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ReprintsNo time to panic for North American manufacturers
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The U.S. economy is soft, stocks are tumbling and a divided U.S. government is in gridlock at the worst possible time.
This may sound odd, but things aren't so bad for North American suppliers.
Let me explain:
-- Now that Toyota's and Honda's suppliers are recovering from the March 11 earthquake, both automakers are running their North American assembly plants full tilt to replenish their dealerships' inventories.
Last week, Ray Tanguay, senior vice president of Toyota's North American manufacturing, said his assembly plants will be running at 110 percent of capacity through September.
At a time when U.S. sales may be flattening a bit, the Japanese automakers are going to generate some production volume.
-- Chrysler purchasing chief Dan Knott told reporters that he has spent the past three months assuring suppliers that Chrysler is sticking with its production plans.
-- Forecasters are settling on an industry sales projection of 12.7 million units this year. While that isn't record-breaking, it's still 1.1 million units better than last year.
Naturally, everyone is going to watch inventories like a hawk -- and rightly so. But these production plans strike me as a dose of sanity at a very turbulent time.
Automakers and suppliers can't afford to make snap decisions about production every time the stock market has a scare.
Stick with your plan; don't start trimming unless monthly sales go wobbly.
No need to panic.
You can reach David Sedgwick at dsedgwick@crain.com.
