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Carmakers’ footprint in the region is shrinking

01:00 AM EST on Wednesday, December 3, 2008

By ROBERT WEISMAN

The Boston Globe

At no time in the past half century has the US auto industry carried less weight in Massachusetts than it does today. The last auto assembly plant in the state closed 20 years ago, leaving behind the dealers who sell the cars and a diminished network of parts suppliers and distributors. Few are clamoring for an industry bailout.

“If the bailout is just to continue with business as usual, then it’s not going to help us or anyone else,” said Mike Elwood, vice president for Azure Dynamics Inc., where 65 workers at a Woburn plant build electrical converters and motor controllers for hybrid and electric vehicles. One of Azure’s customers is Ford Motor Co.

Massachusetts companies like Azure are part of the automotive food chain, selling components that are used to build new cars and to repair vehicles already on the road. Most have diversified beyond total reliance on the fortunes of the Big Three domestic automakers — General Motors Corp., Ford, and Chrysler LLC — by also selling to foreign manufacturers or supplying replacement parts.

“Even if the Big Three go into bankruptcy, that doesn’t mean they’re going to vanish,” said Irwin Young, owner of Central Automotive Warehouse in Allston, where the sale of GM ACDelco and Ford Motorcraft replacement parts represents a third of his business. The parts are shipped to the service departments of dealerships and to auto parts stores.

With domestic automakers this week seeking $25 billion in loans on Capitol Hill, advocates argue that one in 10 jobs in the United States depends on the three manufacturers and their far-flung suppliers, vendors, and dealers. America’s hobbling auto industry is said to be “too big to fail” in large swaths of the industrial Midwest, where stressed executives and distressed workers await a government bailout.

But in Massachusetts, the once-vibrant industry has shrunk to Lilliputian dimensions. Giant auto factories once dotted the Bay State, with a General Motors assembly plant in Framingham employing as many as 5,000 workers in the post-World War II era, building Buick Century and Oldsmobile Cutlass Ciera models before shutting its doors in 1989.

Today, auto-related jobs represent a tiny fraction of the state’s 3.3 million-person payroll workforce. The state’s total number of motor vehicle parts manufacturing and distribution jobs had dwindled to 1,840 in the first quarter of this year, according to data from the Massachusetts Department of Labor and Workforce Development.

“If what we have in Massachusetts was typical of the auto industry, we’d be insane to spend a dime,” said Barry Bluestone, dean of Northeastern University’s school of social science, who worked at a Ford carburetor plant as a young man. “But if you’re in Ohio or Michigan, this is your lifeblood. This is really a Midwest bailout.”

One reason the overall number of manufacturing jobs in Massachusetts has stabilized in recent years, after decades of layoffs and plant shutdowns, is that the state has become steadily less dependent on the automotive sector, said Bluestone, one of the authors of a recent Boston Foundation report on manufacturing.

The ranks of auto production and distribution workers in Massachusetts are even dwarfed by the more than 20,000 employees the Massachusetts State Automobile Dealers Association listed as working last year at the state’s 461 dealerships, a sector where the failure of GM or its US rivals would have a greater impact.

Dave Williams, executive vice president of the state dealers association, said “it’s unfathomable there would not be a source of cars manufactured in the US by the Big Three.” But he conceded that if GM or another automaker were to go out of business, American or foreign competitors — many of which build cars in the United States and overseas — would expand production to meet demand.

Massachusetts dealerships, presumably, would sell just as many cars from the remaining producers. And the state’s smaller auto businesses would adjust operations to focus on foreign-built cars or used cars, just as many of them already have been doing.

“I’m better off if they go out of business,” said Charles Ross, owner of Auto Electric Supply, a small machine shop in Hyde Park that remanufactures starters and alternators. “If people aren’t buying as many new cars, they’ll have to fix the old ones. That’s good for us.”

For some auto-related businesses, though, the survival of US manufacturers remains preferable even if they don’t account for as much revenue as they once did. “Selfishly, my sense is that if they get support from the government, our lives will be less chaotic in terms of sourcing supplies,” said Young at Central Automotive Warehouse.

And some economists say the fallout from an auto industry collapse in Massachusetts or other states far from the Rust Belt wouldn’t be measured simply in jobs at manufacturing plants or dealerships.

“It would have a significant impact everywhere,” said Mark Zandi, chief economist at research firm Moody’s Economy.com, who suggested the loss of millions of auto jobs would have a ripple effect on all kinds of retailers and service firms across the nation.

“This could be disastrous for states like Michigan, Ohio, Indiana, Illinois, and Wisconsin, but the entire country would be hurt,” Zandi said. “Job losses would be so substantial they would affect businesses everywhere. They would also undermine confidence.”

But consumer confidence already is sagging in response to the economic downturn, putting increased pressure on struggling automakers and the lawmakers weighing an industry bailout. “The problem is that no one’s buying cars now,” Bluestone said.

With consumers tightening their belts, there is little illusion the automotive industry can continue on its current course. Many believe automakers should be pressed to boost productivity and invest in alternative energy technologies as part of a bailout.

Elwood, at Azure Dynamics, said the US government should require automakers to step up efforts to market hybrid or electric vehicles before it ponies up bailout funds.

“This should be 100 percent conditioned on electrification of the power train,” insisted Elwood, whose company has been working with Ford on a hybrid version of the E450 truck. “That’s the first step away from foreign fossil fuel dependence.”