A volatile North American auto industry is continuing to shake up employment levels for suppliers, with both temporary layoffs and permanent staff reductions.
The world's two largest suppliers — Delphi Automotive Systems and Visteon Corp. — combined to place more than 10,000 hourly workers on temporary layoff the week of Jan. 22, with more rolling cutbacks planned for the weeks and months ahead.
At Textron Automotive Co. Inc., 400 salaried employees are packing up, part of a 3,600-person staff reduction across parent corporation Textron Inc. in Providence, R.I.
"Tough situations demand tough actions," Lewis B. Campbell, Textron Inc. chairman and chief executive officer, said in a Jan. 23 conference call with stock analysts.
While suppliers said they expect carmakers to settle into a predictable pace within a few months, shutdowns and reduced sales are likely to continue hitting suppliers through the first quarter, Campbell said.
Automakers launched a series of their own plant closures in December in an effort to slow production and bring North American inventory in line with consumer purchases.
In addition, DaimlerChrysler AG is slated to disclose plans for a restructuring of its Auburn Hills, Mich.-based Chrysler unit in late February, which could result in long-term closures for some facilities.
Even temporary shutdowns force parts producers to slow their factories, Campbell said. Auto suppliers announce temporary layoffs at the end of each week for the following week — once they receive word from automakers about their production plans.
"It's all based on our customers' production schedule," said Visteon spokeswoman Carly Lamprecht.
The Dearborn, Mich.-based auto supplier placed 6,000 of its workers on a one-week layoff starting Jan. 22. Competitor Delphi of Troy, Mich., had 4,300 workers out for the week.
"When our customers take volume down, we have to respond," said Delphi spokesman John Pekarek.
Troy-based Textron Automotive has had short-term shutdowns to match automakers' schedules. The company also is cutting its automotive salaried staff by 10 percent worldwide by the end of January.
About half of the total 3,600 corporate job cuts — affecting 7 percent of the total head count in Textron's manufacturing sectors — will have taken place by mid-2001.
The corporation announced plans to restructure in September but released further details during the January conference call. Textron is taking a conservative view of the North American auto industry, predicting an even bigger slowdown than most automakers expect.
While the bulk of suppliers and carmakers anticipate production of about 16 million cars this year in the United States, Canada and Mexico, Campbell said his company is planning on 15 million to 15.5 million units. The industry produced more than 17 million passenger vehicles in 2000.
"We obviously have a lot of work to do to offset what will surely be a tough year," he said.
The slowdown also will affect Textron Fastening Systems, which includes divisions supplying the auto industry, mobile telephone and other commercial customers.
The unit has spent the past six years expanding its market base via acquisition, bringing annual sales to more than $2 billion, from $400 million in 1994. It bought three injection molders last year alone to supplement its presence in the mobile telephone market; now it is closing one of those plants.
A 75-employee, five-press operation in Naples, Fla., will close by mid-March, with production moving to a Chicago facility. The plant was part of Advantage Molding and Decorating Inc. of Mount Prospect, Ill., which Textron purchased in June.
"We have successfully rolled up a very significant Fastening Systems business, and now we have to integrate it, remove costs and expand market share," Campbell said.
Plastics also will play a part in Textron's pursuit of nonautomotive businesses, he noted.
Its aircraft division, including Bell Helicopter, will make investments to advance its sales. Aircraft business makes up about 32 percent of Textron's annual sales, while automotive contributes 25 percent.
"We're continuing to retool our factories to convert from sheet-metal technology to the advanced, state-of-the-art composite technology that's so important to our future," Campbell said.