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U.S. Automakers Are On A Roll, But Hiring Is Slow And Steady

Jun 19, 2013
Originally published on June 19, 2013 9:40 am

There is one basic question that keeps being asked about the U.S. auto industry: Is it on the rebound?

"People ask a lot, is the auto industry back?" says Kristin Dziczek, a director at the Center for Automotive Research. "And it depends on what scale you want to look at."

So if we're looking at scales, let's start with productivity. In this case, how many work hours it takes to build a car. Productivity in U.S. plants is 39 percent higher than it was in 2000. "Productivity has never been this high," Dziczek says.

And while sales aren't as high as they once were, vehicle prices are up — so profitability is up, too. General Motors, Ford and Chrysler are all making money. They've been rewarding their workers with profit-sharing checks, and all the companies — foreign and domestic — are investing billions of dollars in North American facilities.

You'd think this would all translate into a hiring frenzy, right? Not so much, according to Dziczek. "Employment's still got a long way to go," she says. Before the economic crash there were over 1 million autoworkers. That number has now fallen to below 700,000, Dziczek says. [The Bureau of Labor Statistics puts the number at just under 800,000.]

The car companies are adding workers. Eight thousand employees were added in the first part of 2013, and Dziczek says many more will still be added. But the addition of those workers is sort of slow and steady compared with how auto companies have recovered from recessions historically.

Right now, plants in the U.S. and North America are running above 90 percent capacity. That means the number of shifts and hours worked have increased and car plants that used to, say, have one assembly line now have two.

"There's no doubt that the industry is stressed right now," says Michael Robinet, an analyst with IHS Automotive. The car companies, both foreign and domestic, have learned the lessons of the economic crash almost too well, he says. "The days of 2008 and 2009 still linger well in our industry."

All the automakers are being extremely careful about adding capacity, Robinet says, whether it's workers or bricks-and-mortar assembly plants. He says car companies are not ready to expand the number of plants in the U.S. unless they're absolutely sure they'll be needed for a long, long time. And companies like Volkswagen are expanding in Mexico, but no new U.S. facilities are on the books for the foreseeable future.

Meanwhile, Dziczek with the Center for Automotive Research says the industry has never seen productivity this high for such an extended period. The question, she says, is "how long can this go on before you start having some issue with morale in the plants."

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Transcript

STEVE INSKEEP, HOST:

It's MORNING EDITION from NPR News. I'm Steve Inskeep.

DAVID GREENE, HOST:

And I'm David Greene. The U.S. auto industry is doing more with less. A lot less. There are fewer car assembly plants in the United States. There are also hundreds of thousands fewer workers than there were before the recession. But productivity is the highest it's ever been. And profits are high too. NPR's Sonari Glinton looks at why that won't translate into more jobs.

SONARI GLINTON, BYLINE: You know how when take an embarrassing fall people rush up to you and ask are you all right, even after you're back on your feet. Well, that's how it's been with the car business.

KRISTEN DZICZEK: People ask a lot, is the auto industry back? It depends on what scale you want to look at.

GLINTON: That's Kristen Dziczek. She's the research director at the Center for Automotive Research. So if we're looking at scales, let's start with productivity. In this case, how many work hours it takes to build a car.

DZICZEK: Productivity in our automotive plants in the U.S. is 39 percent higher than it was in the year 2000. Productivity has never been this high.

GLINTON: And while sales aren't as high as they once were, vehicle prices are up so profitability is up. General Motors, Ford and Chrysler have all been making money and they've been rewarding their workers with profit sharing checks. And all the companies, foreign and domestic, are investing billions of dollars in North American facilities. You'd think this would translate into a hiring frenzy, right? Well Dziczek says, not so much.

DZICZEK: In employment we're still down a lot. The peak before the crash was over a million. And we're at about 670,000, 660,000 employees in motor vehicle and parts manufacturing in the U.S. So employment's still got a long way to go.

GLINTON: Here's the thing, the car companies are adding workers, but the addition of those workers is sort of slow and steady. A few thousand here, a few hundred there. The plants in the U.S. and North America are running at full steam. Every single plant that makes cars on this continent is at or near capacity in terms of number of shifts or hours worked.

And car plants that used to, say, have one assembly line, now have two - with the same amount of space and workers. Michael Robinet is an analyst with IHS Automotive.

MICHAEL ROBINET: There's no doubt that the industry is stressed right now. It's stressed at the vehicle assembly facility. It's stressed where they make engines and transmissions. And it's definitely stressed within the supply community.

GLINTON: Plants have added second and third shifts. And they're less likely to shut down or even go on their formally traditional summer breaks. Robinet says the car companies, both foreign and domestic, have learned the lessons of the economic crash well - almost too well.

ROBINET: The days of 2008 and 2009 still linger in our industry, and therefore everybody is being very, very careful about adding capacity, whether in the form of brick and mortar or in the form of new employees, and only adding them when it's absolutely necessary or they see a road in the future where it's going to be fully utilized.

GLINTON: Robinet says the car companies are not ready to expand the number of plants in the U.S. unless they're absolutely sure they'll be needed for a long, long time. Meanwhile, companies like Volkswagen are building plants in Mexico. New plants in places such as Michigan or even Mississippi just don't seem to be on the horizon. Robinet says, though, the car business has sort of hit its sweet spot.

ROBINET: The industry is back. It's in a happy place. The world is now looking for more vehicles built in North America, and certainly exports are going to be on the rise. That's a great ending comment, by the way. That one's a keeper.

(LAUGHTER)

GLINTON: You know what? I think I will. Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.