A few years ago, American automakers cut tens of thousands of jobs and shut dozens of factories simply to survive. But since the recession ended and General Motors and Chrysler began to recover with the help of hefty government bailouts and bankruptcy filings, all three Detroit car companies, including Ford Motor Company, have achieved one of the unlikeliest comebacks among industries devastated during the financial crisis.
Now steadily rising auto sales and two-tier wage concessions from labour have spurred a wave of new manufacturing investments and hiring by the three Detroit automakers in the US. The latest development occurred on Thursday, when Ford said it was adding 450 jobs and expanding what had been a beleaguered engine plant in Ohio to feed the growing demand for more fuel-efficient cars and SUV’s in the American market.
Ford, the nation’s second-largest automaker after GM, said it would spend $200 million to renovate its Cleveland engine plant to produce small, turbocharged engines used in its top-selling models. Ford plans to centralise production of its two-litre EcoBoost engine — used in popular models like the Fusion sedan and Explorer SUV — at the Cleveland facility by the end of next year. Its move to expand production in the US is yet another tangible sign of recovery among the Detroit auto companies. Industrywide sales in the US are expected to top 15 million vehicles this year after sinking beneath 11 million in 2009.
Last month, GM announced plans to invest $600 million in its assembly plant in Kansas City, one of the company’s oldest factories in the country. And Chrysler, the smallest of the Detroit car companies, is adding a third shift of workers to its Jeep plant in Detroit.
The biggest factor in the market’s revival has been the need by consumers to replace aging, gas-guzzling models. And Joseph R Hinrichs, the head of Ford’s Americas region, explained that the Ohio revival plan was “all based on increased demand”.
Yet even though Ford is enjoying a resurgence in the US, it is racing to reduce costs in its troubled European division. The workers in Spain who were building the small EcoBoost engines that have been shipped to America will be moved to an assembly plant that is taking on work from a plant to be closed in Belgium.
While Ford survived the industry’s financial crisis without government help, it still cut thousands of jobs and shuttered several factories to reduce costs and bring production more in line with shrinking sales. But now, the burst of showroom business has prompted automakers to increase output at remaining plants. In Ford’s case, the company added about 8,000 salaried and hourly jobs last year, and has said it plans to hire about 2,200 white-collar workers in 2013. Ford is also moving some vehicle production from Mexico to a Michigan plant, where it will add 1,200 jobs. The investment in Cleveland is indicative of how Ford and others have trimmed domestic labour costs and improved productivity since the recession. Just a few years ago, the company was forced to consolidate two engine plants into one and close a major component operation.
Hinrichs said that a new local agreement with the United Automobile Workers union in Cleveland paved the way for the expansion. Currently the plant employs about 1,300 workers.