MANUFACTURING PLANTS

Made Across America at the Washington Auto Show

January 23, 2015 by admin 2 Comments

One of my deepest pleasures in covering the auto industry is the pervasive influence it has on the US economy. Some Americans are under the impression that the industry’s best days are behind it, but that simply is not true — manufacturers, foreign and domestic, operate assembly plants in more than a dozen states and directly employ hundreds of thousands of workers.

Beyond the automotive plants, there are hundreds of suppliers with a presence in the United States, with each one providing dozens, hundreds to well over 1,000 jobs. Certainly, wherever a manufacturing plant is found, the local economy benefits from a trickle down effect. Indeed, according to the Auto Alliance advocacy group, some 7.25 million Americans base their livelihoods on the auto industry, by working in manufacturing plants, for suppliers, at dealerships and in ancillary businesses.

Made in America, Texas in particular: 2016 Toyota Tacoma.

2015 Washington Auto Show

Today, the Washington Auto Show is open to the general public. Held at the Walter E. Washington Convention Center, this show features new cars, concept vehicles and related technologies from automotive manufacturers, suppliers and related businesses. This year’s show runs through Feb. 1, 2015.

As a “public policy” exhibition, the Washington Auto Show most definitely has a political influence. And what better way to advocate on behalf of the industry than to showcase its strengths? In fact, over the days prior to the start of the auto show, automakers with a manufacturing base in the United States drove vehicles from assembly plants as far away as California to Washington, DC, to showcase that strength.

Made Across America

More than two dozen models arrived in “The District” from plants located in Michigan, Kansas, Kentucky, South Carolina and elsewhere. The Tesla Model S, manufactured in Fremont, California, has the distinction of traveling the furthest. And that is no small feat either — the Model S is a pure electric vehicle, one that has to be recharged approximately every 250 miles.

The auto industry’s importance is not lost on politicians, individuals who help steer the industry, even if its collective hand is heavy at times. Earlier this month, President Barack H. Obama told the Detroit News, “The auto industry has led a resurgence of manufacturing in America. The quality of the cars has gotten so much better that we are competitive — not just in SUVs — but up and down the line. The branding of American cars is back to where it should be. Michigan’s unemployment rate has fallen faster than the overall unemployment rate.” Not just in Michigan either: automotive-related jobs extend across all 50 states and, of course, the nation’s capital.

Domestic and Foreign Manufacturers

The good news also goes beyond the traditional American manufacturers: GM, Ford and Chrysler. Indeed, foreign manufacturers have had a presence in the United States for more than three decades. For example, Honda claims that 94 percent of Honda and Acura brand vehicles are manufactured in North America (inclusive of Canada and Mexico). This Japanese manufacturer has a significant presence in the Midwest and recently committed to building its Acura NSX super car in Ohio.

Furthermore, Toyota has truck plants in Texas, Nissan builds its electric Leaf in Tennessee, and Subaru’s plant in Lafayette, Indiana, is struggling to keep up with demand. In addition, BMW builds its entire global supply of utility vehicles in South Carolina, while Mercedes-Benz manufactures four lines of vehicles at its assembly plant in Vance, Alabama.

Other global manufacturers with a vital US presence include: Hyundai, Kia, Mitsubishi, and Volkswagen. Several other companies also operate facilities in Mexico and Canada, with import, dealer and supplier jobs benefitting on this side of the border.

Advancing the US Economy

To be sure, not every vehicle on display at the Washington Auto Show originates from an American manufacturing plant. Nevertheless, every model marketed stateside influences the economy, particularly the job sector. And with 16.5 million new vehicles sold in 2014, the industry’s influence on the US economy continues to grow, a fact noted by President Obama and affirmed by industry experts.

Photo copyright Toyota Motors.

Fiat Chrysler Weighs Its Minivan Options

February 17, 2014 by admin 1 Comment

Chrysler presses Canada for financial support.

***Update: Chrysler Withdraws Financial Assistance Request to the Federal and Provincial Governments in Canada***

It was supposed to have been settled by now. If everything was done according to plan, Chrysler would have identified the brand slated to receive the next generation of its minivan and the one that would get its crossover derivative.

Chrysler minivans: Made in Canada.

A collection of Chrysler minivans, all built in Canada.

CEO Sergio Marchionne made it plain a few years back that only one minivan was needed with either the Chrysler Town & Country or the Dodge Grand Caravan transitioning to a crossover utility vehicle based on the platform underpinning the next generation minivan. That announcement has yet to be made, but minivan-related news is front and center.

Making an Investment

Instead of brand decisions, we now have Fiat Chrysler Automobiles (FCA) asking for as much as CAN$700 million in incentives from federal and provincial governments to update its two Ontario manufacturing plants. That contribution would partially defray the CAN$3.6 billion Fiat Chrysler Automobiles says it will cost to retool Windsor and update Brampton.

The Windsor plant has been the exclusive builder of Chrysler minivans since Dodge and Plymouth models were introduced in 1983. Brampton builds Chryslers large cars including the Dodge Charger and Chrysler 300. Together, the two assembly plants represent FCAs entire manufacturing presence in Canada.

That presence could be jeopardized if both Ontario and Canada decide not to contribute funds. For its part, the Canadians want FCA to pledge a long-term commitment to build cars in Canada reports Toronto’s Globe & Mail. The federal government recently announced that it wound invest another $500 million in its Automotive Innovation Fund, but it hasn’t promised that those funds will go to Fiat Chrysler. At least not exclusively.

Minivans to Mexico?

Marchionne raised eyebrows last month at the Detroit auto show when he said that the company had alternatives to continuing to build minivans in Windsor, reports the Wall Street Journal. That may include shifting product to Mexico where labor costs are much lower than in Canada. Of the three North American Free Trade Agreement (NAFTA) countries, Canada’s labor costs are highest followed by the United States and much further down the list, Mexico.

Canada and Ontario contributed billions of dollars in loan money in 2009 to help General Motors and Chrysler, loans that have since been paid back. Still, the country has shed more than 50,000 automotive jobs since 2000 and another 8,000 direct manufacturing jobs would be affected if Chrysler pulled up stakes. Tens of thousands of supplier and spin off jobs would also likely go away. In all, Chrysler employs 10,245 people in Canada as of Jan. 2014

Meanwhile, Down Under

A Chrysler exit would not decimate the country’s automotive industry composed of multiple manufacturers including GM, Ford, Toyota, and Honda. And, unlike Australia, the Canadian industry is heavily tied to the US and Mexico, with suppliers, components, and new vehicles moving back and forth across each border. Yet, it also raises the stakes for the remaining manufacturers, each competing in a global industry where maintaining operating costs is crucial for competitiveness and the bottom line.

Australia’s auto industry is in dire straits with Toyota following Ford and GM by announcing the end of domestic manufacturing within the next four years. The prospect that Canada might someday lose its manufacturing base and go the way of Australia is not lost on provincial and federal government leaders. What type of proposal they make to keep Fiat Chrysler from fleeing might also set a precedence for other manufacturers to follow as they weigh their own needs.

Photo courtesy of Fiat Chrysler Automobiles, N.V.

GM Restructuring Continues Apace

December 19, 2013 by admin 2 Comments

Cutbacks in Korea, Australia planned. Expansion set for US manufacturing.

The all-new 2014 Chevrolet Impala.

News from General Motors continues to dominate the auto industry, trumping its competitor’s new product introductions. That Mary Barra will ascend to GM’s top office in 2014 is big news, what overshadows the, is he going to Microsoft or staying put?, chatter about Fords Alan Mulally.

All that suits GM just fine because as it leaves government ownership and stewardship in its rearview mirror and focuses on its future, it can finally move forward on several matters it likely has had to put off handling until the federal government sold its remaining shares in the automaker. Those matters are not minor issues either and include the following news stories:

Opel to Trump Chevrolet

The recent news wave began prior to the Akerson/Barra announcement. GM said that it was pulling back its Chevrolet Europe strategy to focus on Opel. Although GM admitted defeat, it likely won itself much needed and desired support in Europe where Opel and Vauxhall are its main products and homegrown ones at that.

Chevrolet entered Europe in 2005 and has lost money since. It wont be a complete abandonment, however, as select Chevrolet models such as Corvette will still be offered. Moreover, Russia will remain an important market for the bow tie brand.

See Also — The History of the Pontiac Fiero

Korean Manufacturing Scaled Back

Korea is an important market for GM and has been since the automaker took over the country’s third largest automaker, Daewoo, in 2001. It was one of the few very good financial decisions GM made leading up to its 2009 bankruptcy and restructuring, a company since renamed GM Korea.

GM Korea supplies the Chevrolet Spark to the US market and also builds Chevrolet models for Europe. But with GM cutting back its Chevrolet exposure across much of the western part of the continent, the automaker has said that it will scale back Korean manufacturing. Indeed, this week GM announced that it would offer up a voluntary retirement for up to 6,000 salaried workers by the end of March reports Fox News. The company says that it expects to reduce its Korean manufacturing by 20 percent to reflect its new strategy for Chevrolet Europe.

Peugeot Stake Sold

One of the worst decisions GM made post-bankruptcy was to secure an alliance with PSA Peugeot Citroen, the beleaguered French automaker. Not just an alliance, but it also took a financial stake worth hundreds of millions of dollars. That 7 percent stake is now gone as GM sold its shares in Peugeot this week.

The two companies say that they plan to continue collaboration on new product, but if Peugeot fails then GM should be able to walk away relatively unscathed. So much for a strategic alliance.

GM Financial trumps Ally Financial for new car loans.

GM Exits Ally

The company once known as the General Motors Acceptance Corporation (GMAC) and now called Ally Financial, had long played a role in helping GM car buyers get auto financing. GM separated GMAC from its own operation in 2006, but most of its business remained with GM. When GM began its slide into bankruptcy, GMAC applied to become a bank holding company.

Later, GM gave most of its new car financing business to AmeriCredit, renamed GM Financial. It still held an 8.5 percent stake in Ally, but sold its shares on Dec. 11, 2013, for $900 million. “This transaction releases capital from a non-core asset and further enhances our financial flexibility,” said Dan Ammann, GM executive vice president and chief financial officer. “Ally continues to play an important role in financing our dealers and customers in the United States.”

Holden Manufacturing to Halt

Will we soon see an end to the beautiful cars imported from Australia that we have come to know and love? Those models currently include the Chevrolet SS and the Chevrolet Caprice SS, based on the Holden Commodore. They aren’t the first Holden-supplied models, with the Pontiac GTO and G8 starting the Aussie onslaught, disappearing as Pontiac was closed down.

GM says that it will stop making cars in Australia by the end of 2013, relying on imports beginning in 2018 to supply its Australian customers. GM, citing costs, will close down its one manufacturing and one engine plant. The company insists that it will keep the Holden brand alive. “Australians have been driving Holden vehicles for decades – and we are determined that Australians will drive Holden vehicles for many years to come,” Mr Devereux said. The high cost of doing business in Australia is behind GMs decision.

Updated Manufacturing and Jobs in the US

With GM cutting back jobs abroad pulling Chevrolet out of Europe and divesting itself of financial stakes in Peugeot and Ally Financial it may seem that the automaker is seeking to conserve cash. However, that recently expanded largesse will soon be tapped to pay for a planned $1.3 billion investment in five manufacturing plants three in Michigan and one each in Indiana and Ohio. GM says that the move will create or retain about 1,000 jobs.

The investment will pay for retooling to support the production of an existing 6-speed transmission, a new 10-speed transmission, and the building of a new V-6 engine. The funds will also pay for plant upgrades as well as for a new paint shop and logistics optimization center.

“GM is committed to a strong American manufacturing base and creating jobs in dozens of communities throughout the country. Today’s announced plant upgrades continue the momentum of a resurgent auto industry,” said GM Executive Vice President and North America President Mark Reuss. “More importantly, these investments add up to higher quality and more fuel-efficient vehicles for our customers.”

Is a Cadillac Elmiraj announcement pending?

But, Wait…There is More!

With Dan Akerson leaving and Mary Barra’s ascendancy timed to coincide with the start of the 2014 North American International Auto Show (NAIAS) in Detroit, GM also wont miss out on a major media opportunity to showcase one or more new cars as it parades Barra before the media.

We already know that the Cadillac ATS Coupe will be revealed, but might we also learn the status for another new product that has everyone talking? That would be the Cadillac Elmiraj, a beautiful full-bodied coupe that made its debut at the 2013 Pebble Beach Concours dElegance. It is the latest super concept for the Cadillac brand and the one that many enthusiasts hope Cadillac decides to build. Yes, the Detroit auto show would present the ideal place to showcase this $100K+ luxury coupe, providing perhaps the best send off for Akerson and a hand off of company leadership to Barra.

GM to Slash Jobs at its Holden Subsidiary

April 9, 2013 by admin 1 Comment

Europe is not the only market giving GM financial fits with its Opel and Vauxhall operations facing job cuts and plant closings. GM’s Holden subsidiary, an Australian entity with a manufacturing plant in Elizabeth, South Australia, and an engine plant in Port Melbourne, Victoria, are also facing cut backs with the company announcing on Monday the elimination of nearly 500 positions effective later this year.

The Chevrolet SS is an Australian import.

Holden in North America

Holden might otherwise be invisible to the North American consumer had GM not begun importing select vehicles and selling those as Pontiac models. The Holden Monaro was sold as the Pontiac GTO from 2004 to 2006, while the Holden Commodore was sold as the Pontiac G8 for the 2008 and 2009 model years. Later, after Pontiac was shut down, the Commodore was sold as the Chevrolet Caprice PPV.

Beginning this year an all-new VF Commodore will be sold in the United States as the Chevrolet SS. That model was introduced at the Daytona 500 NASCAR race this February. Canada consumers, however, will not get the Chevrolet SS.

Small Car Demand

Despite interest in its larger cars, Holden has found that demand for its volume Cruze small car has fallen. The company also blames a high Australian dollar and “one of the most open and competitive markets in the world,” for planned production cuts that are expected to be finalized by August. Those cuts will slow down car production from 400 units per day to 335, as part of its effort to realign Holden production with current and future demand.

As a result, some 400 jobs will be eliminated at the Elizabeth manufacturing plant and 100 jobs will disappear in Victoria. The company plans to offer Voluntary Separation Packages in a bid to reduce its workforce.

A Challenging Environment

On Monday, Mike Devereux, Chairman and Managing Director, General Motors Holden Ltd., explained that the company had been working aggressively these past 12 months “to address our challenges” by bringing new products to the market and by reducing prices. Said Devereux, “… to protect the long-term future of Holden we have been forced to take these actions and this restructure will better align Holden with projected future volume and workload.”

Devereaux also noted that the Australian automotive industry is heavily trade exposed as low tariffs and a high Australian dollar have made it difficult for Holden to compete against cheap imports. To remain competitive the company has slashed Holden Cruze prices by up to $2,500, but a sharp drop in sales during winter 2012 have not recovered.

The Future of Holden

GM is clearly concerned that its ability to compete in Australia has been diminished. Today, the Sydney Morning Herald reported the political sparring now taking place in Australia in light of approximately $2 billion given to Holden over the past decade. Another $215 million is also on the table, provided that GM follows through on a promised $1 billion investment to release a new Commodore in 2017.

The Australian automotive industry and related industries employ approximately 250,000 people and is considered “an integral part of the Australian economy.” Under the national government’s “new car plan,” Australia is investing $5.4 billion to support an industry that is clearly under siege. That investment, however, may not save Holden from the policies of central banks that are impacting the Australian dollar.

Photo courtesy of General Motors Company.