The pint-sized car tucked into the corner of Cobo Center during the 2012 North American International Auto Show was easy to miss. Yet the eMo concept vehicle, developed by Tata Technologies, was one of the annual event’s more important debuts.
While the $20,000 eMo likely will never make it to a local showroom, it’s designed to demonstrate that electric vehicles can compete on price with traditional, gas-powered automobiles. But more significant to the region and state is that while Tata Technologies is the R&D arm of India’s giant Tata Motors, much of the development work on the eMo, which will be sold in Asian markets, was performed in Michigan.
Tata is just one of dozens of foreign-based manufacturers, suppliers, and research firms that have been setting up shop or expanding their engineering base in metro Detroit over the last two years. The list is a virtual automotive who’s-who, ranging from Japanese giant Toyota, which opened a huge test track and research center near Ann Arbor, to French software firm Dassault, located in Auburn Hills, whose CATIA is the computer-aided design technology of choice for much of the automotive industry.
In the process, the companies have taken what was a glut of engineers and turned it into a severe shortage. Today, it’s not unusual for companies to be offering rock-star wages and benefits to the right people. On a related front, there are plenty of reports of companies raiding rival firms for engineering talent.
How times have changed, says Della Cassia, media communications manager at the Engineering Society of Detroit in Southfield. She recalls a gloomy afternoon a few years back when “Chrysler let go of 3,000 (engineers and support staff in one move), and our phones wouldn’t stop ringing with people looking for jobs. Many had families and were desperate.”
Various industry and trade organizations estimate more than 10,000 (of Michigan’s 225,000) engineers were let go by the Big Three automakers during the second half of the last decade. “It was a very dark time,” says David Cole, chairman emeritus of the Center for Automotive Research and who co-runs the AutoHarvest Foundation.
Now, the days of doubt and uncertainty seem a distant memory. Cassia points to an ESD job fair in the spring of 2011. At the time, the trade group had 40 companies participating, and 1,038 unemployed engineers lined up for interviews, resumes in hand, for few openings. In contrast, last autumn, when the next fair was held, 59 firms signed on, with 2,000 job openings to fill, but only 789 potential employees greeted them.
Neil De Koker, president and CEO of the Original Equipment Suppliers Association in Troy, tells a similar tale. Two years ago, Altair Engineering in Troy “had plenty of applications and no jobs.” But a few months ago, they put out the word that “they had 700 engineering slots and no one to fill them,” he says.
Several factors contribute to what has triggered various regional efforts to lure talent from other parts of the country and the rest of the world. A lot of engineers, especially younger workers who were relatively mobile, either left the market or shifted from automotive to another industry. Meanwhile, the bulk of the qualified engineers released by the struggling Big Three consisted of older workers nearing the end of their careers. Most received buyouts that helped nudge them into a less painful retirement. “And now,” laments De Koker, “they just aren’t interested in coming back.”
There are other factors at work, too, according to Cole, who is on the board of Carz, an Indian firm. He says the company is planning to shift operations to the United States. That might seem counterintuitive, but “with labor costs going up in places like India,” and other factors at play, “they found it cheaper to do work here,” he says. But hiring has been a challenge. Of the 700 resumes the vehicle service and repair company received, Cole notes there were only six with the needed qualifications.
The change reflects the nature of today’s auto industry. Consider that as recently as the early 1980s — when many of today’s older engineers began their careers — the average car had perhaps $50 to $100 worth of electronics content onboard. Today, even entry-level vehicles offer hundreds of dollars of digital technology such as anti-lock brakes, stability control, airbags, and emissions control systems. On high-end models, there are advanced infotainment systems, active cruise control, blind-spot intervention and park-assist that, combined, easily run $10,000 or more.
The problem, says Cole, is that “the changes in technology are happening so fast that, in many cases, the skill sets are missing.”
That’s one reason Ford Motor Co. recently announced plans to open a small R&D center near Stanford University in Palo Alto, Calif. The facility has the advantage of being close to established technology firms such as Microsoft, which developed the underlying software behind Ford’s popular Sync system, as well as the startups that help constantly refresh the digital world, says Paul Mascarenas, Ford’s chief technical officer.
Ford isn’t the only automaker betting on the talents of Silicon Valley. General Motors, the Renault-Nissan Alliance, BMW, Volkswagen, and Mercedes-Benz have research centers on the West Coast to take advantage of engineers skilled in infotainment and autonomous driving systems, says Dieter Zetsche, CEO of Mercedes’ parent, Daimler AG.
On the other hand, Zetsche quickly adds, “We still do a lot of engineering work around Detroit, mostly related to issues like homologation” — the challenging work of bringing products into compliance with increasingly stringent federal regulations. That makes sense, considering the Environmental Protection Agency’s National Vehicle and Fuel Emissions Laboratory is located in Ann Arbor.
Going forward, global manufacturers, suppliers, and R&D firms will likely fragment their research work to reflect the fact that skill sets often vary by region. The increasing globalization of the auto industry is also, somewhat ironically, leading to regionalization.
At one point, GM might have done the majority of engineering work on a vehicle like the redesigned Chevrolet Malibu or its all-new Sonic hatchback entirely at the Warren Technical Center. But today, such work is divided up worldwide. For example, the 2012 Malibu is sold in more than 100 countries. As a result, more projects are parsed out to a mix of engineering facilities — perhaps Germany is handling design, Korea is working on the powertrain, and Detroit is in charge of the suspension.
At Ford, local engineers played a supporting role in developing a new subcompact crossover called the EcoSport, but the automaker’s Brazilian team took the lead — no surprise, since that’s one of the emerging markets where the vehicle is likely to be successful.
Foreign automakers, meanwhile, are increasingly looking to expand in the U.S., with some coming to Michigan. Toyota is adding 100 jobs at its sprawling engineering center in Washtenaw County, says Jim Lentz, the OEM’s lead American executive. “There’ll be more in the future,” he adds. “Detroit is the hub of our engineering operations in North America.” A significant plus, adds Lentz, is the proximity of so many schools, like the University of Michigan, with major engineering departments.
In January, Nissan, which operates an R&D center in Farmington Hills, announced plans to add 150 engineers to handle a steadily increasing workload, with more to follow in 2013. Some will be replacements for talent cut in 2008, as the industry began its downturn. “We have a lot of very good senior engineers. But we need to bring on new and emerging talent,” says Carla Bailo, president of Nissan Technical Center North America, which has more than 800 employees.
Hyundai recently announced it would invest $15 million to expand its technical center in Superior Township; setting up, among other things, a 50,000-square-foot facility that will be used for extreme hot- and cold-weather testing. With construction set to begin by May, as many as 50 engineers and other workers will be hired when the facility opens next year. It’s the first time the automaker has built such a facility outside of Korea, says Sung Hwan, president of the Hyundai American Technical Center. The project was helped along by a $2.5 million state subsidy to cover the cost of a power substation.
Such efforts complement recruiting strategies by the Engineering Society of Detroit, which is aggressively working to lure more companies and projects to the region. A big selling point is the fact that Detroit traditionally has the highest number of engineers per capita of anyplace in the U.S. “So why wouldn’t they come here?” asks Darlene Trudell, an ESD executive vice president. The organization also is developing programs aimed at highlighting the engineering sector to regional K-12 students.
Cole, long associated with U-M, has helped create a nonprofit called Building America’s Tomorrow, which aims to not only increase the number of students who go into engineering but also to lure them, along with established engineers, to Michigan. Ford CEO Alan Mulally is among the project’s advisers.
In turn, the Detroit Regional Chamber recently launched MICHauto, a trade association that seeks to grow and promote the region’s automotive design and engineering assets and workforce. One hurdle is that the Obama administration has been slow to grant visas to foreign workers and students attending American universities. The reason is more political than practical, as Obama doesn’t want to be seen as favoring foreign workers over American laborers.
Gov. Rick Snyder takes the opposite approach. In recent weeks, he’s been touting immigration as a way to boost economic activity in the state. He’s already tasked agencies to do what they can to attract well-educated, skilled foreigners to Michigan. “I view it as education, to explain the facts to people,” Snyder says. “They’re not taking jobs; they’re creating jobs.”
Snyder, a former venture capitalist and past chairman of Gateway Inc., wants Obama and Congress to ease the entry process for people with advanced degrees, especially in science and technical fields, and allow more foreign graduates, either trained here or around the country, to work in the United States. The late Steve Jobs, of Apple, expressed frustration with Obama, saying the computer giant had to locate most of its engineering workforce in Asia due to a lack of available visas.
Meanwhile, employers with skilled jobs have seemingly no one to fill them. Three years ago, they were paying people to leave. “Now we have to put even more money on the table to get them back,” says Gerd Kleinert, CEO of KSPG Automotive, a supplier in Auburn Hills. db