The sales rebound comes with risks that are familiar to Detroit. Crank up production too much and carmakers have to sell vehicles at deep discounts. Boost production too little, and companies could run short of vehicles such as pickup trucks. And even if they find the right balance now, automakers are leery of raising long-term costs by adding plants and workers.
Six years ago, Detroit's automakers were losing billions, in part because they had too many plants and workers. And union contracts forced them to pay workers even if plants were shut down. So automakers kept the factories running regardless of whether vehicles would sell in order to cover expenses. They built too many cars and trucks and sold them cheap, sometimes at a loss.
Now, they're doing everything they can to keep costs under control.
Growth is putting the squeeze on Hyundai and Kia factories. But the affiliated companies will build as many vehicles as possible at two U.S. plants before constructing a new factory. John Krafcik, Hyundai's U.S. CEO, says the first choice is to find areas inside the plants that are slowing the assembly lines and fix them, "because plants are expensive."
GM also will try to handle growth by stretching factories, says North American President Mark Reuss. But he thinks the company will have to hire more workers if sales this year reach 13.5 million or beyond.
Auto factories in North America will reach 90 percent of their capacity if sales hit 14 million, says Michael Robinet, managing director of IHS Automotive Consulting, which forecasts auto production.
The lack of factories, though, could cause automakers to run short of pickup trucks this year, says McAlinden.
Detroit automakers, which dominate truck sales, had far too many pickup factories just seven years ago. They have closed eight truck plants since 2005, removing the ability to build 2.25 million pickups a year. With only nine North American pickup plants left, they may have cut too much, McAlinden says.
Last year Americans bought 1.8 million pickups, an 11 percent increase over 2010, as the economy improved and small and large businesses began replacing their aging vehicles. Pent-up demand is fueling the sales. The average age of a truck on U.S. roads has reached a record 11 years.
If sales increase as projected, companies also could run short of compact cars and small SUVs.
It adds up to what could be a challenging but profitable year for the industry, says Schmald Moncrieff, who runs the Michigan parts factory.
"A lot of things are going to start breaking loose all at once," she says.
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