Oy Vey …
U.S. auto sales in September fell by 27 percent hitting a 17-year low. This time though it wasn’t just the Detroit Three. The decline hit all of the automakers hard.
- Nissan – 36.8 percent
- Toyota – 32.3 percent
- Honda – 24 percent
- Ford – 34.5 percent
- Chrysler – 32.8 percent
General Motors Corp- with a 15.6 percent decline did the best.
It is not rocket science to know that, if sustained, this means even more challenging times for the people in the automotive industry as well as those in the jobs that the industry supports.
For example, it’s hitting auto dealers hard. They are running smack into two-edge sword. First, their customers can’t get loans to purchase vehicles. Second, they either can’t get loans to pay employees or replenish inventory or the loans they can get have sky-high interest rates.
In addition, the days of leased cars seems to be fading rapidly. It is no wonder. Auto financing companies are losing billions, largely because of the rapidly declining value of pickup trucks and sport utility vehicles no one wants anymore because of high gas prices. Even so, eliminating leasing will cost sales, but what’s the choice? Lenders are no longer willing to fund a lot of these leases.
That is just the tip of the iceberg.
Manufacturing jobs create lots of other jobs. That is why it is so important to a region’s economy whether it is in China or India, Mississippi or Michigan (where I am located). According to the National Association of Manufacturers “every dollar in final sales of manufactured products supports $1.37 in other sectors of the economy. Manufacturing has the largest multiplier of all sectors with only agriculture, forestry, fishing and hunting coming close. The wholesale and finance sectors have the lowest multipliers, by contrast, with roughly 50 cents to every dollar of economic activity they generate themselves.”
Jobs will be lost not just in automotive manufacturing. People will be purchasing fewer refrigerators, computers, and cell phones. They will be downloading fewer songs and eating out less.
It’s a vicious circle that we have to find a way to break.
One way is to quickly advance the move to clean alternative fuels. That will create jobs, but in this environment with the global economy in disarray the challenge is much greater.
There are some very intelligent and creative people working on this challenge at the auto companies, their suppliers and in universities. Creative challenges such as the X Prize are sparking people to team together in new and different ways. The X Prize promises $10 million to the first team that creates a commercially viable that can travel 100 miles on one gallon of gas, or the equivalent energy in another form. There are more than 30 teams across the globe that are competing for the prize.
Remember, Charles Lindbergh flew across the Atlantic to claim a prize and achievement sparked the creation of a whole new industry and way of life. I have confidence that people in the automotive industry and across manufacturing can do the same. When we come through all of this there will be a vibrant industry with a great future.
There is an old Chinese saying “May you live in interesting times.” Some say it is a proverb, some say it is a curse. I prefer to think of it as proverb – a warning that we must take advantage of this opportunity or suffer the consequences.