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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