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Fallout From Auto Industry Collapse

Fallout From Auto Industry Collapse
January 20, 2009

In better times, Detroit's Big Three automakers signed multi-million dollar corporate training contracts with local community colleges to offer customized programs for their employees. They offered these same employees and their dependents tuition assistance grants to further their education as they saw fit. And in better times, the state's budget also supported these community colleges at healthy levels. Now, with the auto industry and the state on the critical list, community colleges are being hit hard.

Mott Community College in Flint, 66 miles northwest of Detroit, has witnessed its longstanding relationship with General Motors — which was founded in the town in 1908 — slowly evaporate through the years. Michael Kelly, Mott spokesman, said the college generated about $5 million from direct auto industry training, mostly with GM, in 1998. Now, in a dramatic decrease, he said the college is generating less than $50,000 through these corporate training programs.

As part of some of these larger contracts, Mott used to send instructors to the automobile plants themselves — a local Ford and five GM factories in the Flint area — to train student workers on site. Kelly said this type of corporate training ended in April. Robert Matthews, Mott's director of work force development, said GM used to send workers from all aspects of its operation to the community college for training, not just those working in automobile assembly.

"We did a lot of customized training from A to Z, including programs for those with office occupations and those who needed skills with computer software," Matthews said. "Now, we don't do as much customized training with GM, as they have fewer corporate training dollars — almost down to none."

Kelly said as recently as seven years ago, when a new automotive plant was built in the area, the college offered a 24/7, multi-shift training program for a period of time to accommodate the workers of the 24-hour facility as they learned how to operate on the new assembly line.

Degree students at the college have also been influenced by the recent turmoil in the automobile industry. While Matthews said the college does not dissuade students from certain fields, he said that many who are hoping to work in the automotive industry have begun to look elsewhere on their own. He drew particular attention to the Mott's drafting and design program, which he said often attracts many students seeking design jobs with the major automakers. Recently, he said, many of these same students are now looking to take their skills to other, more profitable manufacturing industries, such as aerospace engineering and agricultural equipment.

While the lost contracts also mean less work for the college to do, there was no equivalent silver lining for other colleges operations, which face tight limits on state spending.

Mott's total budget was $41.8 million during the 1998-9 academic year; state appropriations were $14.8 million, or about 35 percent. Last academic year, the total institutional budget was $71.1 million. State appropriations, however, only constituted 22 percent of the budget, at $16.3 million. In the meantime, however, Kelly said the institution's historically high enrollment has helped bolster its budget in the face of sinking state appropriations. Mott's enrollment was up 3 percent in the fall, totaling more than 11,000 students; in 1998, it had about 7,500 students.

In Detroit, Wayne County Community College no longer has any corporate training contracts with any of the Big Three automakers. Until recently, the college offered on-site training at two Ford facilities, said Reginald Witherspoon, the college's associate vice chancellor of workforce development. The company discontinued this training two years ago. These contracts earned the college around $400,000, he noted. As late as six years ago, Witherspoon said, the college's largest corporate training contract, with Chrysler, was worth $3 million.

"These programs didn't generate profits for us like they might have for other institutions," Witherspoon said of the automotive contracts. "Still, there were non-financial benefits. They kept faculty abreast of people in industry and trade, in addition to the new materials and equipment being used. But revenues and resources have dried up for [corporate] training programs and initiatives to reduce cost. Now, we're looking to create training opportunities for individuals outside of manufacturing to help those in shifting economic sectors."

While the recent lack of corporate contracts has not caused major budgetary problems for these Detroit area community colleges, other recent decisions by the Big Three automakers could affect their enrollment and revenues in the future. It turns out, for example, that while the perk of private plane flights for CEO's got most of the attention, other perks of the auto companies — and perks that helped many non-CEO's — came in the form of tuition reimbursement.

Citing "severe financial constraints," Chrysler suspended its tuition assistance program for active and laid-off employees in late October. The decision follows the June suspension of its scholarship program for dependents and a separate tuition assistance programs for retirees. Last summer, Ford suspended the company-paid tuition assistance program for employees and the scholarship program for their dependents. America's largest automaker, General Motors, however, has only decided to nix its scholarship program for dependents. So far, it is keeping its tuition assistance program for employees.

Though such decisions may be troubling to autoworkers and their families, even United Auto Workers officials acknowledge that tough decisions have had to be made to preserve the industry. The recent decisions by the automakers to suspend these tuition assistance programs are the result of a mutual agreement with the UAW. Christine Moroski, a UAW spokeswoman, said the union holds no separate funds for retraining or tuition assistance in the event of a large buyout of employees. Instead, she noted that there are negotiated agreements between the automakers and the union to provide corporate funds for educational opportunities only on a buyout to buyout basis.

Witherspoon said he did not think the loss of these automaker-funded tuition assistance programs would affect enrollment at Wayne County and other local community colleges that much. Witherspoon said he hoped the college would gain students now through other programs that may be serving many former auto workers, such as Michigan's No Worker Left Behind program — a program that offers two years of free tuition at any state college, university or training program for unemployed residents with a family income of less than $40,000.

Kelly was a bit more fretful about the effect of these suspended programs on Mott's enrollment. Though GM never formally directed workers to institutions like Mott for self-selective or additional training through these programs, he said the college saw quite a number who took advantage of the opportunity to enroll there. Recently, he said as many as 200 autoworkers took courses at the college through such funding. Unsure of whether the loss of these funds would affect enrollment, Kelly said the college would just have to wait and see.

 

 

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