When the financial world stumbled off a cliff in September 2008, no one could have predicted many of the aftershocks. Among them:
-- How fast and far U.S. automotive sales would fall.
-- How long the weak economy would persist.
-- Paradoxically, how well the auto industry could perform financially in 2010 despite the horrific reduction in volume.
To a large extent, the industry has sworn off the sins of its past.
Automakers, dealers and suppliers have been making money, amid 2010 U.S. sales roughly two-thirds of what they were in the past decade.
The economic collapse forced all those businesses to get lean. But, perhaps more important, it also highlighted sins that had built up over the years: oversized structural costs, employees who weren't needed and expenses that didn't bring value. And one of the biggest sins, peculiar to the auto industry, was that automakers were cranking out hundreds of thousands more vehicles than there were likely buyers.
Unemployment remains a crisis as we enter 2011, although the people who hung on to their businesses and jobs generally are doing OK. But even for the survivors, the chilling memory of the 2008 collapse remains.
Now, even though the economy is trending positive, companies are sitting on their new, lower cost structures. They are hesitating to hire and invest in a stronger, more vibrant economy.
Nobody wants to see the sins of the past -- overproduction and bloated cost structures -- rear their ugly heads again. But, at the same time, this industry always has been an engine of prosperity and growth for America. Without hiring in the auto industry, unemployment will remain painfully high.
Some companies are starting to prepare for better times. They're betting on a strengthening recovery, and they want to be in position to thrive along with the economy. Whether they're Chrysler dealers taking on a Fiat franchise, component suppliers adding a shift, large dealership groups renovating and acquiring new business or private dealers bringing back sales and service staff, they're hiring strategically and preparing for prosperity.
The economy remains fragile. But in the new year there will be winners who correctly see opportunity, not just risk.
Happy New Year.