In The News
Feb 6
Over the past several months, private employment in the U.S. has begun to rebound in an increasingly strong way. Through all of 2011, the private sector averaged 160,000 new positions per month, exceeding the monthly rates of population growth (about 140,000) and labor force growth (only about 20,000).
“Everyone is hearing about continued debt concerns in Europe, but when it comes to not hiring in America, it’s used as an excuse not to hire, rather than a reason,” notes Rob Romaine, president of MRINetwork. “Except for companies with heavy exposure to the European market, businesses are making hiring decisions based on the customers walking through their front door, not uncertainty surrounding sovereign debt an ocean away.”
A recent survey of MRINetwork recruiters noted an increase over the last six months of employers backfilling positions that had been left unfilled for two years or more. As one respondent said, “I believe [employers] cut so deeply over the past two years that productivity has suffered. Today, they are hiring out of necessity and a belief that the economy has begun to turn.”
The evidence that the economy has turned is mounting. According to the Bureau of Economic Analysis, the U.S. economy grew at an annualized rate of 2.8 percent during the fourth quarter of 2011, the fourth consecutive increase. Total GDP growth in 2011 measured 1.7 percent, not a rapid rate of growth, but a far cry from projections of a double-dip recession.
Such growth numbers are, compared to past periods of recovery, rather weak. Yet, most important is where the growth is coming from. In 2011, MRINetwork saw placements in the construction space grow by nearly 50 percent, industrial placements by more than 30 percent and consumer products and services by more than 20 percent.
“Increased hiring of senior-level talent in these sectors is promising for the general economy,” says Romaine. “It indicates a confidence and a willingness by employers to invest in talent across broad swaths of the economy despite headwinds that still persist.”
But just as employers seem to be ramping up their hunt for senior talent, the availability of such talent may be shrinking as well. Over the last six months, employers have continued to increase their use of counter-offers, hoping to retain top talent long enough to backfill their positions. In highly technical fields, such as chemical engineering or biotechnology, employers have been forced to sweeten counter-offers because there simply aren’t as many candidates as there are job openings.
Indeed, the unemployment rate for those with a bachelor’s degree or higher—perhaps the broadest definition of the skilled, professional workforce—fell in December to 4.1 percent, its lowest rate in nearly three years.
“A full-blown, double-dip recession in Europe could have a chilling effect on hiring in America. But, until it does impact the U.S. directly, businesses are beginning to return to more normal hiring patterns,” notes Romaine. “Companies are backfilling vacancies and investing in new positions. We are in the midst of the slow, but seemingly stable, rebound that had been projected.”
EUROPEAN NEWS
Nations Look to Change Economic Course
Feb 6
The most recent numbers from the euro zone show that the unemployment rate in the last two months of 2011 reached its highest level since the birth of the euro. Through most of 2010 and the first half of 2011, unemployment continued to fall despite a faltering economy. However, during the last half of the year, unemployment in both the euro zone and the broader European Union reversed course, hitting record highs.
The unemployment rates can be staggering. Lithuania’s unemployment rate rose to 15.3 percent during the third quarter of 2011 and, in Greece, unemployment rose to 19.2 percent in October. Spain’s rate reached 22.9 percent in November and December—similar to the unemployment rate in the United States during the Great Depression.
Yet, amidst these staggering unemployment rates, Austria, the Netherlands, Switzerland, and Germany held strong at 4.1 percent, 4.9 percent, 3.3 percent, and 6.7 percent, respectively. The German unemployment rate is actually at its lowest since the reunification of East and West Germany, making it the largest country in Europe by both population and economy.
In January, EU leaders met in Brussels to try to work out a new plan to balance three seemingly opposing forces:
unemployment, austerity measures, and growth. But as is the very nature of the European Union, each member country is also taking efforts to rectify their own employment situations.
In France, President Nicolas Sarkozy recently made a televised announcement about some of his plans. Included is a proposal to shift social welfare costs from companies to consumers by cutting payroll taxes while raising the value-added tax (VAT). Sarkozy also proposed a new employment contract, which will weaken the rules that created France’s legendary 35-hour work week.
The changes are being proposed to help make French companies more competitive, but they are also highly unpopular among French voters, who will be heading to the polls in late April.
France’s 9.9-percent unemployment rate, though, is minor compared to Spain’s 22.9-percent rate. A new Spanish government elected in December, led by Prime Minister Mariano Rajoy, is now preparing to do battle with unions to begin making changes to labor contracts that are expected to decrease wages, worsen working conditions and reduce guaranteed severance. Critics worry that cuts may hurt the economy further, but still may not be deep enough to actually spur job growth.
As European leaders continue to seek out economic mechanisms to curtail joblessness, the world looks on. In the past, growth in the American economy has been sufficient to pull Europe out of recession. But with U.S. GDP growth at just 1.7 percent in 2011, that boost didn’t occur.
While unemployment is all but certain to remain high over the coming year, it is also possible that the situation will create the political will to force fundamental changes to the business climate in Europe. Such changes could even make European employment practices more competitive with those in America.
Denso Growth Heats Up
Jan 10
DETROIT – To the casual observer, automotive heating, ventilation and air conditioning might appear to be must-have commodity products with little value-added content, but not to Denso.
Japan’s largest auto supplier , which is the No.1 producer of automotive thermal management systems with about 30% of the global market, sees broad opportunities for high-tech additions to its HVAC portfolio as electric vehicles present new challenges in ways to generate heat within the passenger compartment.
This explains Denso’s announcement this week here at the North American International Auto Show of plans for a new HVAC plant in Silao, Guanajuato, Mexico.
It will be Denso’s third plant in Mexico, but the first dedicated to thermal products. Denso has three HVAC plants in Michigan, one in Arkansas and one in Canada.
“Mexico is the right decision for us because it completes our thermal manufacturing footprint in North America,” Hikaru “Howard” Sugi,president of Denso International America, says at the press conference.
“Mexico is a growing market, and this is an opportunity for us to strengthen our competitiveness and our global leadership position,” he says.
Construction of the $57 million facility is set to begin in October 2013. Some 400 employees are expected by 2015.
Getting close to its customer base is a primary reason for the new plant.
Several auto makers are ramping up vehicle production in Mexico, and Audi executives extol the virtues of Mexico in interviews this week about plans for the auto maker’s first North American assembly plant.
Denso has identified Ford and Honda as its first customers for the new operations in Mexico. Nissan also has a plant 100 miles (160 km) away in Aguascalientes producing the Sentra, Tiida/Versa and March.
Much farther away, in Tijuana, is Toyota’s plant, which assembles the Tacoma pickup. Toyota owns about 25% of Denso.
Sugi says the new Silao plant will supply HVAC units only to vehicle-assembly plants in Mexico, not the U.S.
Thermal systems are Denso’s most important product sector, representing 30% of sales.
As electric vehicles become more popular, Sugi says thermal systems will evolve to provide critical cooling of battery modules and motors while at the same time keeping the passenger compartment comfortable for occupants.
Conventional AC systems require a compressor powered by the engine. “In an electric vehicle, the compressor moves to an electrically driven type, which needs a small battery and an inverter,” Sugi tells WardsAuto in an interview here.
He predicts EVs will make up as much as 10% of the global vehicle market by 2020.
Likewise, stop/start systems, which are gaining acceptance as a method of saving fuel by shutting down the engine while idling at traffic lights, create a market for Denso’s electrically driven water pumps.
As engines become smaller and integrate turbocharging, this drives demand for additional Denso products such as exhaust-gas recirculation valves and heat exchangers.
“It all requires thermal management, which means our content is increasing,” Sugi says.
With skyrocketing demand for forced induction, Denso is considering entering the turbocharger market, Sugi says.
Established players BorgWarner, Honeywell (Garrett) and Japan’s IHI now are joined by new entries, including Continental and Bosch Mahle.
Denso, which has its North American headquarters and tech center in Southfield, MI, is stepping up its development of hybrid products, such as batteries and stop/start systems. It also is building a battery-cooling lab in Southfield that will add up to 40 new jobs, says Doug Patton,senior vice president-engineering for Denso America.
In addition, Patton says the supplier plans to manufacture full hybrid components at an existing U.S. plant by 2015.
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