Jan 1, 2015 Off Comments in Business News by
Auto Industry Rebound Impacts Northern Ohio

Auto Industry Rebound Impacts Northern Ohio. The U.S. auto industry has again found traction, and as sales of cars and trucks rebound, it’s taking Northeast Ohio suppliers and some OEM plants along for a welcomed ride.

“We’re hiring — as fast and as furiously as we possibly can,” said Randy Ross, president and CEO of Quality Synthetic Rubber Inc. (QSR) in Twinsburg.

Like a lot of auto suppliers that survived the dramatic industry downturn of 2009, QSR has been lifted by both rising sales generally and from gaining market share as a result of competitors disappearing or shedding production capacity.

Since 2009, when only 10.4 million vehicles were sold, U.S. auto sales have rebounded steadily. In August, sales hit an annual sales pace of 16 million vehicles for the first time since the recession began in late 2007.

In September, sales slackened a bit, dropping to a pace of 15.3 million vehicles. But some automakers that are the most important to the Northeast Ohio market, including Ford, still posted gains last month. And even some adversely affected original equipment manufacturers, such as GM, declared that they believed the September slowdown was temporary and that sales would continue to rise.

Not only have rising domestic sales and increased market share helped boost QSR’s sales, but one of its chief product lines consists of rubber parts used to house and insulate electronic components and electrical systems on vehicles. As more GPS screens, backup cameras, heated seats, efficiency controls and other electronic systems are built into cars, more of QSR’s products are needed, Mr. Ross said.

As a result, sales are up and employment at QSR’s main plant in Twinsburg has risen by about 100 people in the last four years, to about 1,000 full-time employees. “We are far exceeding what we were doing pre-recession,” Mr. Ross said.

The sales boost, and a healthy capital base to begin with, has enabled QSR to expand, and it opened a new plant in southern China.

“Before that, we had access to maybe 20% of the world’s automotive market. Now, we’ve accessed the other 80% of the market,” Mr. Ross said.

Other suppliers are also reporting a good year, including Goodyear Tire & Rubber Co.

“Our North American consumer original-equipment volume is definitely up over last year,” said Keith Price, spokesman for the Akron-based tiremaker.

Goodyear has not yet put a number on its OEM tire sales gains for the year, but the company sticks by its second-quarter prediction that U.S. auto sales would climb by 5% this year, Mr. Price said.
A more accurate crystal ball
In Brooklyn Heights, precision stamper Die-Matic Corp. also is feeling the positive effects of rising U.S. sales, said company president Jerry Zeitler. Die-Matic has been fortunate, Mr. Zeitler said, because it has significant relationships with both Ford and Honda, two automakers that have fared particularly well this year.

“Our orders are strong and they’re healthy,” Mr. Zeitler said, noting that employment at his company is back up to 100 people after declining to fewer than 60 during the recession.

Mr. Zeitler said he’s seeing some of the same signs of strength on the part of the OEMS that he saw before the recession; for instance, they once again are asking suppliers for price cuts and focusing on reducing the number of suppliers they use in total. Like QSR did, Die-Matic is considering opening up an international plant, in Mexico, to better serve existing customers and remain on their list of preferred suppliers.

Improved internal systems and technology also are making auto sales forecasting much more acute, Mr. Zeitler said. That enables suppliers like Die-Matic to do better planning.

“It used to be the rule of thumb, even before the recession in ’06 and ’07, a customer would say, “I want you to make this part and I’ll need 100,000 a year.’ And we were always off by 15% or 20%,” he said. “Today, when a customer says I need 100,000, we actually make 100,000 parts. Sometimes we end up exceeding it.”
Workers still hard to find
The positive impact of auto sales also has a multiplier effect. Companies here that don’t make anything that will ever go into an automobile still feel the positive effects of the industry’s growth.

For instance, Drabik Manufacturing in Cleveland doesn’t make a single part that goes into a light vehicle. Instead, the machine and die shop makes parts for other big manufacturers’ assembly lines. But owner and president James Drabik said he has no doubts that increased auto sales are causing his customers to grow, resulting in more business for him.

“We supply a lot of foundries, paint and coating makers and other companies that sell into automotive, and they are all growing and expanding their plants. That’s good for us,” Mr. Drabik said.

Things might have gotten so good that auto-related manufacturers are facing one of their chief pre-recession challenges — finding enough good employees.

“We are still trying to hire and it’s tough,” Mr. Ross said. “There’s a lack of skilled workers out there and it’s hard to find people.”

But, as he and others on the hunt for employees pointed out, not being able to easily find people to hire is still an improvement over not being able to find sales.
‘We’re all busy’
Suppliers here are thriving partly as a result of the strong performance of Ford, a star of the industry throughout the downturn and afterward. It was the only U.S. automaker not to require a bailout, and it has been quick to bring to market new engines and vehicles that have been readily accepted by consumers.

That includes the EcoBoost engine that Ford makes at its plant in Brook Park, which is running three shifts and churning out the motors as fast as it can, said Mike Gammella, president of the plant’s union, United Autoworkers Local 1250.

“We’re very, very busy and we’ll continue to be busy, in Cleveland especially,” he said. “Last week, we were at subcouncil meetings with other UAWs from Ford across the country, and we’re all busy. If anything, Ford’s got a capacity problem. They could grow more, but they’re being cautious and keeping quality up.”

Things seem only destined to get better in Brook Park, too. Ford will begin making four-cylinder engines at the site next year, a move Mr. Gammella said should increase his rank and file from about 1,050 to more than 1,800.