Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
web
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • ITEC
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • Silicone
    • Latex
    • Coronavirus
    • Executive Action
    • Government/Legal
    • Opinion
    • Technical Notebooks
    • International Elastomer Show
    • Women in Tire & Rubber
    • HEXPOL Sponsored Content
    • Goodyear recognized by Lockheed Martin as 'elite supplier'
      EV tire advancements to help secure future
      Lambillotte: Only question on AVs is timing
      CAR official says EV future brighter than autonomous
    • Hot topics at virtual CES: AVs, air taxis and drones
      Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Renault to form JV with U.S. hydrogen specialist Plug Power for fuel cell vans
    • Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Smithers webinars focus on performance materials in green tires
      Ferentino Tyre opens Sri Lanka plant; eyes exports to U.S., Europe
    • WCCO task force navigates pandemic, expands communications
      JobsOhio funding gives Sperry & Rice room to grow
      TRAC's Glenn Maidment caps 51-year rubber industry career
      LafargeHolcim looks to solidify U.S. presence with Firestone Building Products purchase
    • Biesterfeld to supply Denka acrylate rubbers
      Ace Products & Consulting partners with Wallace Instruments
      Engel starts distribution of its Wintec brand in Europe
      ANRPC notes rubber price recovery
    • Ace Products & Consulting partners with Wallace Instruments
      Safic-Alcan extends distribution agreement with Momentive
      Momentive aims to grow silicone presence in Asia-Pacific region
      IRP Medical solidifies portfolio with KDL deal
    • WCCO task force navigates pandemic, expands communications
      ASTM cancels April meetings as COVID-19 continues impact
      Paycheck Protection Program funding reopens Jan. 15
      Detroit Auto Show canceled; alternative event being planned for September
    • ARP Materials adds technical sales manager
      Jack Murphy joins Akron Dispersions
      Adriano Alfani named Versalis CEO
      Maroon Group adds to Southeast sales team
    • Hot topics at virtual CES: AVs, air taxis and drones
      Paycheck Protection Program funding reopens Jan. 15
      Taiwan tire makers propose settlement of import duties case
      Lobbying group unveils policy agenda to speed transition to EVs
    • Column: Pandemic looms over everything in life, business in 2020
      Column: Lessons from the 2020 Best Places to Work
      Editorial: Silicone hit hard by pandemic, expected to bounce back
      Column: Still far way from normal
    • Effects of multiple repurposed materials for reinforcements of standard rubber compounds
      Impact of peroxide blends on the cure rate and aged properties in HNBR
      Techniques to detect long chain branching in polymers
      A comparative study looking at effects of curing kinetics and batch variation on SBR injection molding and numerical analytics
    • Rubber Division seeks abstracts for 200th Technical Meeting
      WORD panelists say evolution, authenticity keys to success
      IEC keynote: Communication key to logistics
      IEC speaker: Specialized elastomers may reduce spread of life-threatening pathogens
    • WORD panelists say evolution, authenticity keys to success
      New video celebrates women in rubber industry
      ITEC panelists say women can thrive in tire industry
      Rubber Division planning second Women of Rubber event
    • Sponsored By HEXPOL Compounding
      Faster Access to Your Polymer Compounding Experts Around the World
      Sponsored By HEXPOL Compounding
      Take a walk thru a HEXPOL Lab
      Sponsored By HEXPOL Compounding
      HEXPOL offers a unique selection of High Performance Elastomers to match your application requirements
      Sponsored By HEXPOL Compounding
      It’s what you can’t see that makes the Difference at HEXPOL
  • Blogs
    • Products
    • Wacky World of Rubber
    • New Products: MonTech introduces 1,500 kN lab press
      New products: 3M introduces new durable, pliable medical adhesive
      New Products: Lanxess launches energy-efficient PU elastomer
      New Products: MonTech automates bale cutter for safety, productivity
    • Wacky World of Rubber: How Trelleborg, teens sealed a spot in the world record book
      Wacky World of Rubber: Of chicken and feet, but not chicken feet
      Wacky World of Rubber: Time to go mattress shopping
      Wacky World of Rubber: Because nothing says football like 'frunk' shrimp
  • Newsletters
    • Rubber in Automotive
    • Silicone News
    • Latex News
    • Sign Up for Newsletters
    • Hot topics at virtual CES: AVs, air taxis and drones
      Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Renault to form JV with U.S. hydrogen specialist Plug Power for fuel cell vans
    • Ace Products & Consulting partners with Wallace Instruments
      Safic-Alcan extends distribution agreement with Momentive
      Momentive aims to grow silicone presence in Asia-Pacific region
      IRP Medical solidifies portfolio with KDL deal
    • Jack Murphy joins Akron Dispersions
      Synthomer optimistic, raises earnings forecast
      Top Glove reopens COVID-hit factories with enhanced precautions
      Malaysia electronics group to enter rubber gloves sector
  • Multimedia
    • Videos
    • Photo Galleries
  • Directory
  • Resources
    • Classifieds & Mold Mart
    • Sponsored Content
    • White Papers
    • Sponsored By HB Chemical
      The Company Behind the Inventory
      Sponsored By French Oil Mill Machinery
      Process Improvement, Cost Reduction with Custom Press Systems
    • Sponsored By Uncountable Inc.
      Cooper Standard deploys lab informatics platform to synchronize R&D
      Sponsored By Elkem
      LSR Select™: A solution to improve your financial impact in molding applications
      Sponsored By HEXPOL Compounding
      Peroxide Cureable Silicone Injection Molding
      Sponsored By HEXPOL Compounding
      Understanding and Selecting Performance Additives for Rubber Compounding
  • Data
  • Events
    • RPN Events
    • RPN Livestreams/Webinars
    • Industry Events
    • Past Events
    • ITEC Library
    • International Silicone Conference Library
    • 2021 Healthcare Elastomers Virtual Edition
      2021 Rubber in Automotive Virtual Edition
      2020 International Silicone Conference Virtual Edition
      2020 ITEC Virtual Edition
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. News
June 20, 2013 02:00 AM

Auto makers proceeding cautiously during boom times

Nick Bunkley, Automotive News
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    DETROIT—Vehicle production in North America is back near record levels, with output forecast to surpass 16 million units this year for the first time in more than a decade.

    But even though the numbers look similar to the days when Detroit used sky-high incentives to grapple with bloated inventories, the industry is in a much different place this time.

    Dozens of assembly and parts plants closed during the recession. Auto makers now are running many plants around the clock to keep up with rising demand, yet proceeding cautiously to ensure they don't get ahead of the market.

    The result is big profits all around and little danger, analysts say, of resuming old habits of overproduction and fire-sale discounts. That is because the increased production isn't expected to result in more units going into the North American market.

    A large portion of the increased output stems from auto makers exporting more vehicles from North America. Also, Japanese manufacturers are shifting production to U.S. and Mexican plants to blunt the effect of a stronger yen.

    Meanwhile, even as sales keep growing, each of the Detroit 3 says it sees no need to build or reopen plants in North America.

    "There's always ways in manufacturing to figure out how to make more," says Jim Tetreault, vice president of North American manufacturing at Ford Motor Co., which is increasing its annual capacity in the region by 600,000 units over an 18-month period that began in mid-2012. Ford also is cutting its usual two-week summer shutdown in half at many plants.

    "The trend at Ford is we're going to run more and more hours," Tetreault said. "Our goal moving forward is to try to continue to up that operating capacity."

    IHS Automotive projects that auto makers will build 16.1 million cars and trucks in North America this year, up 4 percent from 2012 and more than in any year since 2002, when production totaled 16.4 million.

    That means all the assembly capacity lost during the recession has been replaced by additional shifts at the remaining Detroit 3 plants and new plants opened by Asian and European automakers.

    Reluctance to add plants

    Michelle Krebs, an analyst with Edmunds.com, says automakers have kept incentives in check so far, but competition could start chipping away at transaction prices when sales slow and inventories rise.

    "There needs to be some caution about overproducing," Krebs says. "That's why we haven't seen suppliers jump at adding more bricks and mortar. They're figuring out ways to eke out more production in the plants that we have—doing more shifts and eliminating bottlenecks."

    At some plants, the Detroit 3 are pushing output even beyond the three-shift model by staggering employees' days off and scheduling crews over seven days.

    Still, Krebs says the worst that could happen today is far better than the situation the Detroit 3 got themselves into previously. With each of the domestic companies structured to be profitable as long as U.S. sales are at least 10.5 million or so, "it's just a totally different animal now," Krebs said.

    No auto makers have announced plans to add plants beyond ones already on the way in Mexico, and each of the Detroit 3 has told Automotive News specifically that it does not foresee needing any more plants.

    "We will never build bricks and mortar again, I don't think," Chrysler CEO Sergio Marchionne said at this year's Detroit auto show. "I think we need to use what we've got and take it to the wall, run three shifts, run overtime."

    Marchionne said he hopes to exceed Chrysler's goal of building 2.6 million vehicles this year, nearly all of them in North America.

    "We're going to try and push beyond 2.6 in 2013," he said. "We've got a lot of work to do here, but the machine needs to be pushed. No vacations. No breaks."

    General Motors CFO Dan Ammann last month said he does not see the need to reopen any closed plants.

    "I don't see that in the near-to-medium-term future, primarily because we still have the capacity to add shifts," Ammann said.

    "We have reasonably flexible production capacity. We think we'll be able to deal with any reasonable demands in the near to medium term."

    Ammann is not concerned about any negative effects of the increasing North American production capacity across the industry.

    Ford this month said it will increase North American production in the third quarter by 10 percent. But Tetreault says the company does not anticipate needing additional plants as far as it can see into the future.

    IHS analyst George Magliano says, based on his firm's projections, that all auto makers can satisfy customer demand through at least the end of the decade without any new plants in North America "unless things really exceed our expectations."

    Letter
    to the
    Editor

    Rubber & Plastics News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber & Plastics News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber & Plastics News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    web
    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Contact the Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • ITEC
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • Silicone
      • Latex
      • Coronavirus
      • Executive Action
      • Government/Legal
      • Opinion
      • Technical Notebooks
      • International Elastomer Show
      • Women in Tire & Rubber
      • HEXPOL Sponsored Content
    • Blogs
      • Products
      • Wacky World of Rubber
    • Newsletters
      • Rubber in Automotive
      • Silicone News
      • Latex News
      • Sign Up for Newsletters
    • Multimedia
      • Videos
      • Photo Galleries
    • Directory
    • Resources
      • Classifieds & Mold Mart
      • Sponsored Content
      • White Papers
    • Data
    • Events
      • RPN Events
      • RPN Livestreams/Webinars
      • Industry Events
      • Past Events
      • ITEC Library
      • International Silicone Conference Library
    • Advertise
    • DIGITAL EDITION