International auto show in Detroit awash in optimism
Industry insiders suggest the auto market is poised for a productive 5 years
Confidence and optimism surround this year's North American International Auto Show at Cobo Hall in Detroit.
"Last year, we came halfway back; this year, we're all the way back," said Jim Seavitt, a 30-year Ford dealer and chairman of the auto show.
The show, which gets underway Monday, will kick off what one prominent analyst says should be some of the most profitable years in the auto industry's history.
"The North American market is running very hot right now and has three to five years of sales increases ahead of it," said Dennis DesRosiers, president of DesRosiers Automotive Consultants.
Detroit Mayor Dave Bing said the industry is definitely back.
"And not just the volume [of vehicles], but all of the upgrades they've made," he said of the automakers. "I don’t think three or four years ago anyone thought this was possible.
"Anything is possible. Cobo is ready for the world. Pretty soon, Detroit will be ready for the world."
Last year marked the second-best sales year on record for Canada, where 1,675,675 vehicles were sold. That was a 5.7 per cent increase from 2011.
DesRosiers said Canadian sales in 2013 should be better than 2012.
In the U.S., the most recent auto sales forecast by R.L. Polk & Co. suggests they should top 15 million units in 2013, a rise from 500,000 in 2012.
In 2015, Americans are projected to buy more than 16 million cars. That hasn't happened since 2007.
DesRosiers said that, in his mind, this year's theme at the auto show is "mass market production."
"The vehicle companies realize they are heading into the hottest market in the history of the auto sector and they want to show their best market vehicles to get some buzz around them," said DesRosiers, who has been studying the industry for 40 years. "That's what I expect in Detroit."
Show called 'bigger, badder, flashier'
Workers constructing the showroom floor at Cobo Hall in Detroit called this year's show and buzz " different than last year's." They called it "bigger, badder, flashier."
Electrician Tim Craft has worked on the construction of several shows, including this year's 90,000-square-metre floor. He said after a few lean years, the flash is back.
"The enthusiasm's there. There are a lot of new booths, lots of new stuff," he said. "It's going to be a good time."
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Bing said the show normally has a $300-million US economic impact in the city and that this year it is shaping to be the best in years.
"It's much bigger, much flashier. It's got a lot of new technology, so that's really going to turn this show around I think," he said.
DesRosiers said nearly every automaker is running its plants at capacity.
He said the demand for Ford vehicles is outstripping the company's ability to build them fast enough.
"As the market continues to grow — and the market should grow until the end of the decade — Ford will need capacity to meet demand," DesRosiers said.
Chrysler finds itself in a similar situation, DesRosiers said.
Investments made all over U.S.
The Detroit Three alone announced more than $1-billion worth of investment in Michigan, alone. The three also made investment and promises of hiring elsewhere:
- In October, General Motors said it plans to hire up to 10,000 computer professionals in the next three to five years as it tries to lead the auto industry with cutting-edge technology.
- General Motors opened its first Information Technology Innovation Center last summer in Austin, Texas, where it plans to hire 500 programmers and software experts. In October, the carmaker unveiled plans to hire 1,500 more at a second computer centre in Warren, Mich.
- In November, Chrysler announced it will invest nearly a quarter of a billion dollars and add approximately 1,250 jobs at three of its plants in Michigan.
- A month later, Ford announced it will spend about $773 million to expand six Michigan manufacturing plants while adding 2,350 factory jobs in the state.
The investment has those in the auto industry feeling optimistic on both sides of the border.
In Canada, Prime Minister Stephen Harper last week announced a $250-million auto innovation fund.
Workers feel confident and secure
In Detroit, a little more than eight kilometres away from the auto show, workers shared in the optimism as they were changing shifts.
"Obviously we were all concerned with where we were going to end up, but right now it's moving into the past," said Frank Pando, who has worked for Chrysler for 19 years.
One employee, with only five months seniority, told CBC News that Chrysler is still hiring and said that points to the health of the industry.
DesRosiers said the investment in Michigan should translate to job security in Canada, where the Detroit Three and CAW just last fall agreed to four-year collective bargaining agreements.
Chrysler's Windsor Assembly Plant is where the company's flagship product, the minivan, is built. DesRosiers says it will remain safe, even if the automaker's CEO, Sergio Machionne, has promised to kill off either the Dodge Grand Caravan or Town and Country.
"The workers in Windsor are as safe as they've been in a decade," DesRosiers said.
Even Ford's Essex Engine Plant in Windsor will like see a production increase due to the investment made in Michigan. Engines built in Windsor are sent to plants in the state.
DesRosiers said GM will almost certainly replace the Camaro in Oshawa, Ont., with another product because the automaker has to maximize productivity and capacity at every plant it operates.
Ontario's minister of economic development and innovation said the auto industry accounts for 20 per cent of the province's manufacturing base and 450,000 jobs.
"It's an incredible part of our economy," said Brad Duguid, who just bought a Dodge Ram truck built in Warren, Mich. "It's like a computer on wheels."
Duguid went to last year's auto show in Detroit, but will miss this year's because he will be in China.
"What a difference in the auto show from 24 or 36 months ago," he said. "I think it's going to be a real celebration. It's a great year for auto, when it comes to sales."