Buffalo Business First, April 3, 2009, Friday

Buffalo Business First

April 3, 2009, Friday

Buffalo Business First

Future grim for auto suppliers

Business First of Buffalo - by Thomas Hartley

In 30 years, Tracy DeChambeau has seen his neighborhood change from being a part of the vibrant Western New York auto industry to a ghost-like remnant of its past.

His company, Radio Equipment Corp. on Vulcan Street, is a neighbor of the General Motors engine plant and the just-closed American Axle plant on Kenmore Avenue

REC has been a supplier to both.

“We were almost like their tool crib, we were that close,” he said. “They would come to us for parts like resistors, connectors and capacitors for maintenance repair and operation.”

DeChambeau also did business with the Buffalo plant of American Axle and with Harrison Radiator – Delphi’s GM predecessor in Lockport – and sold components to employees of the plants near him who came in after work.

But much of that is gone. Time and troubles have pruned thousands of jobs from manufacturers’ payrolls, especially in the last three years. American Axle’s two plants are closed and Delphi Thermal Systems in Lockport is hanging on.

“There used to be traffic jams around here, but there’s no traffic problem now. It’s gone,” DeChambeau said of his area near River Road and Delaware Avenue. “Sometimes there are 40 employee cars now in a parking lot where there used to be 4,000.”

Like many U.S. communities where assembly and auto parts plants once offered thousands of jobs in times of war and peace, Western New York cities and towns have watched as one by one their factories went dark and the landscape became dotted with weed-choked employee parking lots.

Recession and the sharpest downturn in North American auto sales in decades continue to feed widespread anxiety and pessimism as the economic impact ripples almost daily through the Buffalo region.

Here is a sampling from recent days:

• Rick Wagoner’s forced exit as General Motors CEO on March 29 and a new 60-day government deadline for a more drastic survival plan make a GM packaged bankruptcy an “almost foregone conclusion,” predicts Buffalo lawyer Brad Birmingham, a member of the National Association of Dealer Counsel and legal representative for some Western New York auto dealerships.

• 128 more factory workers accept buyouts to leave General Motors’ Tonawanda engine plant by April 1 – about 11 percent of the facility’s shrinking hourly workforce. Salaried job cuts will start soon.

• Fiat’s CEO flies to Detroit to meet unions and creditors after U.S. authorities give the two carmakers 30 days to form a partnership to save Chrysler LLC.

• Delphi, which employs 2,100 workers at Lockport’s Delphi Thermal Systems, has languished in bankruptcy for 3 1/2 years. But a glimmer of hope surfaces with an agreement to sell Delphi’s non-core brakes and suspension businesses to Chinese buyers that might reap $100 million to help it emerge from Chapter 11.

• Ford Motor Co., which is in less-desperate straits than GM or Chrysler and unlike them has not asked for billions in government help, is using a sharp knife on its U.S. workforce. The local facility’s 867-member workforce is down from more than 1,100 last year, when company buyouts and retirement incentives for hourly workers were offered.

Arthur Wheaton, industrial education specialist with the Cornell Industrial Labor Relations School in Buffalo, is pessimistic.

He sees a much-smaller company if GM survives. The company’s new CEO says that even if it means going into bankruptcy, the automaker will meet the Obama administration’s mandate to restructure within 60 days.

“What happens to GM will determine the auto industry in the U.S. and Western New York. No question,” Wheaton says.

Together, GM and Delphi have 3,600 Buffalo-area employees and more than 80 suppliers depending on them.

Dozens of dealers also rely on GM products to sell. Included among them are some of the country’s and state’s leading dealerships – Paddock Chevrolet, Jim Ball’s Pontiac franchise and West-Herr Automotive Group’s two Saturn dealerships.

Whatever misfortune befalls General Motors also will affect a long list of supplier companies, including some in Western New York such as Republic Engineered Products and Goodyear Dunlop Tires Ltd.

“The auto industry has too much capacity. It produced 17 million units of sales a few years ago and will be lucky to crack 10 million this year,” Wheaton said. “For Goodyear, if the industry loses 7 million vehicles, you’re talking 35 million tires – four on the car and one in the trunk.”