What have you always wondered about the economy? Tell us

Why more auto sales don’t mean more auto jobs

David Gura Dec 3, 2013
HTML EMBED:
COPY

Why more auto sales don’t mean more auto jobs

David Gura Dec 3, 2013
HTML EMBED:
COPY

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.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.