Auto Manufacturing Could Give Factory Output Boost From 12-Year Low
July 15, 2009
U.S. industrial production is being dragged down by the lowest auto and auto parts
manufacturing in more than a decade, but it could get a boost from vehicle output as plants crank up production in the coming months.
The government reported Wednesday that U.S. industrial production fell again in June for the 17th consecutive month to its lowest level since July 1998.
But good news was the drop was smaller than experts had forecasted and it was the smallest decline in more than a year, suggesting manufacturing is stabilizing.
The automotive sector continued to drag down all factory output because of extended General Motors and Chrysler factory shutdowns during their bankruptcies. However, a major bump in vehicle production is expected this quarter.
GM and Chrysler are now out of bankruptcy and are re-starting operations this month. Ford has said it is boosting its third-quarter North American production by 16 percent from a year earlier.
That should push the nation's total industrial output into the black during the third quarter, according to IHS Global Insight's analysis.
Same Story For Canada
Across the border in Canada, May figures just released show factory sales dropped more than twice as much as economsits expected to their lowest level since November 1998, largely due to lower production of vehicles and vehicle parts.
Vehicle manufacturing fell 25 percent while car and truck part sales fell 22 percent, according to Statistics Canada, cited by Bloomberg News.
Both GM and Chrysler have substantial manufacturing in Canada. GM closed a truck plant in Oshawa, Ontario, and notified about 300 Canadian dealers that their sales agreements won't be renewed next year. Chrysler temporarily closed two Ontario plants -- a Windsor plant that makes minivans for Chrysler brands as well as Volkswagen, and a Brampton plant that builds full-size cars, including the Chrysler 300 and Dodge Charger.
In a memo to clients cited by Bloomberg, Diana Petramala, an economist at Toronto-Dominion Bank, said manufacturing troubles could continue well into the first quarter of 2010.
Photo by Chrysler
A worker assembles a pickup truck at Chrysler's Warren, Mich., plant.
Posted by Michelle Krebs at 9:20 AM under Analysis , Chrysler , Companies , GM | Comments (0) | digg this | Seed Newsvine
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