Auto Research Group Sees Dire Outlook for St. Louis Auto Industry

From the St. Louis Post Dispatch, Thursday, September 6, 2007
By Christopher Boyce

Experts from a prominent auto research group painted a grim picture of the U.S. and local auto industry Wednesday at a meeting of Missouri and local economic development officials and politicians.

Sean McAlinden, chief economist and vice president of research at the Center for Automotive Research, described the industry as being "at the darkest part of a long tunnel where you can't see the light behind you or in front."

"There's too much capacity in light truck sales," he said, adding, "and I'll be honest, a lot of that capacity is right here in Missouri."

Missouri is home to four assembly plants that make light trucks, such as pickups, minivans and sport utility vehicles. Three of those four plants are in the St. Louis area.

McAlinden spoke before a meeting of the St. Louis Regional Automotive Partnership at the University of Missouri-St. Louis. The meeting was held to discuss how changes in the auto industry will affect the estimated 14,000 people in the area employed by local automakers and suppliers.

The partnership was formed in late 2004 to retain and support expansion in the local auto industry. It grew out of earlier state and local efforts to keep Ford's assembly plant in Hazelwood open. That plant ultimately closed last year.

"We cannot afford to be where we were 10 years ago," said St. Louis County Executive Charlie Dooley at the meeting. "We have a competitive edge, but we don't keep that edge if we don't work for it."

Backing that point was Kim Hill, director of Ann Arbor, Mich.-based CAR's automotive communities program. He pointed out that Missouri is one of seven states where auto suppliers are the top employer.

"The usefulness of groups like the automotive partnership is to convey to the companies that the community, as a whole, cares," Hill said after his presentation.

The event comes at a critical time for the region. Chrysler, which recently was purchased by Cerberus Capital Management LP, announced this year that it would trim 1,935 jobs at the two plants in Fenton.

Two years ago, Chrysler committed to invest about $500 million in the Fenton facilities, with a possible further investment of $500 million starting in 2010.

Though the first portion already has been invested, McAlinden said Chrysler needs to bring a new vehicle to Fenton for the additional investment to make sense. The Fenton plants assemble minivans and pickups.

So far, he sees no such vehicle in Chrysler's pipeline.

Despite giving a glowing review to Chrysler's redesigned minivan, McAlinden pointed to several factors that cloud the future of both Fenton plants.

Sales of both pickups and minivans are in decline in the long term. Media reports say Chrysler has opted to build its joint minivan project with Volkswagen in Windsor, Ontario. The company canceled plans for the luxury Chrysler Imperial, which some analysts thought might be headed for production in Fenton.

McAlinden called for local leaders to be diligent in looking for the best ways to keep local auto jobs and grow on a global scale.

"We have to globalize production in North America," McAlinden said. "You can't wait for Ford, GM and Chrysler to call. You have to get out and market around the world."

cboyce@post-dispatch | 314-340-8345