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Autos revving up? Saab sold, Ford hiring, GM building electric engines

A Dutch company is acquiring Saab from GM, and Ford says it will add 1,200 workers in Chicago. The moves could signal a recovery in the long-suffering auto industry.

January 27, 2010|By Jerry Hirsch
  • Ford Motor says it will invest $400 million in a Chicago factory and will hire 1,200 workers to staff a second shift at the site, where the company plans to begin producing the next-generation Ford Explorer late this year. Above, an employee works on a bumper at the plant.
Ford Motor says it will invest $400 million in a Chicago factory and will… (M. Spencer Green / Associated…)

More signs emerged Tuesday that the U.S. auto industry may actually be recovering from its deep slump, despite estimates of anemic January sales and Toyota Motor Corp.'s suspending sales of eight vehicle models because of accelerator problems.

Ford Motor Co. said it would hire 1,200 workers, and General Motors Co. announced a big investment in manufacturing electric engines.

Also, Dutch sports-car maker Spyker Cars said Tuesday that it had struck a deal to acquire Saab from General Motors. As part of the agreement, Spyker said it would form a new company, Saab Spyker Automobiles, which would continue the Saab brand.

The steady stream of hiring and investment announcements marks a dramatic turnaround from the meltdown suffered by the industry during the depth of the economic recession last year, analysts said. Toyota's decision to temporarily halt sales and production of eight models failed to spoil an upbeat day for the U.S. automakers.

"Clearly the market is improving," said Michelle Krebs, an analyst with Edmunds.com, an auto industry research and information firm in Santa Monica. "This is a year when we are going to see a ramp-up in new products."

In addition to electric motors for GM vehicles and a revamped Explorer for Ford, the industry is also starting to benefit from lower costs of manufacturing, especially compared with Europe, Krebs said, noting that Mercedes-Benz was moving some C-class car production to Alabama and Volkswagen was hiring to open a plant in Tennessee.

In the GM-Saab deal, Spyker would pay $74 million in cash and issue the Detroit automaker $326 million worth of preferred shares in Saab. In addition, the Swedish government would guarantee a European Investment Bank loan of 400 million euros, or about $560 million, to fund Saab's operations.

The sale "is great news for Saab employees, dealers and suppliers, great news for millions of Saab customers and fans worldwide, and great news for GM," said John Smith, GM's vice president for corporate planning and alliances.

But others were skeptical of the tiny Spyker's ability to run a larger company. Analysts questioned whether a company like Spyker that hasn't had much experience in mass marketing vehicles could turn around Saab sales.

In its announcement, Ford said it would invest $400 million in a Chicago factory and would hire 1,200 workers to staff a second shift at the site, where the automaker plans to begin producing the next-generation Ford Explorer late this year.

"The Ford announcement is highly meaningful. Ford is in the middle of a record number of new product launches. They are scheduling a 155% increase in production over last year in the first quarter in North American production," said Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.

He noted that the Chicago announcement might mean the hiring of hundreds of "new entry" workers at half the hourly rate that current factory employees earn. He estimated that as many as 600 of the new hires could fall under this lesser-paid category.

The new workers will start at $14.20 an hour and over a period of years will get raises to bring their wages to the same tier as current employees, said Mike Omotoso, an analyst with auto information company J.D. Power & Associates.

"It was a concession the United Auto Workers union made to get Ford to hire workers and not be at a cost disadvantage compared with the other companies," Omotoso said.

General Motors will spend $246 million to become the first major U.S. automaker to design and manufacture electric motors, which it sees as the core technology for hybrids and electric vehicles.

"In the future, electric motors might become as important to GM as [gasoline-powered] engines are now," said Tom Stephens, GM vice chairman for global product operations.

The automaker plans to start selling its electric Chevrolet Volt model later this year.

GM said bringing the design and manufacturing in-house would lower costs and "improve performance, quality, reliability and manufacturability of electric motors by controlling design, materials selection and production processes."

The first GM-produced electric motors will appear in three years in the company's next-generation, rear-wheel-drive hybrid vehicles.

A $105-million U.S. Department of Energy grant will be part of the $246-million investment. Omotoso said the GM electric engine plans were linked to the company's concern about being able to meet a 35.5-mile-per-gallon federal fuel standard for its fleet in 2016.

"GM wants to keep building trucks, so they need hybrid and electric technology to give them good fleet fuel efficiency," Omotoso said.

Tuesday's news follows hiring announcements from several companies that will add thousands of workers in the coming year.

Volkswagen of America is hiring 2,000 people as it gets ready to build a new sedan in Chattanooga, Tenn.

South Korean manufacturer Kia Motors Corp. is recruiting at least 1,200 workers to assemble the newest generation of its Sorento crossover vehicle at its factory in West Point, Ga.

Chrysler Group has added about 400 designers and engineers, at least temporarily, as it rebuilds a segment of its workforce that Chief Executive Sergio Marchionne said was decimated by layoffs last year.

Ford said it expected to hire about 1,000 workers starting in late 2011 at a factory in Wayne, Mich., where it will build next-generation hybrid and plug-in hybrid vehicles.

jerry.hirsch@latimes.com

twitter.com/latimesjerry

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