Automakers, suppliers to add U.S. jobs, expand plants, survey finds
Nearly three-quarters of executives polled say their companies will continue to hire in the coming year, up significantly from the 62 percent in a 2011 survey, according to KPMG.
Photo credit: BLOOMBERG
The U.S. auto industry -- buoyed by a steady rise in new-vehicle sales and healthier balance sheets -- is hiring again, and top automotive executives expect to keep adding workers through next year.
A survey of 100 senior automotive executives released today indicates 72 percent expect their companies to hire more U.S. employees in 2013 -- up from 62 percent who said the same thing last year.
And despite worries about declining demand in Europe caused by the debt crisis and pressures on vehicle pricing, auto executives surveyed by advisory firm KPMG are bullish about their companies' prospects.
"The survey results clearly demonstrate a U.S. automotive industry that is regaining confidence," Gary Silberg, KPMG's national auto industry leader, said in a statement.
"Even though the overall economic recovery remains weak, that is not the case in automotive, where pent-up demand for vehicles in the U.S. is expected to carry over for years," he added. "As a result, auto companies and suppliers are ramping up their hiring and production activities, and investing heavily in new products and facility expansion."
Respondents were U.S.-based executives for domestic and foreign-based automakers, plus parts suppliers.
"Essentially, the industry has a lot of new and upgraded factories. The U.S. has highly efficient, low-cost labor," Silberg said in an interview with Automotive News. "They have done some clearly remarkable things."
Among respondents who said they expect to add jobs, 23 percent said they will increase head count by more than 7 percent, 21 percent said they would go up 4 to 6 percent, and 28 percent said they would go up 1 to 3 percent, KPMG said.
The hiring outlook should not underestimate the "gut-wrenching" restructuring the U.S. auto industry went through to get where it is today, Silberg said in an interview.
That included the 2009 restructurings of GM and Chrysler Group in bankruptcy, and Ford Motor Co.'s turnaround efforts.
Many North American suppliers were also forced to restructure and downsize during the recession.
According to the Bureau of Labor Statistics, U.S. motor vehicle and parts manufacturing employment stood at 779,300 in June.
That's an increase of about 9 percent from a year ago, and up 24 percent, or nearly 150,000workers from June 2009.
However, the June 2012 employment figure is down by 284,000 workers, or 27 percent, from June 2004.
"When you hit bottom and you come out, it's pretty simple mathematics if you can grow," Silberg said.
Silberg said there's no denying the U.S. auto industry, including foreign-based manufacturers, is "significantly outperforming" the rest of the U.S. economy.
Chrysler Group said this year it expects to add about 1,800 jobs for production of the all-new Dodge Dart in Illinois. With those jobs, the company said it would have added nearly 4,000 hourly jobs in the United States since June 2009.
Ford said last month it has added more than 5,200 hourly jobs this year. By the end of 2012, the company said it would deliver more than half of the 12,000 additional jobs it previously committed to add by 2015.
GM said last month it would add a third shift at a Texas plant making full-sized SUVs. Since July 2009, GM said it has "created or retained" more than 18,600 jobs.
Silberg said downsizing moves and renegotiated contracts covering hourly labor and benefits have radically lowered the break-even points for domestic automakers.
"If you take the overall U.S. economy, we have very, very slow growth. This [auto industry] is an outlier to the rest of the U.S. economy, which has come through the recession. The reason why it's outperforming the rest of economy is because of all the restructuring they did," Silberg said.
The outlook for industry profits is also positive, KPMG said.
"If you're making money at [annual U.S. light-vehicle sales of] 11 million, 10 million, 10.5 million, and if you're now at 14 million, or around 30 to 40 percent higher than that lower break-even point, you don't need a Ph.D. in economics to see you're going to have a big profit from that," Silberg said.
In addition, 67 percent of those polled said their companies have significant cash, and almost the same number said they would invest that cash before year end, KPMG said.
Seventy-three percent said they would increase capital spending over the next year, with the highest priority on new products or services and expanding factories.
Mergers and other deals
In another use of that cash, almost half of those surveyed said their companies will be involved in a merger or acquisition, KPMG said.
Nevertheless, the executives surveyed are not predicting an overall economic turnaround for years, KPMG said. More than 80 percent predicted the U.S. economy will remain flat or see only moderate improvement next year, with 60 percent saying a full recovery would not happen until 2014 or later.
Nearly three-quarters of the executives surveyed expect the weak European auto market to continue for another 18 months, including 15 percent who said the slowdown will linger for more than three years, KPMG said.
But 63 percent of executives in the survey said North America was their primary growth market, followed by China, 44 percent, and South America, 30 percent, KPMG said.
In addition to pricing pressures and energy prices as barriers to growth, KPMG said executives also cited a lack of qualified labor.
"We are hearing from U.S. automakers that they are poised for growth but are struggling with their ability to find the right people," Silberg said. "This is becoming an increasing cause for concern, not just for auto companies but for many companies in the manufacturing sector."
Reuters contributed to this report
You can reach Jim Henry at email@example.com.