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US auto industry riding high

2012-02-28 08:06

DETROIT, Michigan - Vehicle sales are growing so fast that Detroit can barely keep up.

Three years after the US vehicle industry nearly collapsed sales of cars and trucks are surging. Sales could exceed 14-million this year, way over 2011's 12.8-million.

The result: automakers are adding shifts and hiring thousands of people. Along with parts companies, the industry added more than 38 000 jobs in 2011, reaching a total of 717 000. Another 13 000 will be added through 2012, mostly on night shifts.

The newfound success is straining Detroit's factory network and the companies which make the thousands of parts; rising prices could be a consequence.

UNDER PRESSURE

It also has automkers in a quandary. They got into trouble largely because their costs were too high; now they fear adding too many workers.

Ford, for instance, is "squeezing every last component, transmission, engine out of the existing brick and mortar," says Jim Tetreault, vice-president of North America manufacturing.

Still, the surge in hiring bolsters the argument of those who supported the federal financial rescue of General Motors and Chrysler in 2008. Starting in 2005, GM, Ford and Chrysler closed 28 factories and eliminated 88 000 jobs. Parts companies cut another 234 000.

Now, if sales hit 15-million by 2015 as some experts predict, the three Detroit automakers could hire another 20 000 people, predicts Sean McAlinden, chief economist for the Centre for Automotive Research in Ann Arbor. Itay Michaeli, an auto analyst at Citi Investment, added: "You can only squeeze so much out of the same number of people."

PRODUCTION SHIFTING

The hiring binge couldn't have occured at a better time for Michigan. Many of the new auto jobs came around the Great Lakes where the Detroit Three have most of their factories. New jobs with vehicle companies don't pay as well as the old ones. Under union contracts, companies can pay new workers around the equivalent of R120 per hour, a little more than half the pay of long-time workers.

Foreign automakers are shifting production to the US because of higher sales and the weak dollar.

The sales rebound comes with risks familiar to Detroit. Too much production and forecourt sale days follow; boost it too little product shortages develop.

Auto plants in the US will reach 90% of capacity if sales hit 14-million.

Comments
  • Fredster - 2012-02-28 11:58

    US automakers were struggling to keep factories open in 2009. Now they're in 2009 struggling to meet demand...only in the US

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