Do the Clouds Hovering Over the U.S. Auto Industry Have a Silver Lining?
Steve Stackhouse-Kaelble (Automotive Site Guide 2008)
(page 2 of 2)
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slowdown and, especially, skyrocketing gas prices are behind the spate
of bad automotive news. Almost overnight, automakers that not long ago
couldn't build enough pickup trucks and other big vehicles now have too
many in stock. General Motors has plans to shut four pickup plants,
Cole says, two in the United States and two elsewhere. GM also is eager
to unload the iconic Hummer brand that it was equally eager to acquire
not that many years ago. And even healthy Toyota is putting the brakes
on U.S. pickup production, putting its pickup assembly operations on a
long summer holiday.
"A lot of the newer plants were built for
larger vehicles," Mace observes. Mercedes-Benz and Hyundai in Alabama
are among the examples. Current trends could spell retooling at some
point, he suggests.
Not all the automotive headlines carry bad
news. Though the pace of new assembly plant development has clearly
slowed, there are some exceptions. For example, Volkswagen this summer
picked Chattanooga as the site of a billion-dollar assembly operation
that will turn out midsize sedans destined for North American
consumers. The automaker, which hasn't had a U.S. assembly presence in
20 years, also looked at sites in Alabama and Michigan before landing
Volkswagen is angling to become the world's
number-two automaker, which means it'll have to significantly increase
its American market share with the help of the Tennessee factory. It
also is working on new factories in India and Russia.
there was word out of Kentucky this summer that Simpson County will get
an $84 million Integrity automotive facility that will manufacture
low-speed electric vehicles. The development could mean as many as
4,000 high-paying jobs.
The news out of Tennessee and Kentucky
continues the automotive winning streak compiled by Southern states.
Assembly, says Cole, "has been steadily drifting to the South, and one
of the key elements of this is the issue of right-to-work states." It's
a reality that executives rarely admit publicly, but international
automakers prefer to set up shop in places where unionization is less
likely. Cole notes that the recent American Axle strike that disrupted
General Motors' production happened at roughly the same time Volkswagen
was making its final site decision.
Cole says that when it comes
to new assembly operations, the rumor mill is relatively quiet at the
moment. But he can think of at least one source of potential good news
at some point down the road. Lots of vehicles continue to cross the
ocean from assembly plants in Japan, "and with the strengthening of the
Japanese yen, that's a reason that they might consider moving more
production here. But we've heard no specific rumors."
Mace, there's the question of when Chinese and Indian automakers will
act upon their itch to tap into the American market. "They may start to
look to the United States to build their market share."
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