US Auto Factories Being Pushed to Their Limits

by Christopher Freeburn | August 19, 2013 9:20 am

Auto Cars Transportation[1]Rising car sales mean that US auto giants are shifting into overdrive to produce enough vehicles to meet demand[2].

Capacity utilization has hit a historic high, according to industry experts. Currently, work schedulers at 40% of all U.S. automobile production plants are above 80 hours a week. Just five years ago, only 11% of U.S. factories were operating at that rate, the Wall Street Journal notes.

Automakers have new flexibility to keep factories open longer. Recent contracts with labor unions allow them to schedule production over weekends and at night without incurring huge overtime costs.

Last month, U.S. auto sales hit an annualized pace of 15.8 million units. That’s still below the record 17.5-million-unit pace reached in 2005, but well above the 14.2-million-unit rate during this time last year.

Profits are rising, too. During the first half of the year, General Motors (GM[3]) generated $3.4 billion in pre-tax North American profits. Ford (F[4]) did even better, recording $4.77 billion in earnings before taxes.

It’s a big change from the years of the Financial Crisis and recession, when automakers saw sales dive and were forced to cut back payrolls and production. General Motors and Chrysler unlimited required government bailouts[5], with the latter being sold the Italy’s Fiat (FIATY[6]).

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