Midwest Hangs Tough

Since 1998, the trend lines have been clear. Vehicle production in the Big Three's Midwestern backyard has trailed off, while Southern and Mexican facilities ramp up new capacity for Asian and European auto makers.

The migration will continue for years, but the Midwest is far from the biggest loser, according to a Ward's forecast. Even with the latest round of plant closings announced Nov. 21 by General Motors Corp., parts of the South actually will lose more vehicle production than their neighbors to the North.

For instance, the South Atlantic region, which encompasses Georgia, South Carolina, North Carolina, Virginia, Maryland and Delaware, is forecast to produce 458,771 fewer vehicles in 2008 than in 1998, a 34.9% drop.

Vehicle production in the Middle Atlantic region, which includes New Jersey, New York and Pennsylvania, should drop by 324,730 units. By 2008, the region will manufacture a mere 13,818 vehicles — a whopping 95.9% decline in regional output.

The West North Central region, which includes Kansas, Minnesota and Missouri, is forecast to lose 299,116 units in vehicle production by 2008, which means an 18.6% dip in output.

Meanwhile, the East North Central region, which includes Illinois, Indiana, Michigan and Ohio, should lose a mere 0.5% of its vehicle output by 2008. That represents 30,800 fewer vehicles manufactured in the Big Three's stronghold in 2008 than in 1998. This year, the region's tally is expected to be 5,831,508 units, according to a Ward's forecast.

On a percentage basis, the biggest gainer is the East South Central region, which includes Alabama, Kentucky, Mississippi and Tennessee. In 1998, the states combined for 1.8 million vehicles. By 2008, Ward's forecasts output of 3,007,706 units, a 65.3% gain.

Alabama is charting the fastest production growth of any state. In 1998, its only vehicle assembly plant in Vance, for Mercedes-Benz, was launching the M-Class SUV. By 2008, Alabama should produce nearly 800,000 vehicles annually, giving it a 4.7% share of North American output.

Hyundai Motor Co. Ltd. is ramping up production in Montgomery, AL, and will add the Santa Fe cross/utility vehicle to the plant's mix next year. Mercedes is adding capacity in Vance with the launch of the new R-Class CUV and a G-Class replacement coming in 2006.

GM's plant closings are spread across several regions. Oklahoma City; the Lansing, MI, Craft Center; and the Spring Hill, TN, Plant/Line No.1 will cease production in 2006.

Also in 2006, the Oshawa Car Plant No.1 in Ont., Canada, will lose the third shift next year, while Oshawa Car Plant No.2 will close after Buick LaCrosse and Pontiac Grand Prix production runs out in 2008.

Doraville, GA, will cease production in 2008 as the stable of GM minivans (currently there are four) reach the end of their lifecycle.

Mexico and, to a lesser extent, Canada will maintain steady production growth.

Mexico is expected to manufacture 502,502 more vehicles in 2008 than in 1998, a robust 34.4% gain, according to a Ward's forecast. For the same period, Canada should gain 227,853 units, an 8.9% boost in output.

Next year, Nissan Motor Co. Ltd. will add production in Mexico of the Versa subcompact to be sold in the U.S. Volkswagen AG will increase overseas exports from its Puebla plant, which currently produces the Jetta/Bora, New Beetle and medium-/heavy-duty trucks.

GM is adding production of Silverado and Sierra pickups to the Silao plant in Mexico and will move production of the Suburban and Yukon XL from Silao to Janesville, WI, and Arlington, TX.

If GM's crucial next-generation GMT900 fullsize pickups and SUVs stumble in the marketplace, the Pontiac East plant in suburban Detroit, rather than Fort Wayne, IN, and Oshawa Truck in Ontario, is the most likely to be closed, according to a Ward's forecast.

In Canada, Toyota is expected to add production of the Highlander CUV at its Cambridge, Ont., plant in 2007. Nearby in Woodstock, Toyota has started on a new plant that will manufacture 100,000 RAV4s annually, beginning in 2007.

Ford Motor Co. is forecast to increase output at its Oakville, Ont., plant with the addition of the redesigned Aviator and new Edge CUV in late 2006.
— with Haig Stoddard

North American Vehicle Production by Region
(Forecast 2008 vs. 1998)

Production of the Top 10 States and Provinces: Forecast 2008 vs. 1998