Honda Motor Co. (7267) and Toyota Motor Corp. (7203)’s North American plants, stalled by parts shortages a year ago, are leading an industrywide assembly surge buoying cities from the Midwest to the deep South amid a languid U.S. economy.
In Tupelo, Mississippi, 18 miles from Toyota’s new Blue Springs plant, Elvis Presley’s birthplace has seen its jobless rate drop to 8 percent with the start of Corolla production last year, from 12.5 percent previously, said Mayor Jack Reed Jr. The arrival of the plant and parts makers helped the city of 35,000 rebound from furniture-making jobs lost to China, he said.
“Both unemployment and revenues have been affected by Toyota,” Reed said, adding that sales-tax collections have increased 6.4 percent this year. “It’s a great thing when you get people back employed; when instead of using a food pantry now they volunteer at one.”
Rebounding auto production and sales are bright spots this year amid tepid job growth and wavering consumer sentiment. Honda, with an industry-leading 75 percent output surge, followed by Toyota’s 66 percent increase, and Japan’s Nissan Motor Co. aim to keep raising North American assembly and parts purchases to blunt losses from the yen’s sustained strength.
Rising production is particularly significant for states such as Michigan, Ohio, Indiana and Alabama that have the highest concentration of vehicle and parts plants, said Gus Faucher, a senior economist in Pittsburgh for PNC Financial Services Group Inc. Toyota and Honda are both on pace this year to break their 2007 records for North American output.
“There is a lot of pent-up demand for autos, and it’s likely to stay strong for the next few years,” Faucher said. “The currency effects are also going to favor the U.S. for some time.”
*Courtesy of Businessweek.com
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