Falling auto sales affect numerous related industries

Auto suppliers employ 600,000 people throughout the country.

Los Angeles Times

Ford Motor Co.’s F-150 pickup is the top-selling vehicle in America with more than 436,000 purchased through October. But when people stop buying the F-150 — and 26 percent fewer have sold this year than last — it’s not just Ford and its workers who suffer.

Falling sales dry up orders for antifreeze made in Illinois by a division of Honeywell International Inc., computer sensors manufactured by Germany’s Robert Bosch Gmbh in South Carolina and a hood latch part made by the 110-odd employees of Amanda Bent Bolt Co. of Logan, Ohio.

All told, each truck contains 4,350 parts, made by 270 suppliers in 26 states as well as several foreign countries. Every F-150 that doesn’t sell hits literally hundreds of thousands of people who play a role in putting the big machine on the road.

When it comes to the U.S. automakers and their financial troubles, politicians and the public tend to think about the 240,000 jobs that could be lost at the Big Three’s assembly lines in Michigan and nearby Rust Belt states.

Yet suppliers provide about 70 percent of the content in most automobiles, from the seats to specialized bolts on the suspension — everything except the sheet metal and the motor assembly. So when Ford, Chrysler or General Motors Corp. sneeze, 600,000 workers in places as widely scattered as Peachtree City, Ga., and Pittsburg, Kan., are likely to catch cold.

As the Alliance of Automobile Manufacturers trade group likes to say, “A lot of U.S. industry goes into every automobile.”

That delicate but often overlooked relationship is of crucial importance now that Congress is debating at least $25 billion in new aid to the auto industry.

GM and Ford have lost a combined $30 billion so far this year, while U.S. sales by all three carmakers have declined 21 percent. This month, GM said it might not have enough cash to pay its bills in the first half of next year.

What Congress decides could have serious effects on not just employees of Ford, GM and Chrysler but also those who work at such companies as Superior Industries International of Los Angeles, which makes the F-150’s wheels. Superior will close its Pittsburg aluminum wheel plant next month, laying off about 600 employees, because its shipments in the third quarter dropped to the lowest level in a decade.

In Peachtree City, Panasonic Automotive Systems Co. of America has notified its approximately 500 employees who make car stereos, GPS devices and rear-seat DVD entertainment systems that they’ll be out of work by the end of next year.

It’s a similar story at AK Steel Corp., which relies on the auto market for 30 percent of its business. The company has temporarily shut down its Mansfield, Ohio, plant because of low demand for the stainless steel it produces for exhaust systems.

According to a study by advisory firm BBK, 17 percent of suppliers were at risk of bankruptcy at the outset of 2008, and the study’s author believes that has risen significantly this year.

The vast majority of suppliers get 60 percent or more of their orders from the auto industry, making the companies particularly vulnerable to a downturn in demand for cars.

The Big Three spend about $300 billion a year on equipment, supplies, tooling and parts ranging from transmissions to shop rags. I

GM spends $7 billion a year transporting parts to factories and hauling finished automobiles to dealers. That makes railroads and trucking companies huge clients of the Big Three. No wonder that with car sales down, Norfolk Southern Corp. reported a 30 percent decline in rail car business in the third quarter compared to a year earlier.

Vehicle and parts manufacturing jobs are concentrated in the Midwest and the South. Collectively, Michigan, Ohio, Indiana, Tennessee and Illinois have more than half of the industry’s jobs. Other states with sizable numbers include Kentucky, New York, California, Pennsylvania and North Carolina.