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Will the South rise again?

October 1, 2005

4 Min Read
Will the South rise again?

When Toyota announced that its new Rav 4 production plant would go to Ontario in spite of generous proposed subsidies from Alabama and Mississippi, there was widespread speculation that the American South had lost the plant because of a skilled-labor shortage.

Built up from virtually nothing, Detroit South-as the automotive manufacturing industry and its supporting suppliers that sprung up in southern U.S. states have become known-has exploded in recent years at a pace that has been hard for local labor, with virtually no prior automotive manufacturing experience, to support. In Alabama alone, the industry employs 86,000 with $3.3 billon in payroll, according to the Alabama Automotive Manufacturers Assn., with 13 new plants built in 2002 and 32 built in 2003. As of June 13, 5.6 million cars had been made in the U.S. in 2005, with 1.4 million coming from foreign automakers that have almost exclusively set up shop down south.

Now, as Hyundai opens its new plant in Montgomery County, AL, as Toyota plans a $1 billion facility in Texas, and as Mercedes and Honda double their output in Tuscaloosa and Lincoln, AL, respectively, further strain is created, and it''s trickling down to plastics suppliers moving to the region in a supporting role.

Scott Paulson, president of plastics training business Paulson Training (Chester, CT), has seen the expansion, and opportunity, for plastics first hand.

"The growth down there has been nothing short of remarkable in the past five years," Paulson says. A relatively reliable metric for plastics activity, Paulson says the company''s tracking of revenue per state has seen Michigan fall from the top spot and a host of mid-Atlantic states like Tennessee, North Carolina, South Carolina, and Kentucky fill the top 10; several years ago they didn''t even register.

"I would say our business has easily doubled there in the past three or four years," Paulson says. "It''s come online and more is coming online." Paulson guesses that for every large OEM assembly plant, at least 10 to 20 suppliers spring up. The shops he has visited aren''t small-Tier Twos coming in with around 40 injection molding machines and more than 100 employees-and are draining a labor pool that in terms of plastics expertise, was shallow to begin with.

Good help is hard to find

"The lack of skilled labor has been a key issue," Paulson says. "I think what we''ve found is a lot of current workers actually come from a manufacturing background, but not necessarily plastics. So they''re used to the environment, but not so much the actual techniques, safety considerations, processing goals, and efficiency."

Rod Groleau, founder and chairman of RJG Inc. (Traverse City, MI), which promotes and trains companies in Decoupled molding where process monitoring tracks processes from the perspective of cavity pressure, says slightly more than a third of his business comes from automotive, but that across any market, the major problem is the same.

"[Molders] are looking for people who know how to think and know how to develop new analytical skills," Groleau explains, "and that''s a big challenge. You have a lot of people who work in factories who can''t do basic math like finding the area of a circle or plotting a graph, so you''re doing an awful lot of remedial work just to get them to that point, let alone run a machine or something."

Dennis Gros, founder of plastics employment headhunter Gros Plastics Recruiters (Nashville, TN), says his company focuses primarily on plant-manager-level workers, but a shortage among lower ranks on the shop floor isn''t unique to plastics.

"I think that there just aren''t enough people training for those jobs," Gros says. "I don''t know how you fix that."

Still, since the initial Saturn plant in Tennessee opened in the early 1990s, and as the arrival of early adopters like Mercedes and Nissan grows, the labor pool fills to levels that can sustain further growth. "When there were few, or not any, automotive plastics suppliers in the South," Gros says, "there was no base of available talent. The first plant comes in and has a real challenge in training people. Second plant comes in, and then maybe there''s somebody who wants to change jobs. Third plant comes in, and now you have kind of a base of talent."

But as the availability of local talent grows, a new challenge can arise-retention.

"The other side of training is, `I get them all trained and then they go down the street to the next guy''s place,''" Groleau says. "I always stress you have to first create the culture that will retain people, because if you''re a revolving door, it''s just a matter of time before you''re going to be out of business."

Tony Deligio [email protected]

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