The New York Times Business Section article from Friday, June 18 – “Bullish signals from G.M. and Toyota” raises some interesting questions about the possibility of further improvement in the global economy.
Two significant items are mentioned in the article. First, Toyota has announced that it is planning to start production of Corollas at its partially completed plant in Mississippi by the Fall of 2011. According to its web site, Toyota states that the building in Mississippi is basically complete. The remaining work is mostly equipment installation. Approximately 2000 jobs will be created as production ramps up. The NY Times article points out that Toyota used to build Corollas in a now-closed California plant, so these are not “plus jobs” for the industry. Second, the article states that “G.M. said that nine of its eleven U.S. assembly plants would skip the regular two week summer shutdown.” 56,000 additional vehicles will be produced as a result, including new models that been in short supply.
The automotive industry has been one of the principal drivers of both the U.S. and global economies for decades so this is good news. The trickle down effect for states that have been particularly impacted by the recession is well documented, so the General Motors announcement must be making news in Michigan, Ohio, etc. I would expect that Tier 1 and Tier 2 companies in the automotive supply chain are already benefiting from the over-all improved sales in the U.S. this year.
The industry is still well short of what used to be the norm – 12 to 15 million vehicles being sold annually. However, if the automotive industry is a significant customer for any of your suppliers, this is a probably a good time to make sure that the capacity that you need will continue to be available.
Herb Shields on Consumer Goods and the Supply Chain news feed
