Monday, July 25, 2005

Detroit could lose as the best and brightest jump ship

By John McCormick / Autos Insider

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Any business owner will tell you that finding and keeping good employees is one of the toughest challenges. An equally challenging problem for large companies is accomplishing a head count reduction, or as we in the media like to say, 'slashing the workforce.'

It's a problem facing Ford Motor Co. right now as it makes sizeable cuts in its white collar staff levels, but it has also been on the agenda at Ford's cross-town rivals. The issue for companies the size of world automakers is how to shed employees in an equitable manner so as to avoid generating widespread ill will and potential legal challenges.

Unfortunately, the reality of these well-intentioned attempts to be fair is that some of the best employees leave and much of the 'deadwood' - the ineffective, non-producers - stay on the payroll. This observation is not mine alone; I hear it repeatedly from insiders among the middle ranks at the Big Three, as well as from contacts at top automotive supplier companies.

For good employees, the attractions of the company buy-out programs can be hard to resist; a year's pay and benefits and the opportunity to find a new job with a supplier eager for an OEM employee's expertise or perhaps another automaker with a brighter outlook.

In the latter case, one name, Hyundai, jumps to mind immediately. This Korean automaker's rapid rise to prominence in the US market is catching the attention of many employees in the Detroit automotive community. Already Hyundai's new R&D center, nearing completion just east of Ann Arbor, has snapped up some top Detroit-grown engineering talent.

And then there is Toyota, an automaker that actually makes money, which has plans to enlarge its technical and developmental facilities in southeast Michigan. Expect the resumes to be flying as Toyota's expansion materializes.

I remember years ago in my native Britain, the government bemoaned the so-called 'brain drain' of university-educated scientific and engineering talent to America, where salaries and prospects were much brighter. Now Detroit's Big Three are facing a related challenge, as some of the best and brightest employees jump ship, leaving the less able behind.

The debilitating consequences of this trend can be seen in the plunging morale levels among employees at some of Motown's automakers and suppliers. While financial losses continue and the dreaded human resource departments' axes are being sharpened, it's hardly surprising to see this reaction.

A related concern is the long-term effect of this outflow of talent on new product development. Detroit's automakers have done such a great job of improving new vehicle quality in recent years, it would be a major step backwards if future products suffered from a lack of expertise.

John McCormick is a columnist for Autos Insider and can be reached at jmccormick@detnews.com