2013 Cadillac ATS sedan begins production at the Lansing Grand River assembly plantEnlarge Photo
Before 2008, before the international economic meltdown, auto companies weren't known for being efficient. Sibling brands overlapped, cannibalizing sales. Production was fragmented, with little thought given to manufacturing vehicles for multiple markets with the greatest of ease. Cars and trucks were built in huge quantities, resulting in huge, sagging inventories.
The Great Recession changed all that. Though it was a painful experience for all involved, the upside is that it forced companies to re-imagine themselves and how they did business.
In the auto industry, that meant shuttering many brands and streamlining production. Since those dark days, car companies have attempted to live by the motto of efficiency, while laying the groundwork for a very complicated (and even more competitive) future.
Which is why a report in AutoNews about soaring North American vehicle production is so very interesting.
According to AutoNews, vehicle production in North America will hit around 16.1 million units this year, up from 15.4 million in 2012. The last time we crossed the 16 million mark was in 2002, when we reached 16.4.
The jump isn't tied to extravagant spending or a return to wasteful pre-recession habits. Instead, it has everything to do with a new economic and manufacturing landscape.
The boom is due, in part, to the U.S. economy, which continues to rebound, sending customers back into showrooms. Across the U.S., Canada, and Mexico, a smaller number of factories are working around the clock to keep up with rising demand -- and that goes for Detroit as well as foreign brands like Toyota and Honda. Increased production volume is amplified by the unfavorable environment in Japan, where manufacturing is expensive and the strong yen makes moving operations overseas attractive.
Then, too, there's the fact that other markets are recovering, and many vehicles exported to those markets are manufactured here. In fact, by 2015, Honda says that it will export more vehicles made in North America than it imports from factories elsewhere.
CEOs are keen to keep this tidy momentum going. Most appear hesitant to build new production facilities, opting instead to maximize production at existing sites by adding shifts and boosting efficiency. According to an analyst at IHS Automotive, that strategy should be fine at least until the end of the decade, when the industry could be flirting with production of 18 million vehicles per year in North America.