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Auto, truckmakers investing nearly $1.8B in Ohio

Honda, Navistar among local businesses improving local plants and increasing production.

Auto manufacturers have poured nearly $1.8 billion into Ohio plants recently, adding jobs in an industry that employs 21,000 Ohioans and is rebounding from big losses during the Great Recession.

Experts attributed the new investments to several factors — increasing demand from consumers, recent union contracts, and streamlined manufacturing and distribution processes that make it more cost-effective to produce vehicles and parts in the state.

The rebounding auto industry also benefits companies that produce and supply parts for the automakers, leading to additional jobs and investment.

In the past three years alone, recent announcements have included:

• Honda plans to spend $70 million next year for a Performance Manufacturing Center in Marysville to produce the Acura NSX supercar. Honda has also announced investments that include $481 million and 200 jobs at its engine plant in Anna, $87 million and 150 jobs at the Marysville Auto Plant, $181 million at the East Liberty Auto Plant and $235 million and 100 jobs in Russells Point.

• Ford Motor Co. decided last month to invest $500 million and add 300 jobs at its Lima Engine Plant. The facility will produce Ford’s new 2.7-liter EcoBoost Engine for the 2015 Ford F150. In February last year, the company also announced it will invest about $200 million and add 450 jobs at its Cleveland Engine Plant to meet demand for the 2.0-liter EcoBoost engine.

• Navistar closed its facility in Garland, Texas, last year and moved production to a plant in Springfield and Escobedo, Mexico. The company also hired a new plant manager in Springfield and spent about $13 million for infrastructure improvements, as well as new tooling and quality systems. Navistar will also spend about $15 million in improvements at the paint facility in Springfield. Those projects are expected to be completed by later this summer.

• General Motors announced a $14 million investment into the Parma Metal Center in Ohio this year for steel production.

The recession cost Ohio thousands of jobs, said James Rubenstein, a geography professor at Miami University who has written several books on the auto industry.

But along with the federal government’s restructuring of GM and Chrysler, the recession forced the auto industry to pare down the number of production facilities and become more efficient, he said.

As the economy has recovered in fits and starts, he said, production of vehicles has increased dramatically and the industry as a whole is more profitable.

“By pulling a large amount of capacity out of the system, everybody now can make money,” Rubenstein said. “It’s pretty much supply and demand 101.”

Ongoing challenges

Despite the recent investments, the auto industry still faces challenges, including with recalls. General Motors recently recalled millions of vehicles after a faulty ignition switch led to more than 30 crashes and has been linked to 13 deaths. The ignition switches can be accidentally turned off if they are attached to a heavy key ring, among other problems.

Ohio has a long history in the auto industry, but lost tens of thousands of jobs in auto manufacturing at the height of the Great Recession. Just a decade ago, the auto industry provided jobs directly for close to 31,000 Ohioans, according to information from the Bureau of Labor Statistics. But that plummeted to only about 17,000 workers in 2009.

The number of jobs still doesn’t come close to matching the figures from a decade ago. But recent statistics from the BLS shows the industry has rebounded to about 21,000 jobs in Ohio.

Part of the reason the number of jobs hasn’t matched the steep rise in production is that auto manufacturers are much more efficient than they were a decade ago, Rubenstein said. However, he said the industry overall is a bright spot in the economy, and jobs will likely increase as the economy continues to recover.

“The headline is that auto manufacturing is increasing in Ohio,” Rubenstein said. “It is not translating into a huge growth in jobs. What we’re seeing is a bit of a recovery in jobs from the bottom in 2009, but this is part of an industry-wide trend that production is up a lot more than job totals because the car companies and the parts makers are a lot more efficient than they were before the crisis.”

Increased demand, increased efficiency

At Honda, recent investments across North America are part of an effort to meet increasing demand, invest in new technologies and make current facilities more flexible and efficient. The company, which employs 14,000 workers in Ohio, reached record production levels in Ohio in the past year, said Ron Lietzke, a spokesman for the company.

At its Marysville plant alone, Honda produced more than 492,400 vehicles in 2013, a 12 percent increase from the previous year. Honda also now ships more American-made cars from the U.S. than it imports from Japan.

Honda’s recent investments have been driven by a number of factors, Lietzke said. That includes an improving economy, pent up demand from customers looking to replace older vehicles, and the need to improve facilities to make them more efficient and implement new technologies into vehicles.

“We’re looking at efficiency and cost-competitiveness,” he said. “We’re looking at environmental aspects as well as manufacturability and making processes as easy as possible for the associates.”

At Navistar, the recent upgrades in Springfield are necessary to keep the facility up-to-date to deliver better products to customers, said Steve Schrier, a spokesman for the truckmaker.

“It’s critical that our Springfield operations stay on a path of continuous improvement as they’re an important part of our manufacturing operations and critical to delivering the highest quality trucks for our customers,” Schrier said.

Car manufacturers like Honda and Ford deal in much larger volume, but Navistar’s recent investments show a commitment to retaining jobs at the Springfield plant, said Jason Barlow, president of the United Auto Workers Local 402.

Just a few years ago, many were concerned that the facility could close, Barlow said, but the company is now hiring and there are as many as 1,400 workers overall at Navistar’s Springfield campus.

The company and union are also working closely together to improve efficiency and quality at the facility, he said.

“We’ve had a dramatic increase in quality,” Barlow said.

Navistar and the UAW are expected to begin negotiations for a new contract later this year.

Although several auto companies have announced investments in Ohio recently, many of those decision have been made years earlier, said Kristina Adamaski, a spokeswoman for Ford.

The company’s decision to invest $500 million in Lima was the result of several factors, she said, including capacity that was available there and negotiations with the UAW as far back as 2011.

Those negotiations also led to promises to move production of Ford’s F-650 and F-750 medium-duty trucks from Mexico to the Ohio Assembly Plant in Avon Lake near Cleveland early next year. That decision won’t lead to new jobs, but will provide job security for workers at that facility. The plant currently produces Ford’s E-Series cargo and passenger van. The van will end production later this year.

“A lot of these things obviously are thought out many years in advance in terms of where we can put capacity, where we want to put workers and what incentives are available,” Adamski said. “A lot of it has to do with incentives Ohio is providing to the company to help attract Ford and other manufacturers to come in and invest and add jobs.”

Suppliers also benefit

Area suppliers also benefit, said Tom Franzen, assistant city manager and director of economic development for Springfield.

Many companies throughout the Miami Valley produce parts or provide other services to the auto industry, and those firms have started to invest and add jobs as the larger auto companies recover.

“It’s been a source of a lot of our growth here,” Franzen said.

The recession hurt many companies and some didn’t survive, he said. But those that did typically are more competitive now.

“Definitely there was a severe downsizing in the auto market and so now you’re starting to see that interest pick up for American consumers,” Franzen said. “I think all of that is helping the industry.”

At the worst of the recession, staffing was down 50 percent at Production Control Units Inc., said Tom Hoge, who owns the Dayton manufacturing firm. The company designs and builds special industrial equipment, and provides services to the auto industry during the production process.

Recently, the company has been working closely with Honda’s East Liberty Auto Plant, which is undergoing an upgrade to replace its entire assembly operation.

Production Control Units doesn’t rely solely on the auto industry, Hoge said, but it is an important part of its business. In part because of the surging auto industry, his company has brought in an additional 15 contract workers, and the full-time staff is back up to about 60 workers.

The company is also stronger than it was before the recession, he said.

“What it allowed us to do was become much more effective and efficient and proactive when the economy recovered,” Hoge said.

Most manufacturers in the Miami Valley supply parts to larger companies, said Angelia Erbaugh, president of the Dayton Regional Manufacturer’s Association. When companies like GM and Honda invest in the state, local firms ultimately benefit.

Manufacturing overall in the region has steadily improved over the past several years.

“They report, however, that even though they are busy, they are still uncertain how long this cycle will last,” Erbaugh said.

Even though hiring in the auto industry hasn’t yet kept pace with the rapid growth of production and sales, Ohio benefits overall as the auto industry continues to recover, Rubenstein said.

“There’s still the multiplier effect,” he said. “While the rehiring in carmaking is not as strong as production growth, there are still plenty of businesses indirectly that benefit from the increase in production and sales.”

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