At last, sales of American-made vehicles are rising -- and with them hopes that Detroit and southeast Michigan can start to dig out of the deep economic hole that swallowed the region in 2008.
And what a hole it's been. For almost three years, Michigan has had the highest unemployment rate in the nation. Two of Detroit's Big Three automakers in 2009 needed billions in federal bailout money to stay in business and drastically downscaled their operations. Plants, dealerships and parts suppliers closed. The city of Detroit, feeling the loss of tax revenues from the auto industry, grappled with insolvency.
Many caution that a three-month bump in overall U.S. auto sales is not yet cause to break out the pompoms. But the fact that more cars and trucks are leaving the showrooms -- and that U.S. automakers' vehicles are part of that caravan -- may be the best news this region has heard in a long time.
"There's no question that . . . everywhere in the industry there is a sense that the worst has passed," says Paul Eisenstein, publisher of TheDetroitBureau.com, a Web site that tracks the automotive industry. "But this is tempered by a level of pragmatism. One reason is that no one expects this market to come roaring back. The best hope is that it will creep back with all the weight of a mouse."
Ford Motor (F, news, msgs), for instance, reported that sales shot up 43% in February from the same month in 2009 -- more than any other automaker, domestic or foreign. General Motors' sales rose 12% in February. Even Chrysler, the domestic carmaker on the shakiest footing, got a tiny sales uptick of 0.5%, its first in 25 months. (Ford and GM also posted sales gains in March.)
Economic ripples from the sales turnaround are already evident in the region, according to the Southeast Michigan Purchasing Managers Index, which tracks manufacturing purchasing trends, including employment. The study, conducted by Wayne State University in Detroit, shows that purchasing in February from all manufacturing sectors, including automotive, increased 27% from the previous month.
The added activity stems in large part from the automotive sector, which "is just a tremendous part of the Detroit economy," says Timothy Butler, associate professor of supply-chain management at Wayne State. "With the improvement in new orders, there's also some pickup in hiring . . . and that's key in this region."
Continued: Rises and falls with Big Three
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