​Editor's note: This is an excerpt from an article in the December/January edition of the Community College Journal, the bimonthly magazine of the American Association of Community Colleges.

The U.S. automotive industry has always been a cyclical business, but its near-collapse in 2008–09 and the subsequent bankruptcy of two of the three largest domestic automakers was more than a cyclical downturn.

As light vehicle sales and production slowly recover, the industry has started to hire again, though with caution.

Wary of another economic swoon and, in at least two cases (General Motors and Chrysler), still trying to win back the confidence of taxpayers who bailed them out, American automakers must ensure variable labor costs and reduced risk through increased utilization.

What does that mean for faculty and students preparing for a future in the automotive industry? The short answer is that workers will need to be more flexible and multi-skilled, and employment and compensation are also likely to be more contingent on economic conditions and flexible.

To date, automotive employment has recovered slightly, with an 11 percent uptick since 2009. In Michigan, one of the states hardest hit by the automotive crash, motor vehicle and parts employment is reportedly up 21 percent compared with its lowest levels after the crash.

Gaining traction

Market recovery and the subsequent rebound in production are just two of many factors driving U.S. automotive hiring in 2011–12 and beyond.

Other reasons include:

• U.S. automakers are now profitable at much lower volumes, leading the companies to focus more on growth and investment than on cost-cutting and restructuring strategies.
• Because the industry hasn’t hired in a long time, the incumbent workforce—both salaried and hourly—tends to be older. Companies must hire to backfill retirement attrition. Technological change—including innovations to meet new fuel economy, air quality and safety regulations—is faster, and the cadence of getting new products to market has become more rapid.
• Companies must hire skilled workers to research, develop, design, engineer and produce vehicles with advanced systems technology.

The Michigan-based Center for Automotive Research (CAR) interviewed human resources leaders at the Detroit Three and a number of suppliers and asked how the 2008–09 auto industry downturn changed their approach to hiring and retaining workers. Researchers also asked if the changes made during the crisis would continue and if there was any reluctance to hire new workers—by increasing utilization, using temporary workers, outsourcing or simply hiring fewer permanent workers.

Flexible workers

Automotive and parts makers who responded to the CAR survey were unanimous in their opinion that future workers will be expected to wear more hats and to work more efficiently.

Almost across the board, human resources executives remain hesitant to bring on new full-time hourly workers, and nearly all firms interviewed rely on overtime and temporary and contract workers to iron out fluctuations in demand or to respond to short-term spikes in program work.

Despite a move toward more salaried employees, flexibility remains king in the revamped automotive sector. Temporary workers are a permanent fixture in today’s automotive workforce. Automakers and suppliers rely on a temporary labor force to backfill for workers absent due to vacation or illness.

Over time, temporary assignments have grown longer, some lasting two or more years. In a 2008 study, CAR found that the five largest automakers in North America and several first-tier suppliers employed temporary or contract workers.

As global competition intensifies, the already highly cyclical automotive industry has become even more volatile.

Fluctuations in energy prices and global currency exchange rates can rapidly shift demand or affect costs. Through the use of temporary labor, automotive employers have the flexibility to respond to sudden changes.

Focus on soft skills

Given the number of workers lost during the most recent downturn, CAR researchers wondered if the industry suffered from a loss of specialized skills or institutional knowledge. For the most part, automotive executives cited few issues regarding loss of capability or knowledge with the downsizing of the workforce. However, as one respondent noted, “We lost a lot of good employees and a lot of experience.”

With a proclivity toward multi-faceted workers, employers are focused on continuous improvement initiatives, including structured problem solving and training exercises.

All workers—hourly and salaried—must possess the so-called “soft skills” critical for collaboration, systems integration and problem solving. It is no longer sufficient to be a deep technical expert; employees must also be strong, budget-conscious communicators who can see the big picture by taking a systems approach to their work.

In an industry known for its cyclicality, automakers and suppliers now understand how best to structure their business to attract and retain workers, and, hopefully, how to weather future downturns. Workers who can wear many hats, solve problems and see the big picture will have a leg up in the revamped and revitalized automotive industry.

Dziczek is director of the Labor and Industry Group and assistant research director at the Center for Automotive Research in Michigan.