US: production boom on the horizon, but the industry is ready for it image

No less than seven production facilities are scheduled to come online in the next few years in North America, which are sure signs of a dramatic output boom across the zonal automotive industry.

Attracted by the low labor costs, lack of unions, geostrategic positioning between Latin and the United States and the myriad of trade agreements with every region of the world, five global automakers are constructing factories in Mexico. Volvo Cars has chosen South Carolina for a new plant and Fiat Chrysler Automobiles is looking whether to expand or even build a new production facility in Toledo, Ohio. Others that don’t plan new facilities – such as General Motors – are throwing out billions of dollars to expand and upgrade existing assembly units in the US and Mexico or even in Canada. The automotive industry shows there are numerous periods of rapid expansion of capacity, followed by massive market drops that caused numerous automakers to disappear forever. And that leaves excess inventory, idled factories and unemployed workers by the thousands.

But even as US auto sales are nearing their usual peak of 17 million units per year, analysts and auto industry executives are not setting off any casualty projections. Thanks to globalization and the recent Great Recession that have fundamentally changed the way the North American auto industry acts, the risks are lower than ever today. They point out to the reassuring factors: increased efficiency, greater flexibility, localization, exports and discipline. The latter overtly concerns the Detroit three, which have not set up new facilities and didn’t reopen the closed ones – lifting profitability.

Via Automotive News