Economic troubles for Big Three automakers trickle down to Columbia auto parts manufacturers

Monday, December 1, 2008 | 6:56 p.m. CST; updated 12:27 p.m. CST, Tuesday, December 2, 2008
John Kessler inspects parking brakes for Honda Civics at Otscon Inc. on Monday. Kessler has been working at Otscon, an auto part manufacturer, for two and a half years. He oversees the eight people who make parking brakes.

Rubber belts and hoses made by Gates Corp. are used in a variety of industries. The story has been changed to reflect that information. An earlier version of the story incorrectly listed specific industries Gates products are used in.

COLUMBIA — Dana Corp, one of the four major automotive parts manufacturers in Columbia, has laid off 50 people even as the federal government weighs a $25 billion bailout for the Big Three automakers.

Columbia, with its strategic location between the two biggest cities in Missouri, is attractive to manufacturers, and major companies have a long-standing presence in the city. But with the major American companies facing a downturn, it is a difficult time for auto parts suppliers in Columbia.

Local auto parts manufacturers

Dana Corp. manufactures axles and driveshafts, as well as sealing, thermal, and structural products. Phone calls on Monday to get updated number of employees from Dana Corp. were not returned.

Location: 2400 Lemone Industrial Blvd., Columbia, MO 65201

Otscon Inc. employs 190 people in Columbia currently. It manufactures parking brake systems, including brake pedal, hand lever and foot pedal.

Location: Otscon Inc., 50 N. Rangeline Road, Columbia, MO 65201

Gates Corp. employs 141 people in its Columbia plant. It manufactures rubber and small parts for its other facilities in the United States.

Location: 3015 Lemone Industrial Blvd., Columbia, MO 65201

Engineered Plastic Components Inc. employs 41 people. It manufactures automotive interior and exterior trim, such as molding.

Location: 4000 Waco Road, Columbia, MO 65202

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Dana Corp.'s layoffs are an effect of the overall turmoil in the automotive sector,   said Bernie Andrews, president of the local economic development organization Regional Economic Development Inc.

When it comes to the automotive parts manufacturing sector, Missouri is in a tenuous position, Andrews said. The automobile manufacturing plants in the state are all domestic auto makers. Unless these plants get new orders, manufacture smaller cars or produce cars that are more energy efficient, the auto sector in Missouri will continue to lose more jobs, Andrews said.

"Missouri has not had any new auto manufacturers locate in the state, and many of the suppliers are moving closer to the new manufacturing plants which are generally in the Southeast," he said.

Dana Corp. is one of the four auto parts suppliers in Columbia. The others are Otscon Corp., Gates Rubber Co. and Engineered Plastic Components Inc., which is housed in the premises of Collins and Aikman Corp., an auto supply firm that filed for bankruptcy in 2005.

Based in Toledo, Ohio, Dana Corp. employs around 35,000 people in 26 countries. In 2007, the company reported sales of $8.7 billion, with more than half of its revenue derived from outside the U.S.

In its third-quarter report published on Nov. 6, Dana Corp. announced $15 million in earnings before interest, taxes, depreciation, amortization and restructuring, compared with $126 million in 2007. Dana Corp.'s core products include axles and driveshafts, as well as sealing, thermal and structural products. Among its customers are Ford, Chrysler, General Motors and Toyota.

Otscon Inc. employs 190 people. "We have lost 10 employees in the past quarter. At this time, we have no plans to hire replacement employees for these positions," Kathy Cowan-Smith, human resources director of Ostcon, said.

The company does not have plans to hire them back, but might this spring, she said.

Cowan-Smith said the company has not seen a major slowdown. "No, we are not affected by the Big Three layoffs," she said. The reason behind that, she said, was that Otscon supplies to a good mix of car manufacturers, fuel-efficient cars and top car sellers in the area.

Otscon manufactures mainly parking brakes system for car-makers such as Honda, Nissan, Subaru and Toyota. Otscon's customers are in Ohio, Tennessee, Alabama, Mississippi, Canada and Mexico.

Engineered Plastic Components Inc., located on Waco Road, "is keeping on with tough economic times as effectively and efficiently as we can," said John Johnson of the firm's human resources department on Monday.

"We are continuously improving current operations to deal with existing market situations by strategically planning and forecasting sector issues and then adapting operations," he said.

The company, based in Grinnell, Iowa, has three automotive supply plants in the country, including the one in Columbia. The Columbia plant employs 41 people. The plant laid off five people, both salaried and hourly, near the end of October.

Engineered Plastic Components' plant in Columbia manufactures instrument panels for Mitsubishi Motors North America. Its secondary customer is International Automotive Components Group in Mexico.

As the auto industry crisis unfolded, Johnson said, the plant felt the pinch as Mitsubishi Motors declined its total orders. "But they are exporting U.S.-made cars to Russia and China," Johnson said, helping the firm to keep up its aspirations.

Gates Corp., headquartered in Denver, Colo., employs 141 people, 61 of whom are salaried full time in its Columbia plant. Forty-nine are full-time hourly, said Jessica Cloeter, corporate communications specialist.

The Columbia plant manufactures raw component cord and rubber parts for belt drive systems and supplies these to other facilities internationally and across the country. Since the plant does not only cater to the automotive sector, manufacturing rubber belts and hoses used in a variety of industries, the recent downturn has not had a significant impact on the plant, Cloeter said. The company has 59 plants worldwide.

The manufacturing sector in Columbia employs less than 9 percent of the total workforce, and at the beginning of the year around 700 people were employed in the automotive parts manufacturing sector in Columbia, Andrews said.

"The turmoil in the overall automotive industry affects retail sales, and retails sales tax revenue is a crucial amount of the city and county budget," Andrews said. "As this sector gets badly hit, many people will feel the pinch."

Otscon Inc., located on North Rangeline Road, has more than 300 suppliers in dye casting, fasteners and steel industries.

"Most of the U.S. auto jobs aren't moving overseas," Andrews said. "They are just disappearing with the cut in production."

There are four automobile assembly plants in Missouri: Chrysler has two in Fenton; General Motors has one in Wentzville; and Ford has one in Claycomo.

With the downturn in the Big Three fortunes, the plants have an effect on suppliers and their locations.

"The activity at the plants is considerably down, meaning the need for parts from suppliers is down," said Terry Maglich, community and economic development manager for the Missouri Department of Economic Development.

The jobs that are supported by the auto parts manufacturers are mainly industrial jobs. Retail part suppliers sell aftermarket replacement parts and their business would be most affected by the general economy, Maglich said.

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