Third Shift: Auto Makers Increase Production, Add Jobs

Many U.S. auto plants are bringing back third shift, which translates to a 24-hour production day, for the first time since the industry collapse in 2009.

Hot Feature: Home-Builder Confidence Rises Fourth Consecutive Month in January

While some plants ran only one eight-hour shift during the worst of the collapse, many now have a third from 11 p.m. to 7 a.m., which has added more than 4,300 jobs in four states at General Motors (NYSE:GM) alone. The added shift also grows demand at odd hours for everything from daycare and dentistry to financial services and food, and means added revenue for local governments as well.

A third shift at a Midwestern U.S. auto plant requires about 1,000 new plant employees, and creates about 7,850 spinoff jobs ranging from police and fire workers to construction, retail, and restaurant employees, according to estimates from the Center for Automotive Research in Ann Arbor, Michigan. About a third of those jobs are within 60 miles of the plant.

This year, U.S. auto plants may operate at about 81 percent of capacity after falling as low as 49 percent in 2009, according to estimates from IHS Automotive in Northville, Michigan.

After U.S. light vehicle sales rose by at least 10 percent for two straight years — the first time since 1984 — automakers are increasing production to keep up. Domestic demand grew at a faster rate than in China, the world’s largest auto market, for the first time in at least 13 years. And now states that were among the hardest hit by the downturn, namely Michigan and Ohio, are seeing the job market swell as everyone from automakers to local eateries add jobs.

Ford (NYSE:F), Chrysler, Nissan, Kia Motors, and General Motors have all either added U.S. production beyond the traditional two shifts or announced plans to do so at 15 plants, including six in Michigan, since mid-2009.

Now businesses from auto suppliers to trucking companies are boosting their capacity and finding new workers to adapt to the increased production. Ohio added a net 79,300 jobs from December 2010 through November 2011, according to the federal Bureau of Labor Statistics. Ohio was second only to Michigan in vehicle production in 2010.

Michigan gained 63,500 jobs in 2011 — the first job gain for the state since the turn of the century, according to the Research Seminar in Quantitative Economics at the University of Michigan. The group predicts a net gain of 26,000 jobs in Michigan this year, 28,500 in 2013, and 46,800 in 2014 as the auto industry continues to expand.

The effects of the industry boom are also being felt outside of the Midwest. Nissan already runs three shifts on its Altima sedan assembly line at its factory in Canton, Mississippi, and is now considering adding a third shift at its plant in a couple Tennessee plants.

The industry’s overall production is expected to increase further in 2012 as auto deliveries may rise about 5.6 percent to 13.5 million. Vehicle sales rose 11 percent in 2010 and 10 percent in 2011 after falling to a 27-year low of 10.4 million in 2009.

“Every single auto supplier we’ve talked to recently has a positive outlook for 2012 and 2013,” said Holly Sears, the vice president of economic development for the County Chamber of Commerce in Rutherford, Tennessee, which is home to a Nissan plant and about a 75-minute drive from Volkswagen’s Chattanooga factory.

Don’t Miss: The December Producer Price Index: Lower Energy Prices Lead The Way

To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com