There’s no sugarcoating this one, folks. Many “down-river” Michigan platers based in the Detroit and surrounding areas are having a tough time these days. That’s due in large measure to the plight of several major auto manufacturers (namely GM, Ford, and Chrysler) and the trickle-down effect that their respective predicaments are having on participants across the supply chain. You’ve seen all the ominous headlines: “GM To Cut 30,000 Hourly Jobs and Close 12 North American Facilities by 2008”; “Ford Motor Co. Plans To Trim 30,000 From Its Work Force”; “DaimlerChrysler To Cull 6,000 Employees by 2009.”
The culprits are numerous and well documented. Auto industry analysts cite everything from costly incentive programs and bloated inventories to high operating overhead, escalating health-care expenses, and fierce competition from foreign firms and “transplants” alike. Naturally, finishers’ fates are tied to some of those ailing car makers—companies that are exhausting creative energies in their quest to find ways to compete and remain profitable in the face of encroachments on their market share.
“It’s not just us—a lot of the finishers here are in the same boat,” one plating plant general manager told me. While he pointed to the negative impact of more and more finishing work moving offshore (namely to China), he said there are other market factors at work. “Everything costs more money: chemicals; energy and utilities; employee insurance coverage; shipping and trucking charges—ship too far and the margins fall right out of the job.”
If those issues aren’t enough, many finishers are also faced with a declining customer base in terms of the sheer number of accounts. One plater told me how it was once commonplace to draw walk-in, drop-off orders from local parts suppliers and specialty manufacturers. But over time that steady, small-run, high-frequency customer base has eroded as nearby anchor businesses shut down or skip town.
So, what’s the Michigan plating and finishing community to do? Some are responding by seeking business across state and country lines, namely Ohio, Chicago, and even Canada. Others are pursuing finishing certifications for transplants such as Nissan, Honda, and Toyota. Even a few are chasing finishing work outside the automotive industry. Then there are those who are just waiting it out.
“We’re going to keep working hard and hope things turn around—that’s all we can do,” said a co-owner of a 50-year-old plating operation with a hard-earned reputation in the automotive parts arena. “It would be a shame for Detroit to lose that business. There’s just no better place to build cars.”