A strong North American auto sales market predicted for 2016 is prompting a Bowling Green manufacturer to step up production next month.
Chris Guthrie, president of Trace Die Cast Inc. in Bowling Green, said Monday that production at the local plant will be increased in December to meet projections for the first quarter of 2016.
Trace Die Cast offers technology-driven, high-pressure die casting solutions for the global automotive industry. It focuses on aluminum castings designed for the engine, transmission and driveline components.
Trace supplies fully machined and assembled components as well as cast-only products. The types of transmission components produced at Trace include valve bodies, converter housings and extensions.
“We’re going seven days a week just to keep up with current production,” Guthrie said Monday.
Guthrie said the automotive markets are benefiting from the market’s return in sales following a slump that began in 2010 when customers weren’t buying as many new vehicles.
“People held on to their cars longer and now are looking to replace them,” he said.
Guthrie and Dave Tatman, executive director of the Kentucky Automotive Industry Association, agreed Monday that the automotive market is hot right now and is projected to continue to prosper in 2016.
One factor benefiting auto sales is low fuel prices. Locally, regular gasoline has dropped below $2 a gallon, and Tatman said when people pay less for fuel, it inspires them to think about buying a new vehicle.
Kentucky will continue in 2016 to hold its position as the United States’ No. 3 light-vehicle manufacturer, Tatman said. Kentucky is first on a per capita basis. There were 1,276,557 Kentucky-made vehicles in 2014, a 73 percent increase from just five years ago.
The optimistic auto sales prediction comes from the Center for Automotive Research in Ann Arbor, Mich. Tatman said CAR’s information tracks with expectations by his organization.
“CAR predicts in 2016 the U.S. auto market could expand beyond the previous peak at 17.2 million to a higher ground of 17.5 million,” the center’s October newsletter noted.
“North America is the leader in the world’s automotive market,” Tatman said, adding that projections for the world’s auto sales are even more optimistic than the North American outlook.
CAR noted the U.S. automotive industry had the best summer sales in 10 years – 17.7 million units in July and August and 18.2 million units in September, the highest level since 2005.
Kentucky could become the nation’s No. 2 vehicle maker, bypassing Ohio, depending on the types of vehicles consumers choose to purchase.
Toledo, Ohio, is home to the maker of Chrysler’s Jeep Liberty sport-utility vehicle, and General Motors makes the Chevrolet Cruz at its massive Lordstown plant just north of Youngstown, Tatman said. Ohio benefits if consumers choose small vehicles such as the Cruz, while Kentucky benefits if consumers choose the larger Escape.
“Our vehicle position has everything to do with what consumers want,” he said. Kentucky is just behind Ohio in annual vehicle manufacturing, while Indiana is just behind Kentucky in the No. 4 position.
The KAIA also plans to continue raising its public profile in 2016.
Tatman said the KAIA is already making plans for the second annual Auto Vision conference in 2016. The 2015 conference in Louisville included 240 attendees. The association also plans a legislative reception in Frankfort as the biennial budget session ensues after the first of the year.
Turning to another issue, Tatman said the KAIA is taking a “wait and see” stance on the impact of the Trans-Pacific Partnership agreement being reviewed by Congress.
According to the Obama administration’s fact sheet on the agreement, the TPP will “eliminate tariffs, simplify customs procedures, ensure protections on intellectual property, improve rules of origin and open up Japan’s market to American autos. American auto manufacturers will also benefit from TPP’s intellectual property rules to protect and promote the patents, trade secrets and trademarks that U.S. auto parts makers have developed, and customs provisions that streamline and simplify customs rules and cut red-tape in getting U.S. auto and auto parts exports to TPP markets.”
Tatman said right now Mexico has 44 trade agreements with other nations, eclipsing the TPP.
“We are looking at language on import tariffs and restrictions,” said Tatman, who recently participated in a panel discussion about the TPP.
The value of Kentucky-made vehicles and parts exported in 2014 was $5.9 billion.