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Fallout: The Financial Crisis

Parts makers in wrench with auto woes

Alisa Roth Feb 18, 2009
Fallout: The Financial Crisis

Parts makers in wrench with auto woes

Alisa Roth Feb 18, 2009


Bob Moon: One of the worrisome “what ifs” involving a bankruptcy by any of the major carmakers is what if the dominoes keep falling, right on down the auto parts supply line? At its height the parts industry employed nearly 840,000 people. But over the past several years, more than a third of those jobs have been lost. Today, our Alisa is back with the tale of two people in the auto parts business — one blue collar, one white collar — both of them trying to weather the turmoil in the industry.

ALISA ROTH: Keith Thornton’s job used to be enough to support his wife and five kids, pay the mortgage and keep two cars. It was a union gig at an injection molding company called Plastech. It made makes parts for carmakers like GM and Chrysler. It didn’t pay as much as a job at the Big Three, or even at some of the larger parts companies, but it was enough.

In July, the plant shut down and he was laid off along with about 300 others.

KEITH THORNTON: Going out, movies, dinner, shopping, all that’s cut out. You have to spend what you got, you can’t spend something you don’t have.

Thornton is a big man, with a quick, shy smile and an Obama ski hat. I met him at a union hall in Dearborn, near the old plant. The union has a counseling program where laid-off workers can help each other figure out their options.

Thornton gets unemployment benefits. But the maximum payment in Michigan is $362 a week. That’s about $1500 a month. And in most cases you can only collect them for 6 months a year.

He says he and his wife started planning as soon as he found out he was being laid off.

THORNTON: Wow, this is going to be my last check, what am I going to do with it? OK, we got this in savings, how long this going to last? So you kind of prep yourselves. But it’s still hard, no matter which way you look at it, it’s going to be hard.

Getting laid off is particularly hard on parts makers. Even ones like Thornton who belong to the union. For starters, they’ve most likely been earning a lot less money than their Big Three counterparts. At Plastech, starting wages were 10-dollars an hour; they maxed out at just over 20.
There’s also no supplemental unemployment benefits-the Big Three makes up most of the difference between state benefits and wages for workers they lay off.

At the Big Three, laid-off workers still get health coverage. But once a parts-worker is laid off, he’s expected to pay for his own. Most end up like Thornton and his family-uninsured.

Rick McHugh is a lawyer with the National Employment Law Project. He helps laid off auto workers get their unemployment benefits extended.

RICK MCHUGH: If you’ve been making 30-, 35-, $40,000, it’s not going to take very long to not being able to make a payment, apply for food stamps, living with relatives and that sort of thing.

Thornton is hoping to avoid that. He’s enrolled in a community college program, with help from the state. He’s given up on the auto industry; he’d really like to get in to the food business-which is what he did before coming to Plastech — and maybe run his own restaurant someday.

But right now, what he really needs is money. He wants to work. But to keep his unemployment benefits, he has to prove he’s looking. He says he’s handed in dozens of applications. But there just don’t seem to be any jobs.

THORNTON: Everybody is very cordial and very nice…but we’ll get back with you.

So far, nobody has.

On the other side of town, Brian Shellabarger worries about his job. He’s an engineer at Autoliv. It’s a Swedish safety equipment company that supplies just about all the big carmakers. They have four research and development facilities in the U.S., including the one in Town name where Shellabarger works.

He thinks his job is safe. But he’s not naive:

BRIAN Shellabarger: The company’s gotten smaller every year that I’ve been here, I think. I’ve managed to hang on.

Shellabarger’s from the Detroit area. So he grew up watching the ways the auto industry can change the region’s economy. And he’s probably more connected to the industry than most people, since his wife works for Autoliv, too.

Shellabarger: I mean, I like to think that, you know, if you work hard and you’re talented you’ll be okay. But I know that’s just not true. I’ve seen a lot of good people that have been let go.

Including his father, who was an engineer there. Until he got let go this month.

Shellabarger told me that just to be safe he and his wife have started making contingency plans. Mostly that means making sure they could pay the essentials, like the mortgage and car payments and groceries, on just one salary. And they’ve sort of talked about the things they could cut out if they had to — some of their Tigers tickets, cable TV.

They hope they could still hang on to their house, which has three bedrooms and a front porch that looks like it would be very inviting when the temperature’s not below zero.

Shellabarger: We just bought our house two years ago, of course at the peak, just before the market took a real dump. So we’re stuck. But we’re happy to be stuck.

Back in Dearborn, Thornton’s afraid he might lose his house. His wife doesn’t work. He says with five kids, there’s plenty do there. But she’ll have to start looking soon. Their cars are paid off, but insurance and gas are expensive. Even so, they’re really trying to hang onto them. Since as he puts it, it lets him and his wife go in different directions to look for help.

Mostly, he’s trying to get used to needing help:

THORNTON: Oh yes, oh yes, it plays with your pride and conscience but it’s something you have to learn how to swallow.

In Dearborn, Mich. I’m Alisa Roth for Marketplace.

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