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STEVE INSKEEP, host:

We're spending much of this week in and around Detroit. Michigan went into recession first and has it the worst. And we're watching the struggle to retool an economy that was built, above all, around the auto industry. Sarah Cwiek, of the Detroit Public Radio, visited an auto supplier that went looking for something else to do. Sarah, where'd you go?

Ms. SARAH CWIEK: Well, Steve, I went to a business that's called TNT EDM in Plymouth, Michigan - that's about 25 miles west of Detroit - and they make these very small, precise components for cars. And they have a lot of very advanced equipment there. It was actually quite amazing. The internal working environment within there, it's more like an office than you would expect a tool and die shop to be, a very clean and quiet environment, relatively speaking. So their customers were primarily the bigger suppliers who supply directly to the big automakers like GM.

INSKEEP: So that's the business they were doing. They now face the challenge of a collapsing auto industry. And I'm wondering how hard it is for them to look elsewhere, because in preparing for this trip to Detroit, I was talking with the owner of a parts supplier who said that the auto industry is like cocaine; it's been so easy for so long to make so much money. It's very simple, it's very direct. You sell a high volume of stuff. And he's had great difficulty changing. Has this company had difficulty changing to some other business?

Ms. CWIEK: Well, it doesn't seem they have that same addiction. They really dove straight into diversifications, starting around 2003. That was when they saw a lot of their customers consolidating or even starting to go bankrupt. So far they've pushed hardest into aerospace defense. And I actually asked Greg Rothermel, who's their business development director, why that's the case.

Mr. GREG ROTHERMEL (TNT EDM): We started taking a look at what was out there that would appeal to our capabilities, as far as other types of markets. We have a lot of the high-tech processes and technologies that work well within aerospace defense.

Ms. CWIEK: Rothermel says there's also a big backlog in aerospace defense orders. He says it's about $200 billion annually. So TNT was about 25 percent aerospace defense last year and actually project will be up to 50 percent by next year.

INSKEEP: So they are making these little tiny parts that could have ended up in a Chevrolet, and now they're making a different tiny part that could end up in a military plane someplace in Afghanistan.

Ms. CWIEK: Exactly. He says it was an easy transition for them. It was just a matter of working with different materials.

INSKEEP: They making any money?

Ms. CWIEK: Actually, they have been making money. Even with the crisis in the auto industry, the revenues were at about $10 million in 2003 when they began diversifying and as of last year they were about $12 million.

INSKEEP: Does this mean any difference for the employees?

Ms. CWIEK: Not really. The basic nuts and bolts of what they do, so to speak, hasn't changed that much. Charlie Hall was one of TNT's 24 skilled machinists who work out on the shop floor. He's been working there for 23 years.

Mr. CHARLIE HALL (Machinist): We have new software, and basically the machines are pretty similar to the last 10 years. But they have different technology in them so you have to learn that technology.

INSKEEP: Sarah Cwiek, I guess another difference is they are actually still working, unlike a lot of people of the auto industry right now.

Ms. CWIEK: Well, that's true. And Governor Granholm and the Michigan Economic Development Corporation have certainly put a lot of resources into trying to help auto suppliers diversify. I talked with Tim Davis, and he's doing research into how auto suppliers may branch out into different industries. He's with the Center for Innovation Research at the University of Michigan, Dearborn, and he told me that there is room for flexible organizations to find opportunities there.

Mr. TIM DAVIS (Center For Innovation Research): Does that mean that all of them will be able to succeed? Probably not. A dashboard component maker won't be able to start creating large wind turbine blades. You'll need to find where your product mix fits with where these industries need.

INSKEEP: And maybe a bigger question, Sarah Cwiek, is whether there's going to be enough work to go around for all these auto parts suppliers over time.

Ms. CWIEK: Well, there's kind of a yes/but answer to this. Most people in the industry seem to think that there will be enough advanced manufacturing work for all of these suppliers to get into. But we have to bear in mind that the auto supply base is expected to contract maybe 30 to 40 percent before the auto industry stabilizes.

INSKEEP: Sarah, thanks very much.

Ms. CWIEK: Thank you, Steve.

INSKEEP: Sarah Cwiek of Detroit Public Radio. She is part of our project this week, Retooling Detroit.

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