Car sales surging and hiring is growing

DETROIT - Auto sales are growing so fast that Detroit can barely keep up. Three years after the U.S. auto industry nearly collapsed, sales of cars and trucks are surging. Sales could exceed 14 million this year, above last year's 12.8 million.

The result: Carmakers are adding shifts and hiring thousands of workers around the country. Carmakers and parts companies added more than 38,000 jobs last year, reaching a total of 717,000. And automakers have announced plans to add another 13,000 this year, mostly on night shifts.

But there's a downside. The newfound success is straining the factory network of the Detroit automakers, as well as the companies that make the thousands of parts that go into each vehicle. This could lead to shortages that drive up prices.

It also has auto executives in a quandary. They got into trouble in the first place largely because their costs were too high. Now, they fear adding too many workers. Ford, for instance, is "squeezing every last component, transmission, engine out of the existing brick and mortar," said Jim Tetreault, vice president of North America manufacturing.

Still, the surge in hiring bolsters the argument of those who supported the federal bailout of General Motors and Chrysler in 2008. And the hiring is good news for communities around the country that saw hundreds of thousands of manufacturing jobs disappear. Starting in 2005, GM, Ford, and Chrysler closed 28 factories and eliminated 88,000 jobs. Parts companies cut 234,000.

If sales hit 15 million by 2015, as some experts predict, the three Detroit automakers could hire an additional 20,000 people, predicts Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.

Laurie Schmald Moncrieff, president of a small parts-manufacturing company near Flint, Mich., says when demand for auto parts collapsed, she shifted production to parts for companies in green energy and defense. Now automakers and other parts suppliers have her on speed dial, trying to line up everything from fuel pump parts to tools that make hoses. "I see tremendous growth coming in the near-term," she says.

The hiring binge couldn't have happened at a better time for Michigan. Many of the new auto jobs came around the Great Lakes where the Detroit Three have most of their factories. New jobs with auto companies don't pay as well as the old ones, however.

But in a state where unemployment was above 14 percent just three years ago, any jobs are welcome. And Michigan is not the only region to benefit. Ford is adding positions in Louisville, Ky., Chicago, and near Kansas City, Mo., and GM is hiring at plants in Tennessee, Kentucky, Texas and New York.

Foreign carmakers are also shifting production to the U.S. because of higher sales and the weak dollar, which cuts the profits they get from selling vehicles exported to America.

The sales rebound comes with risks that are familiar to Detroit. Crank up production too much, and carmakers have to sell vehicles at deep discounts. Boost production too little, and companies could run short of vehicles such as pickup trucks. The automakers say they will be working hard to keep a balance.