By on November 19, 2009

Signs of life... (courtesy:The WSJ)

One of the most overlooked arguments during last year’s bailout debates was the fact that America’s automotive industry was not under threat. Sure, a few companies based in Detroit were panhandling at death’s door, but so-called “import brands” have been closing the gap in terms of Americans employed for years. And America’s transplant auto industry is continuing to grow. Even as the Detroit firms have slimmed down their North American manufacturing footprints, foreign firms are moving ahead with American and NAFTA-area plants despite the economic downturn. Not only do these moves signify possible new jobs, they also represent a long-term bet on the fundamental strength of the US economy.

The Chattanooga Times Free Press reports that over 65000 people applied for the 2000 jobs which the Volkswagen are creating in their new factory. One of the residents, Pamela Glant, applied for a production job in order to improve her standard of living. “I think I could do the work and I’d like to be tested” she said. Perhaps Ms. Glant should talk to DCX-era Chrysler employees to find out how “testing” German bosses can be. But national reputations aside, 35000 people applied for the VW plant’s 1200 production jobs and 30000 people applied for one of the 800 maintenance positions. “We are overwhelmed by the response and we are very satisfied with the result,” said Hans-Herbert Jagla, executive vice president of human resources for VW’s Chattanooga operations. “It gives us the confidence that we will be able to hire all the capable and flexible people we need to build our cars safely and with the highest quality.”. Feel free to add your own snarky comment about the use of “VW” and “quality” in the same sentence here.

Not to be outdone, Norwegian electric car maker “Think Global” looking in Indiana for a location for a manufacturing plant, Reuters reports. Charles Gassenheimer, chairman and CEO of Ener1 Inc., a lithium Ion battery manufacturer, said that the exact location and other details will be announced in a few weeks. Ener1 Inc. has a 31% stake in the Think Global. Mr Gassenheimer also disclosed that Think Global have applied for a US Government loan under the Department of Energy’s Advanced Technology Vehicle Manufacturing Loan programme, along with nearly every other dedicated EV firm.

Meanwhile, in addition to opening a new Kia plant in Alabama, Hyundai are taking firm advantage of NAFTA by scouting the site for another new plant in Mexico. Insideline reports that Promexico, a government agency that promotes exports and foreign investment, have disclosed that negotiations with Hyundai are already in progress. The main contender for Hyundai’s new plants is the Mexican state of Veracruz, possibly because of marketing opportunities for the Hyundai Veracruz. The report finishes with the author, Loriana Marietta, saying “Hyundai moves ever closer to matching Japan’s strength in the North American market.” Since Hyundai are determined to follow in Toyota’s footsteps, lets hope they don’t move into the next stage of Toyota’s method, over-expansion.

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21 Comments on “New Plant Plans Highlight Strengths In The US Auto Industry...”


  • avatar
    rnc

    lets hope they don’t move into the next stage of Toyota’s method, over-expansion.

    More than likely they will, as the won is kept artificially low (and there is no reason for it’s valuation against the dollar based on the strength of the SK economy other than inputs from thier treasury) the amplified effect this gives to thier NA business (as well as the inherent cost benefits) will make not chasing profits extremely hard (not impossible, they have alot of automotive economic history as a reference).

  • avatar
    superbadd75

    Sadly it seems that the “import” brands truly are taking the lead in employing Americans while the domestic automakers that we bailed out with our tax money are pulling more and more jobs from this country. Yet there are still people out there with the delusional belief that buying an American brand is the best way to keep jobs in America. If you want to keep Americans employed, buy a Honda built in Ohio, or a Nissan built in Tennessee. Buying a Chevy built in Korea or Mexico does nothing for American workers.

  • avatar
    Omoikane

    Toyota over-expansion?
    Getting tired of clueless comments.
    Let set the record straight.
    We’re in the worst recession since the Great Depression. Despite the grim general economic situation,  with the exception of TMMI, all other Toyota plants in North America are running overtime.

    If not for the US and Canadian governments taking over GM and Chrysler, Toyota would have reigned supreme.

    They still do, but it’s not easy competing against the governments. They have virtually unlimited resources- or so it appears. The government prints money, covers all losses, forgives taxes and gives loans without interest and sometimes even declares they don’t expect to have the loans paid back…
     
    It’s tough competing against the government but we’ll see how long this little game will last.
    Just remember, if government ownership would have been the way to economic prosperity and business success, North Korea would be the country with the highest standard of living…
     

    • 0 avatar
      rnc

      look alittle deeper and you find thier  japanese plants are running way below capacity, toyota imports about 45% of the cars sold in NA from Japan,, those imports were designed to be profitable at a 110 yen/$, the rate is currently 90 yen/$ (a $6 billion impact on toyota’s P&L).  Thier NA plants are running OT because it’s unprofitable to import from Japan.  Even without the worst recession in history thier capacity was built for a market that will never return.  The new japanese government has made it clear they aren’t going to lower the value of the Yen to help exporters at the expense of thier own population (finally realizing that the only thing that is going to pull Japan out of thier 2 decade decline is the japanese consumer, not exports or government stimulas).  Toyota has a capacity (and cost structure) issue and it’s in Japan, are they going to be willing to deal with it? 

    • 0 avatar
      Geotpf

      Yeah, but they are closing the NUMMI plant in California (although in theory it was half owned by GM, in reality 85% of it’s product was Toyota-badged, with the other 15% being a few thousand Pontiac Vibes a month), and never opened the Mississippi plant that was first supposed to make Highlanders and then was supposed to make Priuses.  Also, many of their plants had significant downtime in the past year.

      EVERYBODY over-expanded and/or didn’t shrink fast enough.  Toyota certainly wasn’t alone in this regard, and the shitty economy was certainly a large factor here.

  • avatar
    dkulmacz

    I would like to see the data and sources showing the transplants employing more American workers than domestics.  I’ve never heard that one before . . .

  • avatar
    CyCarConsulting

    I’m infuriated that factories are allowed to be built on virgin land when a redevelopment of Detroit’s ghost town is so necessary. This nation is truly asleep at the wheel.

    • 0 avatar
      rnc

      I’m infuriated that michigan (northern mid-west) doesn’t have the balls to pass a right to work law thus giving corporations an actual incentive to want to use those old factories (there is a reason that they are being avoided and it has very little to do with the factories being “old”.)

  • avatar
    TonUpBoi

    Likewise, what a waste.  Unfortunately, when you take over an old plant, you’re primary hiring base is a bunch of experienced people who would be in a big hurry to get back into a union bargaining unit.
     
    Now, if Michigan was smart enough to pass “right to work” . . . . . . .   Yeah, never happen.

  • avatar
    gm-uawtool

    “so-called “import brands” had been employing more Americans than the Detroit three for years.”  This statement is patently false.  “The Truth” can be found at http://www.levelfieldinstitute.org.  Even though it is 2007 data, that door was flung wide open by the author.  And that data says that GM alone employed as many American workers as all “import brands” combined!  And with higher domestic content, drove more employment nationwide – which is one reason the recession has been so bad.

  • avatar
    FleetofWheel

    Don’t the citizens of Michigan and nearby states ever get mad enough at their politicians whose more restrictive laws encourage most import plants get built in the South?
     
     

    • 0 avatar
      hal

      MI seems to get design centers and such rather than actual manufacturing but “nearby states” like IN and OH are getting their fair share.
      No mention of the subsidies that these transplant plants attract? I linked before to an FT article with comments from Marchionne. States are competing and offering automakers generous packages of subsidies and taxbreaks to attract these jobs.
      US automakers have foreign factories for the same reasons that foreign automakers have US factories. No one is going to build a global automaker just building cars in the US or without building cars in the US.

  • avatar

    gm-uawtool: You’re right… the transplants do not yet employ more Americans than the Detroit three. The most recent numbers I can find put GM’s US workforce at 65,000-75,000, and import manufacturers at 90,000. I’ve amended the text to correct this error.
    However, the Level Field Institution isn’t doing you any favors. If you think GM, Chrysler and Ford’s employment of Americans has remained static since 2007, you must not read a lot of news. Also, the Level Field Institute’s assertion that “U.S. automakers (Ford, GM and Chrysler) employ twice as many U.S. workers (per car) as foreign automakers” is laughable on face, considering that dividing the number of Americans employed by the numbers of cars produced creates a wholly meaningless statistic.

    • 0 avatar
      gm-uawtool

      Edward,  Of course I know that Detroit three numbers have dropped precipitously since 2007 – I see it all around me every day.  That’s why I pointed out the year of the numbers.  I also agree that the cars-per-employee (vice versa?) metric is useless.  My point is that foreign nameplates, no matter how they spin it, will not replace worker-for-worker the job losses incurred when they replace the domestic’s production.  Imagine how much of a boost the economy would have gotten had Americans chosen to favor domestic brands as opposed to foreign brands.

    • 0 avatar
      Arete

      Edward:  Careful about the 90,000 number.  Looking at the AIAM website (where this number comes from), the first sentence you see is:

      “AIAM members have invested over $40 billion in 103 U.S. vehicle plants, component manufacturing facilities and R&D centers which employ 90,000 Americans with a payroll of $6.6 billion. ”

      103 plants seems like a really high number.  So I checked the list of members.  Among them are a bunch of automakers, but also suppliers like Bosch, Denso and Delphi (although to their credit they don’t appear to count Delphi employees in the 90,000).

      So a percentage of these 90,000 are supplier employees.  For example, in Michigan AIAM claims 8437 employees, of which 4700 are employed by Denso, mostly supplying components to the Big 3 plants in the area.

  • avatar
    Mr Carpenter

    The real truth in the whole situation re: American jobs, is that “American” car companies (as well as virtually all other manufacturing and many other companies) have been exporting or eliminating jobs from this country for decades.  “American” car companies are simply multi-national corporations with a few people at an HQ which happens to reside within the boundaries of the USA.   They obviously care little to nothing for capitalism or the country which gave them, their parents and grandparents all the opportunities to get where they are.  

    In the meanwhile, Toyota, Nissan, Subaru, Hyundai, Kia, Volkswagen (soon), Mercedes-Benz, BMW, Mazda and Mitsubishi have put jobs INTO this country.

    Just for an example; Hyundai have an engineering center in Ann Arbor, Michigan and a styling studio in California, plus a car factory in Alabama and partner Kia just opened a car factory in Georgia.

    As mentioned, Hyundai (and Kia) are looking to build a plant in Mexico, too.  Pity, but I suppose on small cars, with tiny profit margins, 60 cents per hour equivalent sure beats even $17 an hour (give-or-take) paid to workers in the southern US. 

    Hyundai build their smallest car in India, and export them worldwide.  Perhaps the Mexican plant will not only export to NAFTA countries, but also to South America, since Mexico has multiple trade partners there. 

  • avatar
    Omoikane

    Also getting tired of communist rethoric.
    Only a communist mindset would find merit in employing a bigger number of people to build the same number of cars!
    I’m not even sure “empolying” is the right word here as plenty of the “workers” in the GM/Chrysler/Ford count are actually waiting in the job-banks.

    • 0 avatar
      gm-uawtool

      Jobs banks no longer exist.  We have laid off workers at my plant who, within 3 months time, have been forced to relocate or lose their jobs.  Others have exhausted their layoff benefits.  No more free rides.

  • avatar
    skor

    Before you all get too excited about a Japanese auto white knight for North America, take into consideration that the Japanese economy is now teetering on the verge of total collapse.   Yes, the auto industry will eventually shake out, but the end result may look nothing like most people currently expect.

  • avatar
    Lorenzo

    It’s a pipe dream to expect anybody to move into the vacant factories of Michigan/Detroit until the people correct the governance issues that are the cause of the exodus.  Detroit City Hall is totally dysfunctional and in need of an overhaul, and the Michigan legislature is in no way equipped to manage the state, let alone step in to overhaul the government of Detroit.
     
    Like other states, Michigan spends too much money and has too high a level of taxation. The legislature is so addicted to taxes that when they enacted a tax cut on business, they created a tax on services to cover the cost. That tax was such a mess that it had to be rescinded as unenforceable. How did they cover the shortfall caused by the tax break on business? They raised the tax on business!
     
    Until the voters of Detroit AND Michigan throw everybody out and elect people with fiscal sanity, no corporate leaders will ever decide to relocate there, even with a right to work law.

  • avatar
    Freddie

    Chevy Camaro. American icon. Designed in Austrailia, built in Canada.  I feel very patriotic in my Alabama Hyundai.

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