Next for Ford and GM: More Jobs

DETROIT ( TheStreet) -- Against the backdrop of steady growth in U.S. auto sales, Ford ( F) announced last week it will hire more workers and GM ( GM) indicated it could do the same.

Toyota ( TM) and Chrysler, the third- and fourth-largest U.S. automakers, also have announced or implemented new investment and related hiring this year. For all of the automakers, increased hiring is a natural outgrowth of increasing U.S. sales. In general, automakers plan hiring growth months or years in advance, given the associated demands on infrastructure and on suppliers.

On Thursday, when Ford announced it would hire or recall 2,000 workers in Kansas City to build F-150s because of growing demand, as well as Transit Connect vans, Chuck Stevens, GM's chief financial officer for North America, said the automaker has the ability to increase capacity if conditions warrant. Later, on a conference call with reporters, GM Chief Financial Officer Dan Amman said: "Our approach is to match supply and demand and where demand warrants we have flexibility."

On the truck side, GM has just started production of the 2014 Silverado, a new pickup that is arriving at dealers just as the pickup market heats up. "In a changeover year, (a capacity increase) is something we can move on fairly quickly," Amman said.

During GM's earnings call, Stevens said the automaker is currently operating its 12 U.S. assembly plants at 100% of capacity on a two-shift basis, but could expand to 120% to 130% utilization if it went to three shifts. "As we go forward and think about industry in the US at 16.5 million, 17 million (annual light- vehicle sales), we would expect to be able to meet that by increasing the number of our facilities on three shifts," he said. U.S. 2013 light-vehicle sales are expected to total close to 15.5 million.

"Obviously, that has a significant impact on thinning fixed costs, if you can run your facilities on three shifts versus two shifts," Stevens added.

GM currently employs 76,500 workers, including about 50,000 hourly workers. That is down from the 112,600 workers it employed in 2007, before it filed for bankruptcy protection, and down very significantly from the 624,000 it employed in 1954, when it had a 54% share of the U.S. light-vehicle market, three times today's share. Still it is difficult to conclude that GM's current hiring trend is not a positive sign for the company and the economy, or that the government's investment in the company, as it restructured before and during bankruptcy, was not a wise one.

Since July 2009, GM has announced $8.5 billion worth of investment in U.S. facilities as well as the related creation of 24,700 jobs. "Some of that is years in the making in terms of implementing the investment," said spokesman Bill Grotz. "We're in the process of implementing (and) adding jobs."

This year alone, GM has announced it will make investments that will enable jobs for 1,000 recalled or newly employed workers at a technology innovation center in Roswell, Ga; 4,000 retained workers at a paint shop in Fairfax, Kan.; 400 workers at a power train headquarters in Pontiac, Mich.; and 1,650 workers at four plants in Bay City, Mich; Bedford, Ind.; Flint, Mich.; and Toledo, Ohio.

Ford announced Thursday that starting in the third quarter it will add more than 2,000 jobs at its Kansas City assembly plant. F-150 production will employ about 900 of the new employees, with the rest working on the Transit vans starting in the fourth quarter. The plant currently employs 2,450 hourly workers. In an interview with The Kansas City Star, Joe Hinrichs, Ford's president of the Americas, said the company began seriously considering a third shift for the F-150 late in 2012. F-150 sales are up 19% this year.

The investment and new jobs in Kansas City means that Ford is three-quarters of the way to its goal of creating 12,000 hourly jobs in the U.S. by 2015. The company also is investing $16 billion in its U.S. product development and manufacturing operations -- including $6.2 billion in plant-specific investments that would save 3,240 existing jobs.

Ford CEO Alan Mulally laid out his plan in a 2009 interview with TheStreet. "The way to survive is to reduce your production to the real demand (and) at the same time accelerate the investment in new products so that when you come out on the other side, you are there with the vehicles that people want," Mulally said. "Then you start to grow the business again, profitably, and you start hiring people."

Meanwhile, Chrysler so far this year has hired 1,000 workers at its Warren, Mich., truck plant and later this year intends to hire 1,100 workers at its Toledo assembly complex. Toyota announced recently that in 2015 it will produce 50,000 Lexus ES 350s at its Georgetown, Ky. Plant, generating 750 new jobs. Since November 2011, Toyota has announced more than $1.5 billion in new U.S investments, creating 3,500 new jobs.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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