Bullish U.S. Auto Industry Plans New Hiring
August 7, 2012
U.S. auto companies plan to expand facilities in coming months and hire new employees in response to growing revenues and strong balance sheets, according to new research. A bullish business outlook for the United States auto market is driving expansion, according to a recent survey from professional services firm KPMG "We are hearing from U.S. automakers that they are poised for growth, but are struggling with their ability to find the right people with the right technical skill sets for jobs they are looking to fill," Gary Silberg, KPMG's national automotive industry leader, said. "This is becoming an increasing cause for concern, not just for auto companies, but for many companies in the manufacturing sector." That might sound like a good problem to have. Aggressive recruiting and training among America's work-hungry labor force should be able to attract many capable hands eager to learn new skills and contribute to the continuing growth of the industry. Nearly a third of executives surveyed by KPMG said that their companies are already back to pre-recession employee head-count. Two-thirds report they have added employees during the past year and 72 percent say they plan to continue hiring more U.S. workers during the coming year. Executives' confidence is in line with data from the U.S. Bureau of Labor Statistics Although the U.S. economic recovery is still weak, Silberg notes "that is not the case in automotive where pent-up demand for vehicles in the U.S. is expected to carry over for years." As a result, "auto companies and suppliers are ramping up their hiring and production activities, and investing heavily in new products and facility expansion." Sixty percent of KPMG's survey respondents say their companies are sitting on significant cash, and 64 percent indicate they plan to invest that money this year. Seventy-three percent say their companies plan to increase capital spending, placing priority on expanding facilities and bringing new products and services to market. In contrast to the sluggishness of other sectors of the economy, U.S. auto industry is performing relatively well. The latest figures show the sector continuing to gain strength Seventy-six percent of KPMG's respondents say company revenues are up from 2011, and even more (83 percent) are optimistic about next year. Technological Changes Expected to Drive the Future Global Automobile Market The good news for America's car manufacturers and autoworkers comes at a time when the world auto industry is confronting changing markets and pressures to respond to new technologies. In another study Findings show that automotive executives expect challenges ahead in responding to new customer demands, such as tightening fuel efficiency standards; growth in the market for electric vehicles and their components; the increasing need to design for urban environments; and "connected-vehicle" technologies that affect automobiles and their owners. The majority of auto executives believe that "electromobility," which refers to vehicles driven via batteries, is "the most pressing trend in the automotive industry," according to the study. The second-most important trend is fuel-cell technology. KPMG projects that electric vehicles will account for 15 percent of annual new-car registrations by 2025. Asian executives tend to think electromobility will be more important than executives in other markets. KPMG's global survey does highlight one significant threat in the auto sector: manufacturing overcapacity, which the report estimated at 30 million cars for 2011. Executives are concerned about this problem and view "direct cutbacks in production capacity as the best way to realign supply with demand, with further industry consolidation or collaboration as the next most effective approach." KPMG suggests that the success of the U.S. auto industry in reducing its manufacturing capacity from 2008 to 2010 might provide a valuable model for other countries in reducing exposure to an overheated manufacturing industry.