Buffalo News (New York), January 28, 2007, Sunday

Copyright 2007 The Buffalo News

All Rights Reserved

Buffalo News (New York)

January 28, 2007 Sunday

FINAL EDITION

SECTION: PROSPECTUS; Pg. P20

HEADLINE: High tech helps auto plants stay competitive;

But jobs fall as efficiency improves

BYLINE: By Matt Glynn - NEWS BUSINESS REPORTER

BODY:

At Ford Motor Co.'s Woodlawn stamping plant, the future weighs 4,000 tons.

A mammoth Schuler press went into action last year, churning out parts for the new Ford Edge and Lincoln MKX. The plant is providing about 90 percent of the stamped parts for the new "crossover" vehicles, which are being assembled up the QEW in Oakville, Ont.

For the Woodlawn plant's hourly workers, the value of the press project far exceeded its $214 million price tag. They hailed the new press as a vote of confidence from Ford and as an opportunity to secure even more work.

With the new press, the 57- year-old Woodlawn plant can produce larger pieces and is capable of quick equipment changeovers. High productivity ratings can bolster the plant's standing within Ford at a time when Ford is closing some assembly plants and considering shutting down more.

Ford's giant press project at Woodlawn involved spending on the press as well as on 10 additional assembly lines and employee training.

> New work; no new jobs

But investment in existing auto industry plants doesn't carry the promise of more jobs. In fact, the headcount at area auto plants has plummeted as more-efficient technology has arrived. Yet the plants need the high-tech improvements to ward off reductions in their production volumes, or worse, extinction.

While a major new piece of equipment has arrived, the work force at the Ford plant is continuing to go down. More than 400 hourly workers at the 1,400-employee plant agreed last year to accept buyouts, under a companywide program aimed at trimming Ford's work force.

In decades past, the local plants now operated by Ford, Delphi Corp., American Axle and Manufacturing and General Motors collectively employed thousands more people than they do now. Even at a plant like GM's Town of Tonawanda engine factory, which receives high industry marks for productivity, the job count has fallen steadily over time.

GM's Tonawanda plant employ only 1,860 people, including about 1,600 hourly workers. Its headcount has declined due to improvements in production efficiency, as well as buyouts and retirement packages offered by GM. Just five years ago, the site had about 3,800 employees.

Earlier this month, the plant was chosen to make a new V-8 engine line for future luxury cars, probably beginning with 2010-model year Cadillacs. The new line is a $300 million investment by GM that makes the plant's future much more secure. But the new line will replace an older 5-cyliner engine line that will move to Flint, Mich. - so he job count her still won't increase.

Still, dwindling auto-plant jobs are coveted.

"I think they're even more valuable now that there's fewer of them," said Arthur Wheaton, an instructor at the Cornell University School of Industrial and Labor Relations in Buffalo who tracks the auto industry.

Plants need infusions of new technology to stay competitive, but that is only half the equation, Wheaton said. The automakers and their suppliers also need union cooperation to make changes in work rules that pave the way for the investment, he said.

GM gets that kind of cooperation from the United Auto Workers in Tonawanda. To win the new V-8, UAW members approved changes in plant work rules that will reduce break periods.

Such management-labor cooperation, along with high productivity ratings, helps the Buffalo area overcome its geographical disadvantage in the industry, Wheaton s a i d . Auto assembly plants are not located nearby, which goes against the trend of how automakers prefer to organize their operations nowadays.

Patrick Heraty, professor of business administration at Hilbert College, said companies have been good about providing training to their workers on the latest innovations. "The ideal situation is one in which you have experienced autoworkers learning how to apply the new technology," he said.

Heraty said the autoworkers have come to realize that increased use of advanced technology is a fact of life in the plants. "The option of not adapting to the new technology is a false option."

Business recruiters point out that auto industry plants have a positive spinoff effect on a region, through what they pay their workers and by attracting suppliers.

Last year, Delaco Steel Corp. opened a $20 million steel processing plant, called DKP Buffalo, in the Town of Tonawanda. Delaco executives said they made the decision primarily to supply Ford's stamping plant in Woodlawn.

> Trouble in autoland

While the Buffalo-area GM and Ford plants have succeeded in attracting large new investments, plants operated by American Axle and Manufacturing and Delphi Corp. are facing difficult battles, reflecting their parent companies' own struggles.

Delphi is in bankruptcy, and its Lockport plant has long been identified as a troubled operation. But last year, Delphi announced the Lockport site was among the few plants it intended to keep operating.

The Lockport plant had a tumultuous 2006, with buyouts and retirements, a strike authorization vote by its unionized members, and the hiring of lower- wage workers to fill vacancies. Late last year, the company announced it was converting 900 temporary workers to permanent status, making them eligible for benefits and cost-ofliving increases in their pay.

While the UAW welcomed the news of the workers' permanent status, the pay for most of those workers' jobs is still about half of what existing workers make in comparable positions.

American Axle's Delavan gear and axle plant received some gloomy news last year. The plant was passed over, in favor of a sister plant in Mexico, as supplier of rear axles for GM's new Camaro. That has raised the pressure on the plant to attract new work as older vehicles are phased out of production.

The Buffalo plant was targeted for shutdown in 2004 but was spared by a freeze on plant closings in the UAW's current labor contract, which is scheduled to run out in early 2008.

American Axle also operates a plant in Cheektowaga, which was opened with a two-tier wage system, and a forge in the Town of Tonawanda. Combined, the three plants had about 1,750 employees late last year.

For a plant like Delphi's, winning new investment at a time when the parent company is in bankruptcy can be a tough sell, Heraty said. He also noted that the area's auto plants "are pretty high-tech as it is." "It's not the absence of technology that caused their problems," he said.

Advancements in technology can also help the automakers protect market share, by allowing them to be versatile, Heraty said. For example, the faster a stamping plant can react to changing consumer tastes influenced by factors like gasoline prices, the more successful an automaker can be.

But the bottom line in the auto industry today centers on using technology to stay competitive in the global market. What once was work handled exclusively on American soil is now spread around the world.

"It's becoming easier to do so," he said.

e-mail: mglynn@buffnews.com

GRAPHIC: Harry Scull Jr./Buffalo News Delaco Steel Corp. last year built a $20 million steel processing plant, called DKP Buffalo, in the Town of Tonawanda, to supply the Ford Stamping Plant in Woodlawn. At right, Jon McAndrews monitors the steel-cutting process, shown at left.