Local auto suppliers boosted by rebounding auto sales

By
Courtesy of the Associated Press

January 9, 2014

The workforce of Middletown auto supplier Advanced Design Solutions doubled to 45 employees over the last year and a half to meet orders placed by its automaker customers, said President Mark Booker.

It’s one example of how a rebounding auto industry rippling through the region has translated to more orders — and greater hiring — at local companies that supply parts.

U.S. auto sales have now climbed four consecutive years to 15.6 million vehicles sold in 2013, according to Autodata Corp. That was the most since 16.1 million passenger cars and light trucks sold in 2007.

“The last year was a big year for the automotive industry,” Booker said. “More and more customers are giving us work” from his company’s Middletown location.

Ford Motor Co., General Motors Co., Honda of America Manufacturing Inc., Toyota Motor Sales U.S.A. Inc., Mitsubishi Motors North America Inc. and other major carmakers have suppliers embedded locally to provide parts to assembly plants in Indiana, Kentucky and Ohio.

After consumers delayed car purchases for several years, job growth, rising property values and a strong stock market drove car buyers back to dealerships, said Alec Gutierrez, senior analyst for Kelley Blue Book, a California company that publishes data comparing car values. Kelley Blue Book is a subsidiary of AutoTrader Group. Cox Enterprises owns a majority stake in AutoTrader, and owns this newspaper.

“Those consumers that have come back to the marketplace have been a significant boom to the industry in 2013,” Gutierrez said.

“The fact that we are now back to the type of sale volumes that was part of the norm prior to the recession says the economy and the auto industry is getting back to full recovery,” Gutierrez said.

Canadian company Advanced Design Solutions Inc. opened in 2011 a Middletown location on Reinartz Boulevard. Workers make steel material handling racks used by automakers to ship body panels, bumpers, gloveboxes and other car parts.

When Honda, GM, Chrysler and other customers launch a new car model, Advanced Design is contracted to make racks designed to hold those car parts. And the more cars the auto companies expect to sell, the more racks they order, said President and Founder Mark Booker.

The same growth seen at Advanced Design is happening at other local manufacturers recovering from the recent recession of Dec. 2007 to June 2009.

The region suffered losses during the economic downtown that led to closures in 2008 of GM’s Moraine assembly plant and Ford’s Batavia transmission plant, for example. Thousands of jobs were lost at once.

On the upturn, Butler County’s expanding auto industry includes ThyssenKrupp Bilstein of America Inc., which makes shock absorbers; and Valeo Climate Control, which makes auto heating and air conditioning systems.

Both Hamilton companies announced plans in 2013 to embark on major investments in new equipment, and committed to creating new jobs.

Bilstein Chief Executive Officer Fabian Schmahl told Journal-News in December that his company added 130 jobs in 2013 at the Hamilton plant on Bilstein Boulevard due to growing business. Bilstein now employs more than 350 in Hamilton.

“Based on the market data we see right now and on the specific releases from our customers, we’re expecting a strong 2014,” Schmahl said. “We’re having more and more discussions with different (original equipment manufacturers). They want to add value, new things for their customers.”

“I see the continuous demand on the quality side. The OEMs are focusing so hard on putting a good product out there,” he said. “They want to separate themselves from the competition. That trickles down to us immediately. We see our quality requirements go up every year, which makes it tougher for us, but we embrace it.”

Auto represented 50 percent of AK Steel Holding Corp.’s sales in the first half of 2013. As Butler County’s third largest employer, AK Steel has approximately 2,400 full-time workers at its West Chester Twp. headquarters and Middletown Works steel plant.

“For AK Steel, the strength in the automotive market has been beneficial across nearly all of our product lines. We have certainly seen the benefits in: carbon steel for exposed and unexposed body parts; as well as in specialty stainless, such as our Coshocton products for bright trim; and in the auto-chrome business for automotive exhaust applications,” AK Steel Chairman, President and Chief Executive Officer James Wainscott told investors in an October earnings call.

Takumi Stamping Inc. on Seward Road in Fairfield is a Toyota supplier, producing engine brackets and other components under the hood. Plans are to start construction on a building expansion after winter to add more factory floor as space has become cramped, said Tash Tashima, coordinator for Takumi Stamping. Along with more space, the auto parts manufacturer is hiring to fill 13 new jobs.

Currently, Japanese-owned Takumi employs 330 to 350 people including temporary workers at its North American headquarters in Fairfield.

“We are gaining more parts” to produce per automobile, Tashima said.

Analysts at Kelley Blue Book are forecasting sales of 16.3 million vehicles in 2014. Sales are expected to grow 4.3 percent, compared to 7.6 percent in 2013.

“I think we can look at ’14 and assume it’s going to be more competitive,” Gutierrez said.

“All the automakers have put such a renewed focus on engineering and ensuring they’re delivering quality products… it will be competitive and far more difficult for automakers to grow market share,” Gutierrez said. “In terms of selection, consumers have more credible options than they have in the past.”

The automakers will not want to fall in the trap of overproducing, and then pushing price deals to move inventory at the end of the year, he said.

“The question remains as to whether or not they’ll be able to manage production and be able to pull back when necessary if sales don’t live up to expectations,” he said.

Ford Motor announced in December plans to introduce 23 new models worldwide this year, the most launches in a single year over the last century. In 2013, Ford sold about 2.5 million vehicles in the U.S., a 14 percent gain over 2012, and its best sales year since 2006.

Sales at General Motors in 2013 rose more than 7 percent to nearly 2.8 million vehicles sold, according to Autodata.

“The biggest reason why people are feeling better about the economy and returning to showrooms is the progress that has been made on the jobs front… That’s the key to releasing even more pent-up demand in 2014,” said GM spokesman James Cain in an email.

Honda spokesman Ron Lietzke said the Japanese company’s Ohio assembly plants have returned to pre-recession production levels. Honda’s U.S. sales totaled 1.5 million vehicles in 2013, up more than 7 percent from the year before, according to Autodata.

“We’re coming off a year of very good production and sales. What it does at least for us is sustain our production,” Lietzke said.

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