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Auto downturn 'not a pretty sight' for Indiana

September 22, 2008

Indiana auto parts plants will continue laying off workers and closing for at least another year, and the plants probably won't bounce back when auto sales recover, projected for 2010, experts say.

Rebecca Lindland, director of automotive research at Massachusetts-based Global Insight, said that when sales rebound, most of the increased production will emerge at newly built assembly plants in the largely non-union southern United States - and those sprawling plants won't buy many parts from as far away as Indiana.

"It's not a pretty sight right now" for Indiana, she said.

Dozens of plants in Indiana have closed or laid off workers this year as the overall auto industry struggles to counter soft sales.

Autoliv Inc., a Sweden-based manufacturer of air bags and other auto-safety equipment, said Friday that it will close its plant in the northeastern Indiana town of Columbia City, throwing 380 employees out of jobs beginning this year, The Journal Gazette of Fort Wayne reported. The work will be consolidated at a Utah plant because the company doesn't foresee the American auto market recovering soon enough to justify keeping the Indiana plant open.

Last week, Cooper-Standard Automotive Inc. laid off 90 workers at its Auburn plant in northeastern Indiana. About 220 others will remain on the job, The Journal Gazette reported.

Forecasters say the cooling economy will result in only about 14 million vehicles being produced in North America this year compared with 16 million last year.

Alan Baum, director of automotive forecasting at The Planning Edge in Birmingham, Mich., said the cutbacks will last at least until the end of 2009.

However, Baum thinks the worst of the layoffs and closings are over. The downturn came suddenly as buyers rejected sport-utility vehicles and pickup trucks and looked to more fuel-efficient vehicles.

"We're in a very unclear period," Baum said, but, "A lot of the declines, we've already seen."

The extent to which Indiana plants bounce back will depend on demand. Plants that assemble hot-selling vehicles will create need for more parts.

Parts plants will get a boost from declining commodities prices, Baum added. Those declining prices will help cut costs as the suppliers strain to survive the downturn.

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