Sarepta is quintessential small-town America.
It's a one-stoplight town in northwest Louisiana with a population of 877, complete with a single post office and a drive-in burger joint.
But it's Sarepta, and small towns across the South just like it, that are creating a labor nightmare for Southeast Michigan's automotive suppliers.
As labor needs transition from low-cost, low-skilled workers to an educated, highly skilled labor force, auto companies are struggling to persuade this new type of employee to live and work in towns devoid of big-city amenities.
“These U.S. plants were established to be close to our customers and to utilize the work ethic of small farm towns, hard-working and reliable people,” said Frank Macher, CEO of Auburn Hills-based Continental Structural Plastics LLC. “As we come up with new means of manufacturing, more automation, more sophistication, the job requires a person that's become more technical than these standard hardworking individuals.”
CSP, a supplier of composite door panels, trunks and other equipment to automakers, employs 175 at its plant in Sarepta -- about 20 percent of the town.
That plant is critical to CSP's supply of products to automakers in the region, and skilled labor is essential, Macher said.
The makeup of its plant workforce is 10 line workers for every skilled worker, but that equation will get close to 1-to-1 in the future, Macher said.
“The interface between chemistry and mechanics is more and more important for us,” Macher said. “This is no longer a wrench-and-nut business; everything is totally interrelated from process to product, and we're recognizing the sensitivity of having skilled people in all phases of production.”
Auburn Hills, Mich.-based TI Automotive Ltd. also struggles to fill positions at its plants in Caro and Cass City in the Michigan thumb, said Kirk Fournier, director of advanced technology.
“The pay rates aren't comparable to more suburban or city locations, and you really have to find the people who want this type of lifestyle,” Fournier said. “Maybe this is where they are from and they want to come back home, or they prefer a rural existence, but this is not the norm in our industry right now.”
Migration patterns and gaps
The inability to secure labor talent in small rural towns is a symptom of the overall trend of people migrating back to metropolitan epicenters.
In 2013, there were 269.9 million people living in, or near, U.S. cities, up by 2.3 million over 2012, according to U.S. Census Bureau data.
Young professionals and retiring baby boomers are driving the boom toward cities, according to William Frey, a demographer at the Brookings Institution, a Washington, D.C.-based think tank. Frey, in a USA Today interview in March, called the trend a “180 degrees” shift from the rush to the exurbs prior to 2010.
The number of college-educated people age 25 to 34 living within three miles of city centers has risen 37 percent since 2000, according to an October report by Portland, Ore.-based think tank City Observatory.
Kimberly Rodriguez, principal in the advisory practice at KPMG LLP in Detroit, said this issue has been exacerbated by an overall manufacturing labor shortage.
“This is not limited to a big company or small company and isn't just a U.S. issue,” Rodriguez said. “There's need for technical talent across the board, in logistics, engineering, computers, etc., and it's starting to stress management and limit some production.”
The skills gap remains an almost universally shared issue for U.S. manufacturers.
Nearly 98 percent of CEOs say the skills gap is a problem for their companies, according to a survey released last week by nonprofit Change the Equation.
The transportation, trade and manufacturing companies surveyed by the organization represent an employment base of 3.1 million -- approximately 2 percent of the entire U.S. workforce.
Change the Equation is a CEO-led effort to improve science, technology, engineering and math education formed in 2010 and supported by President Barack Obama.
Recruiting plans
Plymouth Township, Mich.-based Freudenberg-NOK Sealing Technologies recognized the issue coming out of the recent recession and went on the offensive.
The automotive sealing component supplier began in 2012 engaging deans at universities with strong engineering programs as near to its rural plants as possible, said Ari Gelberman, a recruiter for the company.
For instance, Gelberman has built a relationship with two deans at the University of Wisconsin-Stout in Menomonie, Wis. The university, which has a strong plastics engineering program, is only a few hours from Freudenberg-NOK's plant in Necedah, Wis., population 923.
“We've been able to find ‘A' students who want to be close to home and close to family,” Gelberman said. “We've had success because we've been proactive.”
CSP is also getting creative to combat the reluctance of the skilled workforce to move to rural plants.
The composite plastic component supplier is hiring engineers to work at those plants — which also include locations in Indiana, Ohio and North Carolina — on the promise that after two or three years, they can transfer to the Michigan headquarters or its plants in Spain or China. These have always been options, but are now part of marketing itself to new recruits.
Macher said the supplier is also considering other incentives, like paying premium wages to those skilled workers who transfer to its small-town plants or providing company-paid trips or other entertainment options.
“We have to entice a skill set to an area where none exists,” Macher said. “This has become a significant endeavor.”
CSP, like many other suppliers, is looking at apprenticeship programs to spur resident small-town workers into higher-skilled jobs.
Having an international presence is a bargaining chip, said Ted Duclos, president of Freudenberg-NOK.
“Even if someone is at our plant in Necedah, it's likely they are going to wind up on business trips to Japan or Germany.” Duclos said. “Employees won't just stay there; they will have opportunities to see the rest of the world.”
Rural collapse?
While the experts remain optimistic about placement, the fate of rural plants and the small towns that host them is grim.
