Production in overdrive as minivan sales soar
Windsor plant to reach 350,000 units
The Windsor Assembly Plant, one of the few Chrysler plants running on three shifts, is receiving a production boost from surging North American auto sales, Carlos Gomes, senior economist at Scotia Economics, said Thursday.
Production at the Chrysler minivan plant will reach 350,000 units by the end of the year compared to slightly more than 300,000 units last year, said Gomes. That’s the highest level since 2005, although less than the peak production level of 466,480 units in 1996.
The plant employs more than 4,500 hourly workers who build the Dodge Grand Caravan and Chrysler Town and Country minivans. In the U.S., the Grand Caravan is the best selling minivan so far this year, ahead of second-place Honda Odyssey by more than 10,000 units.
Dino Chiodo, president of CAW Local 444, said the plant should be able to absorb the additional capacity without adding regular overtime shifts.
Though the North American minivan segment has been shrinking, Chrysler commands more than 40 per cent of sales in the U.S. and about 50 per cent of sales in Canada, said Tony Faria, professor emeritus of business at the University of Windsor.
“There will be a segment of 500,000 units for a number of years into the future.”
Gomes said Canada’s auto sector is poised to benefit from the improvement in vehicle production across North America as buyers replace old vehicles and take advantage of cheap financing rates.
“If you look at the U.S. vehicle fleet, the very weak sales we had from 2008 onward increased the average age to about 11 years,” Gomes said. “That’s a record high, so with the improvement with financing, people are taking advantage of that to replace their old vehicles.”
In Canada, the industry is expected to crank out 2.5 million units this year and sales are expected to reach 1.67 million units — a six per cent increase over 2011, said Gomes. U.S. auto sales hit an annualized pace of 14.8 million units last month thanks to pent-up demand for new cars and trucks and a consumer shift to more fuel-efficient vehicles, he said.
“Given stronger-than-expected sales in the United States in recent months, automakers have boosted their production schedule by 85,000 units over the past month,” said Gomes.
Automakers are “once again running their plants at full tilt, with several facilities either adding a third shift or scheduling overtime for the next several months to ensure that the industry has enough supply on hand to meet demand,” he said.
The uptick in sales as well as a more competitive cost structure stemming from the recent Detroit Three-CAW collective agreements could bode well for Chrysler’s Brampton plant, which currently runs on two shifts, he said.
“The agreement puts new hires at a cost structure that is competitive with what you are seeing in the United States,” said Gomes. “It may be possible that a third shift may come into Brampton, although no decision has been made there.”
Under the new four- year deal, new CAW employees will start at $20 an hour and take 10 years to reach the top hourly rate of $34.