To survive, company ships work overseas
By Ron French / The Detroit News
HARBOR BEACH--They call themselves the sole survivors with half-hearted laughs that echo through the nearly empty factory.
There were 350 of them not long ago. But on a drizzly early October day, the seven workers hunched over picnic tables eating Cheetos and chili here at a Harbor Beach factory represent about half the U.S. assembly line work force of KenSa LLC, a Michigan wire harness manufacturer. They are afraid and frustrated and angry. None is sure whom to blame.
John Hardy looked out the window of a vacant loading dock at a For Sale sign stuck in the grass. "They're not making enough to pay the electric bill," said Hardy, 42, of Forester. "Something's gotta happen."
One hundred miles to the south, KenSa owner Hal Zaima emerged from his company headquarters in Sterling Heights looking grim. A major customer wanted a 25 percent price cut from Zaima's wire harness company. "And they want it back-dated to the beginning of the year," Zaima said, shaking his head. "They want us to write a check for their overpayment."
Zaima is a ball of energy, a short Japanese-American seemingly always on the verge of running out of his blue Oxford shirt. The ex-Army Ranger is accustomed to battles, but it's been a long, tough fight for KenSa.
While automakers design and assemble cars and trucks, they rely on suppliers to produce more than half of each vehicle's content. Big suppliers, such as Delphi Corp., in turn rely on smaller companies to deliver thousands of parts needed to build complete modules, such as instrument panels, that can be plugged into the vehicle. And small parts companies buy individual parts from even smaller shops.
This multibillion dollar supply chain forms the backbone of the auto industry. And as global competition increases, the drive to lower costs is intensifying. Every manufacturer in the chain -- from major automakers to the mom-and-pop company that makes plastic radio knobs -- is under pressure to reduce prices. For many, the only option is shifting production to low-wage countries.
Until four years ago, KenSa made everything in Michigan. On the verge of going under, the company moved hundreds of Michigan jobs to Mexico in 2000. When that wasn't enough, it laid off more Michigan workers and opened a plant in Honduras. This summer, hoping to save more money, KenSa bought controlling interest in a factory in China.
Each move that helped the company survive made survival harder for its employees in Michigan.
"Everything is being driven by cost," Zaima said. "At the end of the day, I wonder if we're benefiting."
The state has lost 175,000 manufacturing jobs since January 2001. Auto suppliers alone lost 50,000 jobs, some to increased automation and others to cheaper labor in other countries.
That trend is accelerating. North American auto suppliers will close plants and move as much as 20 percent of their production to lower-cost regions by 2010, according to a survey conducted this year by Roland Berger Strategy Consultants in Troy. And the shift will mean nearly 20 percent of American auto supply jobs -- about 127,000 -- will vanish by the end of the decade.
The loss of almost 350 assembly line workers at KenSa is barely a blip on the economic radar -- a company that size has in effect closed its doors in Michigan every 12 days since January 2001. Yet KenSa is representative of hundreds of small Michigan companies struggling to survive in an increasingly hostile global economy. Its workers' plight is the plight of thousands of others.
Offshoring is an old story among auto suppliers, and no product has moved more than the wire harness, a low-skill, high-labor car part. KenSa, the new name for the former Clements Manufacturing, stuck around longer than most suppliers in the $6 billion wire harness industry. The company survived in Michigan because it paid most of its workers about $7.50 an hour -- about a third of the pay UAW workers would get for the same job.
Today, even wages hovering close to minimum are too lavish to maintain contracts with auto companies.
Facing pressure to slash prices another 25 percent, Zaima had to find more cuts. The only thing to do was to look north once again, toward Harbor Beach and the sole survivors.
Future of auto supply business lies overseas
Highway 25 skims along the edge of Lake Huron in Michigan's Thumb, past modest homes and sugar beet fields. At dawn, there are often more deer than cars on the road, and John Nye keeps a bleary eye out for the animals as he tries to get a signal on his cell phone.
The KenSa director of operations grew up here, where his friends' parents worked the farms and factories around Ubly, Argyle and Bad Axe. Most of those factories are gone now, including three owned by KenSa. Nye drives an hour each day to reach the company's last plant, the Harbor Beach factory that is virtually an empty shell.
Nye is a popular boss among the remaining workers, yet he bluntly acknowledges that Harbor Beach represents the past; the future is overseas.
"For a company our size to be where we're at (in the world) is pretty cool," Nye said. "It's a global thing."
Nye is a wire harness pro. He can pick up a tangle of wires and identify it as a trailer harness for a 2000 Chrysler Prowler or an ignition harness for a '69 Road Runner. He knows there are 1,200 electronic circuits in a new Lincoln Town Car and, if forced to, he could name most of them.
Nye began working in the wire harness business in 1971, at the end of the golden era of the American auto industry. Auto parts workers like those in Harbor Beach were paid good money. The Big Three bought their auto parts and built cars with their own well-paid workers. Workers up and down the food chain bought the cars.
It was a fragile economic ecosystem, with everyone dependent upon and benefiting from each other.
Small-town loyalty versus big-time profits
Clements Manufacturing, the predecessor of KenSa, was founded 58 years ago as a manufacturer of wire picture frame hangers. It branched into electronic wiring in the 1950s and into automotive wiring in the 1960s.
At one time, Clements had six plants in Michigan, small operations in small towns, supplying parts to nearby auto assembly plants.
Kathy Goheen began working at Clements in 1955 and owned the company through the 1980s and 1990s. She watched as the wire harness plants that dotted the region disappeared. Some locked their doors and moved to Mexico. Others, out of stubbornness or loyalty to their workers, refused to leave Michigan and eventually went bankrupt.
"Many times, we were told, 'You have to go offshore or you're not going to get our business,' " she said. "But somehow, some way, we held on."
The public and politicians complained about sending jobs overseas, but Wall Street had a different response. When publicly traded auto suppliers announced plans to move jobs overseas, their stock typically rose, said Kevin Tynan, an auto industry stock analyst for Argus Research.
"An economist could look at it as a negative for our economy," Tynan said, "but an analyst would look at it as a positive for reducing fixed costs."
Even more than their European and Japanese rivals, U.S. companies were under pressure to report short-term profit growth and boost stock prices.
Big companies had to answer to their stockholders and boards of directors, but Kathy Goheen answered to the clerk at Venckier Foods and the waitress at Blower's Cafe. She grew up with her workers and she wasn't going to abandon them, even if it cost her money.
"I had a lot of loyalties to these small towns," Goheen said. "There were an awful lot of people who didn't have the capability to do a lot of other things. They were good, hardworking people."
In the 1990s, Clements factories were packed with workers hustling pallet after pallet of wire harnesses to assembly plants across the Midwest. Employees often worked 50 to 60 hours a week to keep up with orders.
Since selling her company in 1998, Goheen has watched in disbelief as one after another of her factories have shut down, with the last now in peril.
By January 2004, the company's U.S. payroll had dwindled to 40 administrative staff in Sterling Heights and 80 factory workers in Harbor Beach.
"It's heartbreaking," Goheen said. "The world has become a totally different place."
Deb Coverdill helped train Mexican workers to do the jobs of Americans in 2000. This spring, she did the same in Honduras. She was in effect asked to dig her own grave, and the born-again Christian came away empathizing with those trying to snatch the wire harness from her hands.
"They're taking our jobs, but they're trying to improve their lives over there," said Coverdill, 46, of Deckerville. "It's such a poor country. You can't blame them.
"They're just part of the whole scenario -- they're benefiting and we're losing." (Magatsu's comment: Welcome to the Bush's era)
More ... http://www.detnews.com/2004/specialreport/0411/21/b02-11673.htm (Over 10,000 character limits. click 'Next Story' to read more)
Sad eh?
By Ron French / The Detroit News
HARBOR BEACH--They call themselves the sole survivors with half-hearted laughs that echo through the nearly empty factory.
There were 350 of them not long ago. But on a drizzly early October day, the seven workers hunched over picnic tables eating Cheetos and chili here at a Harbor Beach factory represent about half the U.S. assembly line work force of KenSa LLC, a Michigan wire harness manufacturer. They are afraid and frustrated and angry. None is sure whom to blame.
John Hardy looked out the window of a vacant loading dock at a For Sale sign stuck in the grass. "They're not making enough to pay the electric bill," said Hardy, 42, of Forester. "Something's gotta happen."
One hundred miles to the south, KenSa owner Hal Zaima emerged from his company headquarters in Sterling Heights looking grim. A major customer wanted a 25 percent price cut from Zaima's wire harness company. "And they want it back-dated to the beginning of the year," Zaima said, shaking his head. "They want us to write a check for their overpayment."
Zaima is a ball of energy, a short Japanese-American seemingly always on the verge of running out of his blue Oxford shirt. The ex-Army Ranger is accustomed to battles, but it's been a long, tough fight for KenSa.
While automakers design and assemble cars and trucks, they rely on suppliers to produce more than half of each vehicle's content. Big suppliers, such as Delphi Corp., in turn rely on smaller companies to deliver thousands of parts needed to build complete modules, such as instrument panels, that can be plugged into the vehicle. And small parts companies buy individual parts from even smaller shops.
This multibillion dollar supply chain forms the backbone of the auto industry. And as global competition increases, the drive to lower costs is intensifying. Every manufacturer in the chain -- from major automakers to the mom-and-pop company that makes plastic radio knobs -- is under pressure to reduce prices. For many, the only option is shifting production to low-wage countries.
Until four years ago, KenSa made everything in Michigan. On the verge of going under, the company moved hundreds of Michigan jobs to Mexico in 2000. When that wasn't enough, it laid off more Michigan workers and opened a plant in Honduras. This summer, hoping to save more money, KenSa bought controlling interest in a factory in China.
Each move that helped the company survive made survival harder for its employees in Michigan.
"Everything is being driven by cost," Zaima said. "At the end of the day, I wonder if we're benefiting."
The state has lost 175,000 manufacturing jobs since January 2001. Auto suppliers alone lost 50,000 jobs, some to increased automation and others to cheaper labor in other countries.
That trend is accelerating. North American auto suppliers will close plants and move as much as 20 percent of their production to lower-cost regions by 2010, according to a survey conducted this year by Roland Berger Strategy Consultants in Troy. And the shift will mean nearly 20 percent of American auto supply jobs -- about 127,000 -- will vanish by the end of the decade.
The loss of almost 350 assembly line workers at KenSa is barely a blip on the economic radar -- a company that size has in effect closed its doors in Michigan every 12 days since January 2001. Yet KenSa is representative of hundreds of small Michigan companies struggling to survive in an increasingly hostile global economy. Its workers' plight is the plight of thousands of others.
Offshoring is an old story among auto suppliers, and no product has moved more than the wire harness, a low-skill, high-labor car part. KenSa, the new name for the former Clements Manufacturing, stuck around longer than most suppliers in the $6 billion wire harness industry. The company survived in Michigan because it paid most of its workers about $7.50 an hour -- about a third of the pay UAW workers would get for the same job.
Today, even wages hovering close to minimum are too lavish to maintain contracts with auto companies.
Facing pressure to slash prices another 25 percent, Zaima had to find more cuts. The only thing to do was to look north once again, toward Harbor Beach and the sole survivors.
Future of auto supply business lies overseas
Highway 25 skims along the edge of Lake Huron in Michigan's Thumb, past modest homes and sugar beet fields. At dawn, there are often more deer than cars on the road, and John Nye keeps a bleary eye out for the animals as he tries to get a signal on his cell phone.
The KenSa director of operations grew up here, where his friends' parents worked the farms and factories around Ubly, Argyle and Bad Axe. Most of those factories are gone now, including three owned by KenSa. Nye drives an hour each day to reach the company's last plant, the Harbor Beach factory that is virtually an empty shell.
Nye is a popular boss among the remaining workers, yet he bluntly acknowledges that Harbor Beach represents the past; the future is overseas.
"For a company our size to be where we're at (in the world) is pretty cool," Nye said. "It's a global thing."
Nye is a wire harness pro. He can pick up a tangle of wires and identify it as a trailer harness for a 2000 Chrysler Prowler or an ignition harness for a '69 Road Runner. He knows there are 1,200 electronic circuits in a new Lincoln Town Car and, if forced to, he could name most of them.
Nye began working in the wire harness business in 1971, at the end of the golden era of the American auto industry. Auto parts workers like those in Harbor Beach were paid good money. The Big Three bought their auto parts and built cars with their own well-paid workers. Workers up and down the food chain bought the cars.
It was a fragile economic ecosystem, with everyone dependent upon and benefiting from each other.
Small-town loyalty versus big-time profits
Clements Manufacturing, the predecessor of KenSa, was founded 58 years ago as a manufacturer of wire picture frame hangers. It branched into electronic wiring in the 1950s and into automotive wiring in the 1960s.
At one time, Clements had six plants in Michigan, small operations in small towns, supplying parts to nearby auto assembly plants.
Kathy Goheen began working at Clements in 1955 and owned the company through the 1980s and 1990s. She watched as the wire harness plants that dotted the region disappeared. Some locked their doors and moved to Mexico. Others, out of stubbornness or loyalty to their workers, refused to leave Michigan and eventually went bankrupt.
"Many times, we were told, 'You have to go offshore or you're not going to get our business,' " she said. "But somehow, some way, we held on."
The public and politicians complained about sending jobs overseas, but Wall Street had a different response. When publicly traded auto suppliers announced plans to move jobs overseas, their stock typically rose, said Kevin Tynan, an auto industry stock analyst for Argus Research.
"An economist could look at it as a negative for our economy," Tynan said, "but an analyst would look at it as a positive for reducing fixed costs."
Even more than their European and Japanese rivals, U.S. companies were under pressure to report short-term profit growth and boost stock prices.
Big companies had to answer to their stockholders and boards of directors, but Kathy Goheen answered to the clerk at Venckier Foods and the waitress at Blower's Cafe. She grew up with her workers and she wasn't going to abandon them, even if it cost her money.
"I had a lot of loyalties to these small towns," Goheen said. "There were an awful lot of people who didn't have the capability to do a lot of other things. They were good, hardworking people."
In the 1990s, Clements factories were packed with workers hustling pallet after pallet of wire harnesses to assembly plants across the Midwest. Employees often worked 50 to 60 hours a week to keep up with orders.
Since selling her company in 1998, Goheen has watched in disbelief as one after another of her factories have shut down, with the last now in peril.
By January 2004, the company's U.S. payroll had dwindled to 40 administrative staff in Sterling Heights and 80 factory workers in Harbor Beach.
"It's heartbreaking," Goheen said. "The world has become a totally different place."
Deb Coverdill helped train Mexican workers to do the jobs of Americans in 2000. This spring, she did the same in Honduras. She was in effect asked to dig her own grave, and the born-again Christian came away empathizing with those trying to snatch the wire harness from her hands.
"They're taking our jobs, but they're trying to improve their lives over there," said Coverdill, 46, of Deckerville. "It's such a poor country. You can't blame them.
"They're just part of the whole scenario -- they're benefiting and we're losing." (Magatsu's comment: Welcome to the Bush's era)
More ... http://www.detnews.com/2004/specialreport/0411/21/b02-11673.htm (Over 10,000 character limits. click 'Next Story' to read more)
Sad eh?