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NYT Syndicate
It has been years since Detroit, birthplace of the US auto industry, was a steady producer of the manufacturing jobs that defined it as the Motor City. But its comeback is entering a new phase.
The latest milestone came recently, with the announcement of the area's first new vehicle assembly plant in 25 years. And the automaker making it happen is from India.
The company, the Mumbai-based Mahindra Group, said it would begin producing off-road recreational and work vehicles at the plant, in Auburn Hills, early next year. And it indicated that this might be just a first step in its ambitions for the US market.
"None of us really know where this journey will take us," said Mahindra's North American auto group Chief Executive Rick Haas."But we are here to expand Mahindra's auto business in the US".
Moreover, the Mahindra Group, Chairman, Anand G Mahindra, is taking a cue from another automotive entrepreneur, Elon Musk. Citing the success of Musk's electric-car startup, Tesla, he said the traditional barriers to automotive success had been obliterated.
"How many people told Elon Musk, 'You don't have any hope of getting into the car business'?" he said.
Mahindra is a major producer of cars and trucks in India and South Korea, but until now it was mainly known in the United States as the world's leading maker of tractors. Mahindra said Detroit was a focal point for growth for the company's US businesses, which also include manufacturing electric bikes and scooters.
"We have a responsibility to contribute to the resurgence of Detroit," Mahindra said at the plant's opening ceremony."That means jobs, and that means investment."
While the planned production volume pales in comparison with the output of large, mainstream auto plants, the factory underscores that the Detroit area is again attracting automotive investment.
The region is still a prime source of engineering talent and manufacturing know-how, as well as a technology incubator for electric cars and self-driving systems. Mahindra already has a design and engineering centre in Troy, half an hour north of Detroit, that turns out prototypes of future vehicles.
Mahindra's footprint in the Detroit area is small so far, with $230 million invested in the plant, the technical centre and two related operations that employ about 270 people combined. The Auburn Hills site where the company is building its factory, in Detroit's northern suburbs, had been empty for years after housing an engine
The company expects to build about 5,000 off-road vehicles in the plant's first year, then add capacity to more than double the volume.
By comparison, the last full-scale plant constructed in Detroit ” a Fiat Chrysler factory that opened in 1992 ” makes more than 300,000 Jeeps annually. Mahindra also assembles tractors at several US plants and employs about 3,000 workers overall across the United States, part of a worldwide workforce of more than 200,000.
If Mahindra aims to make the leap in the US market from tractors and off-road models to cars or sport-utility vehicles, it has several options.
Mahindra builds and sells its own branded SUVs and pickups in its home market and elsewhere in Asia, and could import variations of those vehicles into the United States. It also owns the South Korean carmaker Ssangyong Motor and the Italian design and engineering firm Pininfarina, both of which could participate in producing models for the US market.
Still, analysts foresee a tough challenge for any new entries into the hypercompetitive US auto market. After two consecutive years of record sales, demand has slipped in 2017. Moreover, automakers like General Motors, Volkswagen and Toyota are broadening their product lineups with both conventional gasoline-powered models and new electrified vehicles.
"It will be an uphill battle for Mahindra," said a longtime analyst with the firm Autotrader Michelle Krebs, ."Tesla has done a brilliant job building a new brand, but it's very expensive to do that."
But the revival of the overall market for new vehicles, as well as the return of the Detroit car companies to financial health, has spurred a steady comeback for auto jobs ” particularly in the high-tech sector supporting advances in autonomous driving and electric vehicles.
And while the Detroit area is studded with empty lots that once had factories, the Mahindra plant is a promising sign of blue-collar jobs on the horizon. The company expects to add another 400 jobs in the area by 2020, investing an additional $600 million ” and to continue to be a factor in the auto capital's resurgence.
"It is great to be part of this comeback story," said Mahindra's global automotive business, president Rajan Wadhera."We have a long and profitable and mutually beneficial relationship ahead of us."
