The plants in North America of Honda Motor Co. and Toyota Motor Corp. were affected by parts shortages one year ago but they’re now leading a sudden surge in the industry. The sales throughout cities from the Midwest to the deep South got a boost even while the U.S. economy is sluggish.
Mayor Jack Reed Jr. said that in Tupelo, Miss., which is located 18 miles away from Toyota's new Blue Springs plant, its jobless rate fell to 8% from 12.5% previously with the beginning of Corolla production. Reed said that sales-tax collections have gotten a 6.4% boost this year and that the city with 35,000 residents benefited with the arrival of the parts manufacturers after having lost furniture-making jobs to China.
He added that Toyota had made an impact on both unemployment and revenues. This year, job growth had been tepid and consumer sentiment had been unsteady but the good thing is that auto production and sales have been recovering.
Honda led the industry with a 75% increase in output. Toyota came in second with a 66% increase. Meanwhile, Japan-based Nissan hopes to continue to raise North American assembly and parts purchases to minimize the losses from the strengthening yen.
Gus Faucher, a senior economist in Pittsburgh for PNC Financial Services Group Inc., said that expanding production is specifically significant for states like Michigan, Ohio, Indiana and Alabama that have the highest concentration of vehicle and parts plants.
Both Toyota and Honda are on track to break their 2007 records for its output in North America. Faucher said that there’s plenty of demand for auto vehicles and that this is likely to continue to be robust for the next few years. [source: Bloomberg]