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Keys to Keeping the Automotive Lead

Southern auto manufacturers resolve not to lose their lead to emerging rivals such as Mexico. Keys to winning: workforce development, R&D and improvements in education.

AAMA Executive Director Lew Drummond

AAMA Executive Director Lew Drummond

Automotive manufacturing is alive and well in Alabama and surrounding Southeastern states, but the phenomenal growth the region has seen in the past few decades may slow unless we continue to take steps to attract new plants, agree government and business leaders who attended the Southern Automotive Conference (SAC) 2014.

SAC attendees celebrated regional successes and discussed competitive strategies at the event held in early October at the Birmingham-Jefferson Convention Complex. Themed “Geared for Growth: Accelerating the Global Automotive Industry,” the conference recognized the emergence of Mexico as a major rival to the Southern automotive corridor.

The conference and a Center for Automotive Research (CAR) study noting Mexico’s competitive strength have driven the formation of a number of Southeastern automotive industry work groups in recent months. Various needs from workforce development to automotive research centers are under scrutiny, all to help increase the region’s desirability to both automotive manufacturers and suppliers.

Alabama, like many other Southeastern states, has much at stake on the success of those efforts. The state and region benefit greatly from hosting the fastest growing automotive industry in North America, partly driven by right-to-work laws and government incentives. 

“Automotive manufacturing has significantly boosted our economy and we don’t want to take it for granted and lose our edge,” says Lew Drummond, executive director of the Alabama Automotive Manufacturers Association (AAMA), which hosted the conference.

The AAMA went all out to garner widespread attendance at the SAC including hiring a company to plan the event. The investment paid off, says AAMA board member William Canary, who serves as president and chief executive officer of the Business Council of Alabama. “The 2014 Southern Automotive Conference was a homerun, from the speakers and exhibitors to the record number of attendees,” he says. “It truly underscored the significance of the Southeast automotive industry.”

Alabama, which manufactured about 1 million vehicles and 1.5 million engines in 2014, is fifth in the nation in car and light truck production, according to the AAMA conference report. The state generated $7.1 billion in vehicle exports in 2013. Automotive manufacturing accounts for about 33,000 direct jobs in Alabama. Using a conservative multiplier of 5, that means those direct manufacturing jobs account for 165,000 total jobs, AAMA President Ron Davis pointed out during his conference report.

Moving forward and looking ahead in Alabama, seven new manufacturing sites and 21 expansions were announced in 2014 and five new sites and 61 expansions in 2013. During 2013, $1.3 billion in planned investments were announced. “It’s no wonder Business Facilities Magazine named Alabama No. 1 in Automotive Manufacturing Strength,” Davis says.

Automotive manufacturing associations from other states — including Tennessee, Mississippi, Georgia and South Carolina — also shared the impressive economic impact the industry makes in their states. Tennessee’s representative, for example, boasted 100,000 employed at more than 900 facilities. With strong planned investment, production and job figures, “the South is doing well today; however, Mexico is where the new automotive plants are being built and that’s where suppliers will want to go,” says Jay Baron, Ph.D., president and chief executive officer of CAR, who presented at the conference.

Alabama Gov. Robert Bentley told conference attendees what the state is doing to become more attractive to manufacturers and better compete for new plants. He noted the Accelerate Alabama program is bringing together primary and secondary education with two-year colleges for workforce training in the areas of advanced manufacturing and technology. “Automotive manufacturers and suppliers are having a tough time filling jobs in a number of key areas,” Drummond says. “We’ve got to get the word out to our young people that the automotive industry offers great career opportunities.”

High-paying jobs can only exist where there’s a supply of well trained workers, says BCA President William Canary.

 

Canary points to the need for fully implementing Alabama’s Plan 2020, applying the recommendations from the Business and Education Alliance of Alabama’s report. Goals should be to achieve a 90 percent graduation rate by 2020, fully fund first-class pre-K, offer dual enrollment for high school students and provide educational choice for parents, he says. “With a growing automotive industry, it has become a responsibility of Alabama’s business community to engage in preparing our students for bright futures,” Canary says. “We have to ask ourselves where will the employees come from to fill the demanding and highly skilled jobs that the automotive industry provides?”

Drummond, who worked in the aerospace industry in Alabama, including during the Apollo program, reflects that in the early days aerospace companies often had to recruit from outside the state to fill positions. “We don’t want that to happen these days if we can avoid it,” he says.

CAR’s Baron compares the automotive industry vying for young talent to that of universities trying to recruit the most promising football candidates. “You recruit the players, yes, but it’s also important to recruit the families,” he says. “You want to show the families you are going to take care of their children and offer them a bright future.”

Another key theme at SAC 2014 was the need to bolster the South’s automotive research capabilities. The CAR study, as well as comments by manufacturers and suppliers at SAC, point to the need for more research and development to take place near to automotive plants versus in far-off headquarters locations. The research needs of automotive suppliers have increased as they must strive to continuously improve their processes and products. “Automotive manufacturing has become about as high tech as aerospace,” Baron says.

Gregg Bennett, center director for the Alabama Technology Network, introduced the South’s new Manufacturing Technology Acceleration Center (M-TAC) pilot project at the conference. Funded by the National Institute of Standards and Technology, the M-TAC program seeks to improve the competitiveness of the country’s manufacturing supply chain by increasing the rates at which small manufacturers adopt helpful technologies. 

Hollings Manufacturing Extension Partnership (MEP) centers are coordinating the M-TAC pilot programs across the nation. The Southeast Automotive M-TAC project is headed by Georgia MEP. Regional MEP Center partners include the Alabama Technology Network, Innovate MEP Mississippi, South Carolina MEP and Tennessee MEP. “We are trying to discover tech needs of companies throughout the automotive supply chain and connect those companies to other companies, federal labs, universities and other technical assistance providers throughout the Southeast,” Bennett says.

AAMA, other Southern automotive manufacturers associations and automotive plant operators — including Nissan, Volkswagen, Toyota, Honda, Mercedes-Benz, Hyundai, Kia and BMW — are being called upon to determine and foster the technology needs of the automotive supply chain. “Smaller companies don’t tend to have as much access to technological innovation as they need,” Drummond says. “We want to help them any way we can.”

Kathy Hagood is a freelance writer for Business Alabama. She lives in Homewood.

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