contingent of suppliers for foreign automakers with plants in places such as South Carolina and Alabama.
It's unclear how many parts suppliers in this state serve domestic automakers versus foreign ones such as Toyota and BMW. But it is clear that those that do work for the likes of Toyota are hurting and action by Congress might not benefit them much, if at all.
ASMO North Carolina, which is shutting down the plants in Thomasville and Mount Airy, counts Ford, Chrysler and Toyota among its key customers.
Its consolidating operations in Statesville, action driven not by the plight of the Detroit companies but by actions at Toyota.
The Japanese automaker has trimmed production, especially at U.S. plants that make trucks and sport utility vehicles, reducing demand for parts ASMO supplies.