Southfield, Michigan – A new report by corporate advisory and restructuring service Grant Thornton LLP said that with U.S. automakers reporting their worst monthly sales results of the year and no relief expected in 2009, it believes that as many as 100,000 industry-related jobs may be at risk.
“With a more than two million unit sales decline likely this year compared with 2007, followed by a prolonged slump expected next year, the downturn is placing unforeseen levels of stress on the industry,” said Kimberly Rodriguez, a principal at Grant Thornton. “We expect many players do not have the cash, credit or means to see the cycle through.”
U.S. sales in September were the lowest of 2008, with fewer than one million units sold. For the full year, Grant Thornton analysts expect full-year 2008 sales to drop to 13.8 million units. Given the weakening economic environment, forecasts for 2009 are for between 13.4 and 13.7 million units.
“Yesterday’s results put the entire industry on alert, as many experts had expected some level of recovery to occur in the second half of this year,” Rodrigeuz said. “Nine months into 2008, sales and economic conditions are worsening. We may not have seen the bottom. The full effect of such a two million-unit decline from 2007 is generally underappreciated and will likely lead to even higher unemployment numbers. Potentially, more than 100,000 jobs are at risk.”
Grant Thornton’s analysis shows that for automakers, a decline of one million units of production is equal to the lost ouput of nearly four vehicle assembly plants, 2.5 engine plants, and more than two transmission plants, on average. At the Tier 1 supplier level, more than 50 just-in-time assembly/powertrain sites and more than 500 supplier manufacturing locations could be at risk of collapse, with the losses cascading down to Tier 2 and Tier 3 operations, as well as the truck and rail companies that ship components.