Many in NH feeling Detroit's pain

By MICHAEL COUSINEAU

New Hampshire Union Leader Staff 
Sunday, Jun. 7, 2009

New Hampshire lost more than 1,000 auto-related jobs in 2008 -- before many car dealers and parts makers in recent months made even steeper cuts in jobs and workers' hours because people were buying fewer new cars.

Parts maker Freudenberg-NOK is requiring nearly all of its 800 New Hampshire employees to take every Friday off at reduced pay for two months sometime between May and July.

The company's auto-related business is down between 35 percent and 45 percent from a year ago. Its New Hampshire workforce has shrunk from around 1,100 a year ago to 900 at the end of 2008 to about 800 today in Ashland, Bristol, Franklin, Manchester and Northfield.

"It's really driven on whether people buy automobiles," said Greg Keenan, vice president of operations.

About 650 jobs there are tied directly to the auto industry, producing, among other things, urethane parts used in shock absorbers and body mounts to make vehicles ride quieter and smoother.

Heading into this year, there still were more than 900 New Hampshire companies in the auto industry -- from parts makers to car salesmen to retail supply stores -- employing more than 17,000 people, or roughly as many as the entire population of Goffstown.

They represent 1 in every 30 private-sector workers in New Hampshire, according to figures from the state Economic and Labor Market Information Bureau, and their combined 2008 wages totaled $848.7 million -- enough to buy 29,746 new Chrysler Sebring convertibles (at the manufacturer's suggested retail price).

Years of decline

Yearly auto-related job totals have fallen each year since at least 2003.

"What it shows you is there had been a decline in the auto industry even before the current financial crisis," said Anita Josten, a research analyst with the labor bureau.

Bill Hand, owner of Park Nameplate Company in Dover, holds a sheet of Ford emblems. (THOMAS ROY)

This year is looking bleaker for automakers and most anyone associated with the industry.

"The odds are 2 to 1 it will get worse rather than get better nationally, and we'll feel that in New Hampshire in manufacturing and sales," said economist Russ Thibeault, president of Applied Economic Research of Laconia.

Americans last month bought 30.5 percent fewer cars and light trucks than a year earlier.

Last month, Chrysler and General Motors -- both in bankruptcy -- notified thousands of dealers across the country that they were severing ties with them effective as soon as this week for Chrysler and 2010 for GM. Pete McNamara, head of the state auto dealers association, said he has confirmed six targeted Chrysler dealerships and six GM dealers with about 260 combined employees.

Most of the targeted dealerships plan to sell used cars if they can't reverse the minds of auto executives.

Automotive jobs in New Hampshire

The number of New Hampshire workers in jobs related to the automotive industry is on the decline, according to state statistics:

	2003	2004	2005	2006	2007	2008
Manufacturing	7,515	7,078	7,088	7,130	6,841	6,204
Wholesalers	1,949	1,932	1,775	1,780	1,636	1,633
New-car retail	7,471	7,391	7,335	7,125	6,958	6,561
Other auto retail	3,604	3,529	3,542	3,635	3,630	3,621

All sales positions might not be included, if the sales people are not covered by unemployment compensation insurance.

Source: N.H. Department of Employment Security

GM also has tentative deals to sell its Hummer and Saturn brands while lining up prospective buyers to take over Saab, perhaps saving dealerships at least in the short term.

McNamara suspects there could be at least two other GM dealers at risk and has heard that New Hampshire could see its Cadillac franchises drop from nine to one or two, though those affected dealers would stay in business selling other car brands, he said.

Ripple effect

The cutbacks have ramifications that extend well beyond those employed in the auto industry.

Rochester City Manager John Scruton, whose city has two targeted dealers, said car sellers help "support various activities in the community through taxes and donations through the community and through their employees being involved as coaches and volunteers."

And, Scruton said, downsized car dealers with empty buildings could seek tax abatements next year, and if successful, "it means everyone else has to pick up what they've been paying for the tax burden."

Should people need to go elsewhere to buy or service a car, they also might eat and shop in that community, too, he said.

For those making auto parts, there were 14 fewer New Hampshire companies and 1,313 fewer jobs last year compared to 2003, according to state figures. Still, they had a combined payroll of $303.1 million in 2008.

People in the parts-manufacturing sector are relatively well-paid. Their jobs last year paid an average $939.57 per week, compared to $870.48 for private-sector jobs statewide.

Pressure's on

A decrease in new-car sales this year puts more pressure on the approximately 100 auto-parts manufacturers around the state.

"The first couple of months were horrible, and we had to make more adjustments to the business to survive," said William Hand, president of Park Nameplate in Dover.

Along with cuts in holiday and vacation time, most workers saw their weekly hours drop from 40 to 32, while salaried employees took a 10 percent cut.

Hand's 89 employees -- who make, among other things, emblems that go on steering wheels -- represent a little more than half what the workforce looked like in November 2007. About 60 percent of his sales are auto-related.

His business dropped nearly 50 percent during the first three months of 2009 compared to the quarter ending last September, and he doesn't expect a full recovery until at least late 2010.

Hand believes his business already hit bottom and credits Ford Motor Co. with "helping like crazy" with increased orders that he expects will make June the year's best sales month.

Hand's company is even making some GM parts that are being shipped to China, he said, and he hopes to restore workers' hours by September.

Any work restoration would be a welcome -- and unusual -- development in New Hampshire manufacturing, noted Thibeault, the Laconia economist. He said the state has lost about 30,000 manufacturing jobs since 2000.

"One out of three has vaporized," he said. "These are good-paying bread-winner jobs that are difficult to replace.

"We've always had industries in decline in New Hampshire, but usually we've had industries on the upsurge to take its place," he said, citing the shoe industry, computer manufacturing and high-tech boom over the decades.

"We still have industries in decline but nothing to take their place."

YOUR COMMENTS

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Mark,
GM's legacy costs are their own fault. They could have said 'No' to the unions, but they didn't. It also didn't help that the government gave tax breaks to businesses that purchased vehicles weighing over 6000 lbs and artificially drove up large vehicle sales. Sure, it's Obama's problem now, but it didn't start with him. Personally, I would have let Chrysler and GM go right into chapter 7 and get it over with. The US based foreign auto makers would, and will, pick up the slack.
- Texter, Newfields

Dear Texter in Newfields: I don't know if you heard but GM's legacy costs (due to its highly overpaid workforce) were what drove GM into bankruptcy. I own a 10-year old Chevy Blazer and it's a great vehicle. Don't blame Obama? Why not? It's now his recession and it's getting worse, not better. If the Democrats ignore this problem, they do so at their own political peril.
- Mark, Manchester

Mark,
How can you blame Obama for the state of the auto industry? Years of making vehicles which don't last as long as foreign (which are usually made in the US) vehicles, not having designs that are exciting (witness GM models available in Europe that you can't get here) and a lack of credit for people who shouldn't really get it have all come together with the result being today's situation. Have you seen the Autofair ads that tout no credit, bad credit, upside down on your vehicle. It's people with these credentials that artificially kept vehicle sales high over the last few years, and now the chickens have come home to roost.

I've owned four foreign vehicles and one American car in my lifetime. Hands down, every one of the foreign vehicles was a better value, lasted longer, and had better crash safety ratings than comparable American vehicles. All had well over 200K on them when I got rid of them, and they were driven even further. Not one major problem. The Ford Taurus I had just made 140K, but I wasn't willing to put thousands into it to keep it running.

If I could go back a minute, the real beginning of the problem was the oil crisis of 1972. I remember that Chevy came out with the Vega, Ford had the Maverick and Pinto, and don't ask me what Chrysler had. The foreign manufacturers listened to what the consumer wanted, and gave it to them. The American manufacturer designed something, and then marketed it so that the consumer would want it. The GM diesel debacle, where they used a gasoline engine block with a diesel head, has soured a good portion of the American public to diesel. I've been to Europe, almost every vehicle there is diesel.

My Subaru, which was made in Indiana (except for the very important bits, the engine and drivetrain), will last me at least ten years, and that is how long I am going to drive it. I don't, and the average American doesn't, need a new car every three or four years.

Perhaps the auto makers should have been allowed to go into Chapter 7, and see where the cards would fall. Who, then, would provide the spare engine computers, update software, etc? I'm sure that the buyer of an American car would want to know that they could maintain it for the foreseeable future before they shelled out the greenbacks.
- Texter, Newfields

As a Ford Engineer who grew up in NH, I just want to say that Leno's comment disgusts me. Ford is the only company to NOT take gov't $ and to be standing on our own feet with our own products, and you wish US and our suppliers ill because of your 'investments'? Sad.
- Travis, Dearborn, MI

I am sorry for the companies that supply Ford but I am a tax payer and I own Chrysler and General Motors. You are the competition, I gotta hope for the success of my investments.

Leno, Raymond
- Leno Hebert, Raymond

We by cars from other countries do to better quality, and most are still made state side to offset the terrifs. Odd thing is notice the none union makes are doing better Better quality car and lower overhead. They still pay good I have a friend that works for Toyota and makes great money at one plant but don't pay union dues. The unions and greedy workers killed the Cryslers and GM's of the world. Now the GOV is running the show they cant even run a country bugget without defacite do you trust them to run a Buisness? I don't and I will never own a car that is owned any persentage by our Goverment. They could not make profit on a hore House in Navada but will make quality product at profit I don't think so.
- Tim, Manchester

I think a large part of the problem is not only that people are not purchasing new cars but a high pecentage that do buy new cars are choosing forign made vehicles.
- Pete, Somersworth

So I guess that hope and change our Dear Leader Obama brought isn't working out too well for those in NH's auto industry. Never fear though - Democrat Party leadership feels your pain very much and stands ready to help. Just ask the people of Berlin NH.......
- Mark, Manchester