Auto industry’s change is deeply felt
Change is in the air in the automotive industry in more ways than one and the effects will be long-lasting in many ways.
In June 2014, I toured GM’s Orion, Mich. manufacturing plant for a cover story we ran in our 2014 Mid-Year Report. Shuttered as part of the 2009 GM bankruptcy, Orion was reborn, with new union rules, a new pay structure, and a new commitment to innovation and automation. At that time, GM was suffering quality issues that were spawning lawsuits and recalls.
From Aug. 2013 to July 2014, GM recalled more than 27 million vehicles built between 1997 and 2014, and the company faced a massive corporate scandal in early 2014 when 13 deaths were linked to faulty ignition switches in GM vehicles. The congressional investigations and public outcry that followed weren’t lost on the plant management and workers at Orion, but they told me at the time they were embarking on a different way to manufacture cars.
“I think we had to help them understand the bigger picture of our challenge of competitively building the first small car in the U.S.,” said plant manager Steve Brock at the time. “We had to help them understand how we were going to do that together and why change was important.”
Change was the central theme to GM’s announcement on Nov. 26 that it would shutter five North American manufacturing plants, stop the production of several car lines across GM’s portfolio, and refocus its efforts on autonomous, electric vehicles. It followed a similar proclamation earlier in the year from Ford, which announced it would end the manufacturing of almost all automobiles to instead focus on trucks, utility vehicles and commercial trucks.
These moves will first put auto plant personnel out of work and undoubtedly will cost jobs for the Tier 1 and Tier 2 suppliers for these plants. The ripple effect across manufacturing in these regions, and especially in Michigan, will be felt for years to come. The first wave feels like a tsunami.
These changes are driven by consumer preference—SUVs simply are more popular today than the family sedan on which the auto industry built its reputation. It also is driven by changes in technology and the enormous potential for both autonomous vehicles and electric vehicles.
As the announcement was coming from Michigan, I was in Munich, Germany, listening to a presentation from Siemens’ partner NXP, the world’s largest chip manufacturer for the automotive industry. The NXP officials described in great detail how the sensors built into autonomous vehicles would create a safer, more organized and more personal driving experience in the future.
GM already has committed to that future. Its new slogan, announced as part of the plant closings and product line reduction, is “Zero Crashes, Zero Emissions, Zero Congestion.”
But that’s the future. The present will see job reductions in both the front office and on the plant floor. The human cost will be extensive, especially just before Christmas, and even at a time when other manufacturers are seeking the kinds of plant-floor skills these workers will take with them from GM, these are wrenching decisions and painful choices for management.
Change can be painful. When GM closed Orion after the bankruptcy, those workers felt that pain and loss. When it reopened, it was under a set of work rules unique to both GM and the United Auto Workers union.
Today, Orion remains an example for GM of how change looks after a while. Orion survived the massive cuts announced by GM. In fact, a Detroit News article from May detailed how Orion has been building the Chevrolet Bolt electric vehicle since 2016 while the company has invested in the plant’s automation and tooling.
There is tremendous nostalgia about the American automobile. Detroit made more than cars for many families in the Baby Boomer generation. The automobile gave us autonomy and freedom. We could go as far as a gallon of gas could take us.
The announcements from GM and Ford this year, and the changing marketplace for automobiles, reminds us again that auto manufacturing is a business, and that business can be cold and fundamentally unfair. It also is a changing business in a changing world.