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Salaried Automotive Industry Workers Face the Ax

September 3, 2008
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White-collar automotive jobs at carmakers and suppliers are disappearing by the thousands.

Salaried auto workers, like their blue-collar counterparts, are being cut because of  collapsing North American vehicle sales and the consolidation of engineering into fewer centers with global responsibility.

Each of the Detroit Three has announced significant white-collar job cuts this year, totaling about 8,400 positions.

Several large suppliers also are cutting salaried workers to deal with the sales slump. They include Delphi Corp., Lear Corp., BorgWarner Inc. and American Axle & Manufacturing Holdings Inc.

But there's more to the cuts than just bad U.S. business, says Dave Cole, chairman of the Center for Automotive Research, a think tank in Ann Arbor, Michigan.

U.S. engineers are losing out as Ford Motor Co. and General Motors locate global platform engineering for their midsize cars in Europe and subcompacts in Asia, Cole said.

Ideally, North American engineers would pick up work from overseas for large cars and light trucks, he said. But those are the segments suffering the most now from a consumer shift to more fuel-efficient small cars, Cole said.

Even BorgWarner, one of the most profitable of the Detroit-based parts suppliers, is cutting 1,000 North American jobs, including 220 salaried positions.

The company is not only responding to the North American sales environment but also trying to get ahead of potential tougher times. BorgWarner, which makes turbochargers and engine and transmission management systems, is experiencing flat revenue in North America and increases in Europe and Asia.

"We have to make sure we're right-sized for the business that we have here," said spokesman David Peterson.

Market conditions prompted Delphi to announce 600 U.S. salaried job cuts in its electronics and safety division centered around operations in Kokomo, Indiana, said Delphi spokesman Lindsey Williams.

Dana Holding Corp. announced in late July that it would lay off 600 salaried workers in North America, or about 20 percent of its salaried North American work force.

A few weeks later, during its August 8 earnings call, company executives announced that 3,000 layoffs, including the 600 reported earlier, would take place by year’s end. Axle maker Dana did not break out the number of salaried and hourly worker cuts.

"Dana is scaling back operations to match market demand," a spokesman said.

A supplier vice president who asked not to be named said his employer has been selective with salaried cuts. The company cut headcount in departments supporting North American lines of business but spared salaried employees working on global platforms for the same products, the source said.

Last week, Linamar Corp. announced plans to lay off 400 to 500 workers, after a cut of 300 to 400 employees earlier this year. A spokesman for the Canadian supplier blamed industry production cuts. He wouldn't say how many of the layoffs would be salaried workers.

The layoffs come despite double-digit earnings growth reported last month for the powertrain-products maker. White-collar employees make up 40 percent of Linamar's workforce.

Filed by David Barkholz and Robert Sherefkin of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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