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News
July 18, 2016 02:00 AM

Wage discontent simmers at auto suppliers

John Irwin
Automotive News
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    McAlinden

    Automotive suppliers are finding themselves in the crosshairs of wage issues as the industry continues to expand and seek lower costs.

    But whether workers can do anything about it is far from clear.

    Wages at U.S. auto suppliers, after adjusting for inflation, have declined by more than one quarter since 2003 to an average of about $20 per hour, according to data supplied by the Center for Automotive Research in Ann Arbor, Mich.

    The result? Simmering discontent among a work force that feels as though it's being left behind by a booming industry, says Sean McAlinden, chief economist for CAR.

    The industry has moved toward lower-cost solutions globally, including a long-term shift of North American vehicle and parts production from the U.S. to Mexico.

    U.S. wage frustrations also are providing fodder for this year's presidential campaign remarks. Donald Trump has claimed higher wages will be an outcome of his immigration reform proposals, while Hillary Clinton has called for an increase in the minimum wage.

    Last month, workers at a Creative Foam Corp. plant in Dayton, Ohio, petitioned the National Labor Relations Board for a union election, saying they are "fed up with fast-food wages" that are capped at $12.75 per hour, according to a press release from the UAW.

    In March, nonunionized temporary workers at axle-maker Detroit Chassis in Avon, Ohio, pushed to join the plant's UAW-represented work force in order to receive a wage boost.

    "The major beneficiary of the decline of manufacturing in the United States or Canada or the U.K. has been the developing world," McAlinden said. "Wages there, as low as they look, have gone up" while U.S. wages have declined, he said.

    McAlinden says he doubts wages ever will significantly rise, saying global economic forces have made it difficult for U.S. workers to demand higher wages without risking jobs being shipped away.

    McAlinden says a variety of factors continue to make Mexico appealing to automakers, including average auto wages below $6 an hour and access to nearly half of the global marketplace via free trade agreements. As automakers move south, so do suppliers that provide parts that can't be transported easily, he says.

    Some parts suppliers could find some luck, though, he says: Workers at plants supplying automakers with parts that can't be transported long distances — and thus are stuck in close proximity to U.S. assembly plants — could demand higher wages and be successful. Such parts include headliners, seats and large stampings.

    "As long as we have assembly plants in the United States, we'll need parts factories near them because some parts can't be shipped from far away," he said. "There are certain things that can't go very far, and that's probably where you have an opening for a higher wage."

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