Automakers Work Overtime to Fill Consumer Demand

Wall Street Journal

For the first time in a long time, robust auto sales are prompting automakers to hire, add more shifts and try their best to keep on top of the booming demand for cars.

Dealers are pleased with the sales boom, and hope it will last a long time.

More U.S. auto plants are cranking out cars around the clock like never before, a change that is driving robust profit increases at Detroit’s Big Three.

After years of layoffs, plant closures and corporate bankruptcies, U.S. auto makers and parts suppliers are pushing factories to the limits. At General Motors Co., Ford Motor Co.  and Chrysler Group LLC, more flexible union agreements now allow the companies to build cars for 120 hours a week or more while paying less in overtime pay.

As demand for automobiles nearly returns to  pre-recession levels, automakers are ramping up production. Ford Motor trains new hires on a simulated factory floor as the company staffs up for expanded factory hours.

Nearly 40% of car factories in North America now operate on work schedules that push production well past 80 hours a week, compared with 11% in 2008, said Ron Harbour, a senior partner with the Oliver Wyman Inc. management consulting firm.

“There has never been a time in the U.S. industry that we’ve had this high a level of capacity utilization,” he said.

The Detroit auto makers closed 27 factories following the financial crisis as GM and Chrysler went through government-led bankruptcies. But U.S. vehicle sales have roared back from the trough of 10.4 million in 2009.

In July, U.S. car and light truck sales ran at an annualized pace of 15.8 million, up from a 14.2 million pace a year ago. Auto sales hit a peak rate of 17.5 million in 2005. The industry had 925,700 employees that year. Last year, the workforce stood at 647,600.



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