Why more auto sales don't mean more auto jobs
A spike in sales by the Big 3 U.S. automakers was driven by pick-ups.
Americans were buying trucks: Sierras, Silverados, Rams, and F-150s. But last month’s pick-up in pick-up sales probably won’t lead to more jobs making trucks.
“You don’t want to have this layoff, recall, layoff, recall situation,” says Art Schwartz, an economic consultant who was fomerly GM’s director of labor relations. “You want to get a more regular kind of employment level and production level.”
Rather than hiring more workers or opening new factories, manufacturers are running existing plants at full capacity. Some of them are open six days a week, three shifts a day.
“They are less likely to bring on people unless they think this is going to be a permanent increase, and even then, it is going to be a slow go,” Schwartz says.
That’s because of lingering uncertainty. But November’s sales numbers are a good sign for the labor market writ large.
“You know, the majority of buyers in the space use a pick-up as a tool,” says Mike Jackson, who directs North American vehicle forecasting for IHS Automotive. "Contractors of every sort, who have delayed purchases in the past, are now seeing very, very definitive results, very strong demand.
“And so, they feel confident enough that they can make a big-ticket purchase,” he says.
Truck sales also signal growth in the energy sector. According to Jackson, if you do hydraulic fracturing, or fracking, you probably own a truck.
And while a spike in truck sales may not necessarily result in more jobs making trucks, it is good news for the auto sector for one very important reason.
“Companies make a lot of money on trucks,” says David Cole, chairman of AutoHarvest. The profit margins on pick-ups are huge -- at times close to $10,000.