Auto-job slide accelerating

Indiana's automotive manufacturing employment for the last decade peaked at 142,000 in 1999. Since then, the sector has
shed 20,300 jobs–a staggering one-seventh of its total. Another 5,220 are slated to be cut soon.

And there's no end in sight.

Replacing those lost auto factory jobs is an uphill battle economic developers like Indiana Secretary of Commerce Nathan
Feltman struggle with daily. For every two steps forward–such as the 2,000-worker Honda plant under construction west of
Greensburg–he said there's at least one step back.

On bad days, more than one.

"Unfortunately, the story is almost always the same," Feltman said. "I've heard it repeated many times:
'We're way over capacity. We're not getting the same number of orders we used to from the Big Three. Some of our
equipment is being moved overseas where parts can be produced cheaper.'

"In many cases, the pain's been put off for a decade or two," he added. "Now, [factories] are in a position
where they have to make changes."

Landing the new Honda plant was Indiana's biggest economic development win in years. Unfortunately, the gain will be
nearly completely offset by the 1,900 jobs Indiana will lose when Ford Motor Co. shutters its east-side steering-systems plant
in 2008.

Same goes for the state's next-biggest auto manufacturing expansion since 2005: the 1,000 jobs that will be created when
production of Toyota Camrys begins at the Subaru plant in Lafayette this spring. That gain was more than offset by the loss
of 1,325 jobs when Guide Corp. closed its lighting-systems plant in Anderson in January.

And the trend continues at auto plants across the state.

"Basically, you've got all these companies with a gun to their heads being forced to do things to keep their products
fresh, to be nimble and adjust," said Ball State University economist Patrick Barkey. "The hardest thing is to grow
in a way we're not used to."

There's no single cause for the slide. Auto industry experts point instead to a complicated mix of factors that's
steadily eroding employment.

The bottom line comes down to supply and demand. Consumers are buying fewer domestic cars. And that's sending tremors
through Indiana's auto supply chain, which is still heavily tied to Detroit.

"You can really trace the root of the problem to having a small customer base," said Kim Hill, associate director
of the Ann Arbor, Mich.-based Center for Automotive Research.

"Not to knock the Big Three, but if you're very dependent on one company or segment of the industry and that segment
takes a major hit, it follows that you're going to take a major hit as well."

Contrasting communities

The trend is hitting Indiana–especially its smaller cities–hard.

In 1999, auto manufacturing employment accounted for 4.73 percent of all the state's jobs, according to the U.S. Department
of Labor. By the end of last year, that percentage had dropped to 4.08.

One of the hardest-hit communities is Connersville, whose Visteon Corp. heating and air- conditioning plant has been shrinking
for years. Visteon last month announced that the plant will close in September, eliminating the last 890 jobs.

At its peak a decade ago, the plant employed nearly 3,400. Visteon was once the biggest employer in Fayette County, which
has only 25,000 residents. The county is struggling with a 9-percent unemployment rate–Indiana's second-highest and far
above the state's 5.8-percent average.

At least the bad news didn't come all at once with one mass layoff, Connersville Mayor Max Ellison said. He said his
city long has braced for the final blow.

"We hoped for the best, but expected the worst," he said. "I think it's time for Indiana to diversify.
The only way we're going to survive this is to think differently. And we can't do it by tying all our loose ends to
the auto industry."

To offset the losses, Connersville has attempted to help its other employers expand, such as compressor-maker Dresser Inc.
and aluminum-extrusion manufacturer Indalex Inc. Ellison pointed to several hundred resulting jobs.

But local communities can do only so much. Many decisions affecting their futures are made on a national or international
stage.

Take Toyota's decision to build Camrys in Lafayette, which was an outgrowth of its October 2005 purchase of a 9-percent
stake in Fuji Heavy Industries, the parent of Subaru.

After Subaru reported that it had excess capacity at its Lafayette plant, Toyota decided to use the site to produce as many
as 100,000 vehicles a year.

Toyota's investment was $230 million. Compared with the $1.3 billion the automaker is spending to build a plant in Mississippi,
the Subaru opportunity was "a match made in heaven," Toyota spokesman Dan Sieger said.

The company didn't approach Indiana for incentives until it had decided to expand.

"The reality is, we didn't choose Indiana. Indiana kind of chose us, because that's where the Subaru plant was,"
he said. "We didn't have to build it from scratch."

But local efforts can pay off. To help attract Honda's attention, about 300 Greensburg-area residents wearing red shirts
organized into the shape of an "H." The resulting photo became part of the state's pitch.

Honda "had an impression that, 'Hey, this state really wants our investment,'" Feltman said. "That
made a big, big difference."

Greensburg Economic Development Director Vicki Kellerman said the town also made sure it had the rest of its ducks in a row.

Honda passed over a competing site for the plant because it couldn't get enough property owners to sell their land, Kellerman
said.

In contrast, she said, "Our economic development corporation had options on 430 acres with rail. We were one of six
communities in the [state's] shovel-ready site-certification program. You just have to be prepared."

Advanced manufacturing

Eventually, the domestic automakers will stabilize, and together they'll likely control nearly half the U.S. auto market,
said Hill of the Center for Automotive Research.

When that happens, the companies that prosper won't be the stand-alone parts suppliers slavishly producing the same part
for just one automaker, the center said in a recent report.

Instead, it will be cutting-edge manufacturers that are nimble and take on much more responsibility, engineering parts or
assembling whole auto systems and providing different versions to multiple buyers.

"The continued efforts by original-equipment manufacturers to reduce costs has led to an ever-increasing amount of manufacturing,
sub-assembly and R&D work being shifted to suppliers," the report said.

The state's economic development leaders aren't giving up on the sector. The Central Indiana Corporate Partnership,
for instance, is rolling out an initiative targeting opportunities in manufacturing, distribution, transportation and logistics.

CICP leaders say Indiana still has an abundance of strengths, including its central location, low cost of business and established
industrial infrastructure.

They envision a high-tech future in which there will be fewer auto manufacturing jobs, but those that remain will require
a highly educated–and well-compensated–work force.

"Can we continue to build on past success? Absolutely," said Lisa Laughner, who leads the CICP initiative. "Will
we see some change of what companies are present here? Maybe.

"One thing's for sure. The Big Three are getting hammered right now, and they're working hard to get their cost
structures in line. It will be a painful process. But they're going to get there, and they'll be stronger."