Diversification will help suppliers weather storm from GM plant shutdown in Lordstown

Bill Koehler, CEO of Team NEO, is concerned about the workers who soon could be losing their jobs due to General Motors Co.'s decision to not give the Lordstown, Ohio, plant any new products next year. And he's concerned about the suppliers that serve the Lordstown plant, and the workers there whose jobs also could be at risk.

But when it comes to the region overall, he has fewer worries.

The economy is diverse, he said, and the region's manufacturers have "proven to be nimble over time."

This is a significant loss, but Northeast Ohio's manufacturers have experienced such loss before.

"I don't mean to be cavalier, but I do think being realistic about our economy and its diversity over time is an important aspect of this," Koehler said.

In general, automotive suppliers have diversified their customer bases over the years, which means the ripple effects of GM's cutbacks, locally and otherwise, could be contained.

Adding different platforms within automotive or expanding to markets like aerospace that are out of automotive altogether has been a way for companies to deal with the "peaks and valleys" of manufacturing, Koehler said.

Take, for instance, Jamestown Industries Inc. of Moraine, Ohio. Jamestown has a plant in Austintown, Ohio, that provides support for the Chevrolet Cruze to GM in Lordstown. In recent years, however, it has diversified to help protect the company from the volatility of the automotive market.

Lawrence Long, vice president of development for Jamestown Industries, is optimistic the company will be able to weather this latest storm. Diversifying the business hasn't been easy, he said, and neither was absorbing the loss as GM Lordstown went from three shifts to two to one. Jamestown Industries had to cut its shifts back, too.

But about three years ago, the company started to make a concentrated effort to diversify the services it offers.

So far, Jamestown has added logistics and transportation services, spinning off a new company, and entered into strategic alliances that allow it to offer services like product design and engineering. The company has almost 50 employees, Long said, and it plans to keep its location in the Mahoning Valley open.

"We're going to make it. It's devastating. It's a hard loss. It's General Motors, and they've been our flagship company that we've been in support of since we started. But we're being proactive," Long said.

There's always a "ripple effect" on suppliers when OEMs make a big change, said Julie A. Fream, president and CEO of the Michigan-based Original Equipment Suppliers Association, in an emailed statement. She acknowledged that the tier 1, 2 and 3 suppliers in the association would likely be affected by GM's cutbacks, but that it was too early to know specifics.

But Fream did see some cause for optimism.

"Additionally, as GM and the automotive industry increase production of autonomous, electric and hybrid vehicles, many suppliers will have new opportunities," she said in the statement.

The approximately 430 members of the Brecksville, Ohio-based Precision Machined Products Association serve a variety of industries, including automotive. But Miles Free, director of industry research and technology, said a number of those companies have already expanded beyond Detroit's three major automakers to serve foreign companies like Honda, Toyota and Subaru, or to serve alternative vehicle-makers such as Tesla, Free said.

Free noted the association has an online forum and that, as of a couple of days after the announcement, no one had mentioned the GM news. Members expect business to be strong in the coming months.

Even if a member company is affected by the GM shutdowns, locally or otherwise, Free doesn't expect that to mean layoffs. Companies are already short on talent, so they wouldn't lay off skilled workers. If they lose work in one department, he expects they'll find a spot for those employees elsewhere.