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When contract negotiations stumbled last month between the United Auto Workers and Chrysler, the automaker’s CEO Sergio Marchionne criticized his union counterpart in a public letter. When deadlines passed, he declared new ones rather than continue open-ended extensions. Now he wants to remove a cap on the number of entry-level workers.

UAW president Bob King has already reached agreements with General Motors and Ford this fall. Negotiations with Marchionne and Chrysler will likely be the most arduous yet.

“Chrysler is in a different situation because their balance sheet isn’t as beautiful and the profits haven’t started to fall in,” Kristin Dziczek, a labor analyst at Ann Arbor, Mich.-based Center for Automotive Research, tells Bloomberg News while explaining Chrysler’s harder-line stance.

According to her organization, Chrysler’s hourly labor costs, including benefits, averaged $49 per hour, compared with $56 at GM and $58 at Ford before the contract negotiations began, according to the Detroit Free Press. Chrysler has not yet returned to profitability since emerging from bankruptcy in 2009.

King said the UAW brings some leeway to the negotiating table, but that “we’re not going to give one company an economic advantage over another company,” he tells the Detroit News. “… But as flexible as we were at Ford and did some things differently, we’re flexible at Chrysler.”


Three stories making news across the Midwest today:

1. Midwest counties lead nation. Several counties in the Midwest are among the country’s biggest beneficiaries of increased employment and wages, according to new data released from the U.S. Bureau of Labor Statistics. Elkhart County in northern Indiana had the largest percentage increase in employment from March 2010 to March 2011 among the nation’s largest 322 counties, growing its workforce by 6.2 percent. Indiana’s overall employment increased 1.9 percent in the same time span. The next-largest increase belonged to Ottawa County in western Michigan, which grew at 4.7 percent. Peoria County, Illinois showed the largest year-over-year increase in average weekly wages, with a gain of 18.9 percent.

2. Illinois seeks Amazon taxes. Amazon.com has agreed to pay sales taxes in California. Officials are hoping that deal means the online retailer will agree to do the same in Illinois, according to a report in Crain’s Chicago Business today. The Illinois Retail Merchants Association has sent Amazon CEO Jeff Bezos a letter, saying “the tide is turning” and encourages the company to begin collecting Illinois sales tax immediately. Under the California agreement, Amazon agreed to go to Washington D.C. and lobby for national legislation that regulates how internet retailers should be taxed.

3. Big Three post sales gains. Strong sales of trucks and sport utility vehicles buoyed Chrysler in September, when sales rose 27 percent. The automaker led an impressive month for Detroit’s Big Three. Despite a struggling economy, General Motors posted sales gains of 20 percent and Ford’s sales rose 9 percent. “There is no double dip downturn going on around here,” Dodge brand president and chief executive Reid Bigland told The Plain Dealer in Cleveland. At General Motors, the Chevrolet Cruze continued to be the company’s best-selling car, although the sales of the Lordstown, Ohio-built Cruze dipped below 20,000 units for the first time in five months.


Kate Davidson

Help Wanted: Temporary manufacturing workers are in demand.

Here are four very bad words you hear a lot these days:

There.  Are.  No.  Jobs.

But it turns out, that’s not entirely true.  Yes, the manufacturing sector lost six million jobs last decade.  But now, staffing agencies that place temporary workers in manufacturing say business is booming.

To see for yourself, just walk up to an employment agency like Staffing Inc. in Grand Rapids, Michigan.  The first thing you’ll notice is an unusual sign on the door.  It reads: “Now Hiring.”  Then inside, you’ll hear this:

“You’ll be required to place the parts on a machine, press a button to activate the machine, and remove the parts to inspect them, okay?”

Tiffany Easlick is briefing a new hire, Katie Sherwood, on her new, temporary, post.

Sherwood is, “pretty excited.”  She says it only took a couple weeks to find a job.  She laughs, signs some paperwork, and asks about safety glasses.

Sherwood’s little giggle is a far cry from the steady drumbeat of dire job numbers we’ve all
heard.  Shannon Burkel is Vice President of Sales for Staffing Inc..  From her perspective:

Kate Davidson

Becky Hall and Shannon Burkel of Staffing Inc say hiring is off the charts.

“There are  tons of jobs!”

Burkel says the business of matching temps with West Michigan manufacturers is better now than it’s been for the last ten years.  Even better than before the economic crisis.

“We are a leading indicator,” she says.  “The first to fall and the first to climb out.”

Same goes for Stacey Bigelow’s firm on the other side of the state.

“We’ve doubled our staff in the last year.  I mean it’s nuts,” Bigelow says, “but it’s taking longer to find people.  You know, our job boards are full.  Every day, they’re full.”

Bigelow says her company, Advance Staffing Solutions, is on track to have its biggest year ever.  So what’s going on here?

Temporary factory workers are nothing new.  However, the current demand for temps is partly the result of massive layoffs during the economic crisis.  Some manufacturers cut deeply into their core staffs, so deeply that as hiring resumes, they’re really starting from the ground up.  Shannon Burkel says a lot of companies are now building up a buffer of temporary workers.

“The hopes are, with little bumps in the economy, they never have to reach into their core
staff again.  And go through that financial and emotional pain that they had to,” she says.

Plus a lot of companies are just skittish about making permanent hires while the economy
is so uncertain.  They want to see demonstrated skills and they want to know the work will last.  Burkel says that cautiousness is turning trial-for-hire into THE route to a permanent manufacturing job.

Sure, some companies may treat temps like commodities.  But already this year, about 400 of Burkel’s temporary workers have been hired permanently by companies like Beverlin Manufacturing in Grand Rapids.

Rick Watson is the company’s president; his business makes perforated tubing and other
sheet metal fabrications.  Watson always tries out potential hires as temps first.  He says it’s the best way to ensure a good marriage and avoid liabilities.

“A lot of companies are hiring all their prospective employees through temp agencies,” he
says.  “Not just what used to be blue collar.  Now it’s technical people, it’s professional
people, the full gamut of people.”

Kate Davidson

Rick Watson says working with potential hires as temps first makes a successful marriage more likely.

Finding that full gamut of employees is the real challenge.  Staffing professionals say there just aren’t enough people coming through the door with up-to-date technical skills.  Not enough experienced welders, not enough high end machine operators and repairmen.  Bigelow says she doesn’t care what the unemployment numbers say.  There’s a labor shortage.

“I think we’ve been pushing our kids to go to college for so many years that they’re not
in these apprenticeship programs or any of these trades,” she says.  “So these people are very hard to find.”

That’s a sentiment echoed by manufacturers across the region, and it’s a problem that
may persist even if job opportunities continue to rise. 

 

 

 

 

 

 

 


Three stories making news across the Midwest today:

1. UAW and Ford reach tentative deal. The United Auto Workers union has reached a tentative agreement with Ford Motor Co., announced Tuesday, that calls for $6,000 in signing bonuses and the creation of 5,750 new jobs at plants in the United States. Workers could vote on the agreement by the end of the week. “The American auto industry is on its way back,” UAW President Bob King said in a statement, adding the jobs will be added by the end of 2012. Crucial to the deal was consensus on entry-level wages of approximately $17 per hour. The tentative agreement means that Chrysler is the only automaker of the Big Three without a deal.

2. Coal at a crossroads. Coal produces nearly half the electricity used in the United States, but benefits associated with coal are outweighed by pollution and health problems that cause more economic harm than good, according to a recent study from the American Economic Review. Our partner station Ideastream begins a multi-part series today examining the economic impact of coal and its future in the Midwest. First up in the series: the natural gas boom has given coal added competition. Coal’s share of the nation’s electricity production was at its lowest level in more than 30 years through the first quarter of 2011.

3. Wisconsin announces microgrid project. On Monday, Wisconsin officials announced a new project that aims to make the state a national center for energy microgrids, according to the Milwaukee Journal Sentinel. By using energy storage devices and battery systems, microgrid “energy islands” maximize the use of energy from renewable sources, according to the newspaper, and could help if main power grids are disrupted. Several Milwaukee-area companies and the state’s four largest engineering schools are among the participants in the project.


Over the past decade, the Great Recession has perhaps punched Michigan workers the hardest.

Michigan was the only state in the country to lose population in that time span. More than 300,000 residents fled the state. Its peak unemployment rate of 14.1 percent ranks as one of the highest in the U.S. More than 1 in 5 residents in Detroit, its largest city, remain in search of work.

Michigan Gov. Rick Snyder

So it’s inexplicable to many in Michigan that one of the lynchpins in Gov. Rick Snyder’s plan to put people back to work is encouraging an influx of immigrants. Snyder touted those plans in an exclusive Dan Rather Reports segment that aired earlier this week.

“I think it’s important for our future,” Snyder told Rather. “We’ve been in a recession for a decade. How do we really reinvent ourselves? One of the keys to how we build ourselves is immigration.”

It’s been a relevant issue in the state’s past. One century ago, immigrants comprised 33 percent of Detroit’s population during its nascent boom years. For a more contemporary example, Snyder gazes beyond Michigan’s borders toward Silicon Valley, and notes 47 percent of its residents are foreign born.

“I am focused on finding more and better jobs for Michiganders,” he tells Rather. “Encouraging legal immigration for advanced-degree people is consistent with that. They’re job creators.”

A study from the Small Business Administration shows immigrants in Michigan are three times as likely as native-born residents to start businesses, and six times as likely to start high-tech businesses. Snyder, a Republican, would like to tap that entrepreneurial spirit.

Steven Tobocman, author of Global Detroit, a recent report that formed the foundation of  Snyder’s immigration policy, writes that 32.8 percent of the state’s high-tech firms over the past 10 years have been founded by immigrants, in a state where 6 percent overall are foreign born.

He’s an unlikely ally for Snyder. Tobocman served three terms in the Michigan House of Representatives, a Democrat representing Detroit’s southwest side.

“Nothing is more powerful for remaking Detroit as a center of innovation, entrepreneurship and population growth than embracing and increasing immigrant populations and the entrepreneurial culture and global connections that they bring and deliver,” he writes.

Many of the immigrants Snyder and Tobocman seek are already within the state’s borders. Approximately 23,000 foreign-born students currently attend the state’s colleges and universities, and the state spends “millions” educating them, according to Dan Rather Reports.

Visa restrictions and more lucrative opportunities elsewhere lure them away after graduation.

“It’s a great opportunity to keep our kids in a wonderful position,” Snyder said. “We already educate so many wonderful students from outside the country. Is there a way to help keep them here? … The other piece I want to do is talk to the communities that we have here that are already ethnic communities, and do they have outreach back in their countries to bring and attract people to Michigan. I think we can all win.”


Can Michigan add auto jobs — or is it destined to lose them to other states and parts of the country?

That topic is on the table Tuesday when Changing Gears joins Crain’s Detroit Business for a breakfast and practical policy discussion.

Senior Editor Micki Maynard will be part of a panel that includes Sandy Baruah, president of the Detroit Regional Chamber; Peter Brown, publisher and editorial director of Automotive News; Neil de Koker, president and CEO of the Original Equipment Suppliers Association, and Doug Smith, senior vice president of the Michigan Economic Development Corporation.

The event begins at 7:30 a.m. at The Henry (formerly the Ritz-Carlton Hotel) in Dearborn, Mich. Find more details here.


Dan Bobkoff

The face of advanced manufacturing? David Bourne of CMU's Robotics Lab sits in a Humvee being built by a helpful robot.

Back in June, President Obama came to Pittsburgh to tout something called Advanced Manufacturing. He created a group to work on it, made up of government officials, academics, and industry. The point, the president says, is to promote innovation, make the country more competitive. But, we wanted to know:

What is advanced manufacturing anyway?

“Oh goodness,” said Mike Molnar when asked just that. “That’s one of those questions I should probably have a ready answer to.”

Molnar is the Chief Manufacturing Officer at the National Institute of Standards and Technology. Advanced manufacturing is kind of his focus. But as I found, most people can’t agree on what it is.

It can be about new ways of making things, says Erica Fuchs of Carnegie Mellon University.

“It can be robots; it can be 3D printing,” Fuchs said.

Or, maybe it’s just companies building high tech products for newer industries.

“It could be just that brand new battery company, that brand new sensor company,” Fuchs added.

Some like Ned Hill of Cleveland State have a more flip answer.

“Advanced manufacturing is any manufacturing company that’s survived over the last twenty years,” he said.

Molnar of NIST took a second to come up with his own definition.

“Advanced manufacturing is the ability to make something nobody else can,” he said.

The President offered this definition back in June.

“It means how do we do things better, faster, cheaper to design and manufacture superior products that allow us to compete around the world” Mr. Obama said.

However we define it, advanced manufacturing has become a priority for Mr. Obama. He was speaking in front of a yellow robot at Carnegie Mellon University. The occasion was to announce a new partnership.

“All with one big goal,” he said. “And that is a renaissance of American manufacturing. We’re calling it AMP, A-M-P, the Advanced Manufacturing Partnership.”

The point says the administration, is to find and support new technologies that could create jobs and make American manufacturing more competitive. AMP is made up of engineering schools like Carnegie Mellon, plus industry and government officials. They’re having their first meeting this month.

Dan Bobkoff

This robotic arm has both a welding torch and a projector to help human workers know where to place bolts and perform other work.

And, when I visited Carnegie Mellon in Pittsburgh recently, I could see why the President came here to talk about the future of manufacturing.

“At the end of this robot is a projector!” said David Bourne, as he showed me the frame of a military-grade Humvee. He’s a principal scientist at CMU’s Robotics Institute.

An orange, robotic arm equipped with a welding torch, and, yes, a projector sits idly by. But this robot has no intention to replace humans. Bourne says it has a nobler mission: it’s going to help the human workers do what they do better.

“If we can get robots and people to work together,” he said, “then the economies come back into line because it’s easier to program robots to do what they’re good at, and we can project any kind of information onto the product in the right place so the person can go over and tighten something in exactly the right spot.”

Robots still don’t have opposable thumbs.

This friendly robot gets funding from DARPA, the same part of the Department of Defense that helped create the internet. And, like how the internet has grown to pervade nearly all aspects of our life, Bourne sees big implications for his technology.

“We’re going whole hog across the product spectrum, Bourne said. “I’m doing this kind of research for everything from cell phones, to this DARPA project for military vehicles, I’m working with Boeing for airplane wings. Same technology, different uses.”

And, that’s what this advanced manufacturing partnership is supposed to be about: helping emerging technologies that can help lots of industries and companies. Bourne thinks more manufacturers will switch from mass production to mass customization. That means churning out small batches of highly customized products, instead of thousands upon thousands of a single design.

The idea is that if America can get good at this high end manufacturing, and push into new materials and technologies, we can continue to have high paying jobs, even if it’s not as many as manufacturing’s heyday.

“It’s instead most likely going to be something where there are fewer people on the manufacturing line itself, but we need those people in order to have the jobs that are in innovation and for our country to continue to stay ahead,” said Erica Fuchs of Carnegie Mellon.

Fuchs’s specialty is engineering and public policy. And, she’s found that when we lose manufacturing, we also lose research and development. She says that’s because they go hand in hand. The person designing something often needs to walk next door to the factory to make sure it all comes together.

“The engineer needs to be there to figure out why the oven isn’t working today,” she said.

In June, the President’s Council of Advisors on Science and Technology said [PDF link] that the US is losing the ability to make things invented here, like LED lights and components for TVs and smartphones. And, something else important: robots.

David Bourne at Carnegie Mellon’s robotics lab noted that the robot he showed me actually came from Switzerland.

“We’ve already done a pretty good job losing the robotics industry,” he said. “We haven’t lost the software part yet. It shows you just how fragile this is. If we fall asleep—this is a crossroads for American manufacturing. If we miss this one, it could be a generation before we have another opportunity like this. This is a big deal.”

And, that’s why those who care about making things are closely watching the President’s Advanced  Manufacturing Partnership, hoping something comes out of it that will make the Midwest and America a manufacturing power again.


Members of the Local 602, employed at the Lansing Delta Township Assembly plant above, voted against ratifying a new contract between UAW and General Motors. (Photo courtesy GM).

DELTA TOWNSHIP, Mich. – Auto workers at the Lansing Delta Township Assembly plant make some of General Motors’ most popular vehicles.

The GMC Acadia, Chevrolet Traverse and Buick Enclave are all produced inside this 3.4-million square-foot facility on the outskirts of Lansing, which is Michigan’s state capital.

In August, when GM announced an 18 percent sales increase from 2010, GMC led the turnaround with a 40.3 percent increase. Chevrolet had gained 15.8 percent.

So when contract negotiations began last month, the plant’s 3,430 hourly workers expected they’d be sharing in the company’s improved position. But when they saw the proposed deal between the United Auto Workers and GM, many members of UAW Local 602 here felt jilted instead.

They rejected the deal — a rarity for a contract approved by two-thirds of GM workers nationwide.

“The concessions we’ve made were supposed to be concessions, and with the stroke of a pen, they’ve made it all permanent,” said Jan Ward, a long-time employee who voted against the contract. “We did whatever we had to do to make them viable. Now they’re more than viable, and they just snubbed our nose, and said, ‘Too bad for you.’”

The majority of workers here agreed. Among Local 602 members, 66 percent of production workers and 57 percent of skilled trade workers voted against the contract.

In national voting, the percentages were nearly reversed: Sixty-five percent of UAW production workers and 63 percent of skilled trade workers approved the agreement, which was ratified Wednesday. Of the 81 UAW locals participating in the voting, Local 602 was one of only three to vote against the contract.

As first-shift workers at the Delta Assembly plant departed Wednesday afternoon, they cited a variety of reasons for the local departure from national sentiment. Some said concern over local union issues had spilled into voting on the national vote. (Local 602 president Bill Reed could not be reached for comment).

But the most-cited reason for the negative swing in Lansing was a feeling by veteran workers that they gained nothing from the contract.

“We’re really disappointed that GM didn’t give more back to us after all we’ve given to them,” said Larry Larner, employed by the company for 35 years. “They’ve always said they don’t like the adversarial approach. If they don’t like it, why don’t they come to us and say, ‘Look, we realize you gave up a lot, and we’ll try to give back to you.’”

Veteran workers got no raises, although there are raises in the contract for recently hired workers, known as “two-tiers.” Cost of living allowances, which were lost as part of the GM bailout, remain a thing of the past.

Larner said he reluctantly voted in favor of the contract. After years of union concessions in bargaining, he said, “We managed to keep what we had.” But his weariness in the face of those continued retreats mirrored the demeanor of many workers who voted no.

“We’re getting beat up,” said one 30-year employee who requested his name be withheld. “I don’t believe the union bargained in good faith. They’re looking out for themselves. GM is looking out for itself. And we’re not getting any help from either side.”

Veteran workers, their numbers diminishing, felt squeezed.

In 2005, GM had 110,000 hourly production workers, according to a presentation by CEO Daniel Akerson to Wall Street analysts Wednesday. Today, GM has approximately 49,000 hourly workers, less than half from six years ago.

The UAW said in a written statement the new deal will create 6,400 new jobs in the United States. But under terms of the contract, up to 25 percent of GM’s workforce can now be comprised of “two-tiers,” entry-level workers who will make about $8 less per hour than veteran counterparts. Now, two-tiers comprise 4 percent of the overall workforce.

Veteran employees at Delta Assembly fear a gradual wave of two-tiers, a slide in their own standard of living and a reduced vision of whatever comes next.

“ I don’t see where we gained anything in this, really,” said Tammy, a 26-year veteran who only gave her first name. “I thought maybe they’d get our cost of living back for us. That didn’t happen.”

She continued. “It only catered to the entry-level workers. The union let them agree to it. So where do you think we’ll be in a few years? We’re going to be dinosaurs.”

 


GM logo. Photo by Chris via Flickr.

General Motors gave some new details today on its just-ratified agreement with the United Auto Workers union. Among them: up to 25 percent of its workforce could be “two-tiers” — new hires at lower rates than veteran workers.

Changing Gears reporter Kate Davidson profiled two-tier workers last year. Right now, they’re only 4 percent of GM’s workforce, but the auto company clearly has plans for more of them.

There’s a caveat, though. In order for GM to hire more workers, auto sales have to pick up, company executives said during a conference call with Wall Street analysts. And it isn’t promising to hire the same number of workers as it sees sales go up: it will study its staffing needs and hire accordingly. 

The new contract runs through 2015 and caps the number of “two-tiers” at 25 percent at the end of the contract. It calls for the new hires to get a raise to nearly $20 an hour by 2015 (veteran workers are paid about $28 an hour now).

Other GM highlights:

– The number of people working in its U.S. factories has dropped sharply. GM had 110,000 hourly production workers in 2005, according to its presentation. In 2008, the year before it filed for bankruptcy production, GM had 78,000 U.S. workers. Now, GM has just 49,000 hourly workers, or less than half what it had six years ago.

– For the first time in 58 years, GM does not expect its pension expense to rise under the new contract. One reason is that newly hired workers will not be covered by GM’s traditional pension plan; they will receive a 401(k) retirement program instead.

– GM says it still has 700 workers laid off from their jobs. They have first dibs on jobs at GM plants, including the workers it plans to hire when it reopens its factory in Spring Hill, Tenn. Once those workers have been offered the chance to come back, then GM will hire new workers, including temporaries.

Read more about the GM contract in The New York Times.


General Motors became the first domestic automaker to reach an official agreement on a new contract with members of the United Auto Workers union Wednesday afternoon.

The UAW said in a written release that 65 percent of production workers and 63 percent of skilled trade workers voted in favor of the agreement, which had been tentatively agreed upon Sept 16. A four-year contract provides a wage increase for entry-level workers, and goes into effect immediately.

The agreement would create 6,400 jobs in the United States, the release said.

“When it seems like everyone in America is getting cuts in benefits and paying higher co-pays and deductibles, we were able to maintain and improve on our current benefits,” said UAW vice president Joe Ashton.