Detroit Economists Forecast Tough Times for Auto Industry

From Detroit Free Press

The 2007 economic outlook for Detroit’s automakers may have caused some indigestion at a Detroit Economic Club luncheon Monday but forecasters said they expect the auto industry to stabilize by the end of the decade.

Ronald Hausmann, president of the heavy, civil and special construction group at Walbridge Aldinger, and economists David Sowerby of Loomis Sayles & Co. in Bloomfield Hills and Sean McAlinden from the Center for Automotive Research in Ann Arbor shared their forecasts for the state, the region and the auto industry with about 400 people at a luncheon at Cobo Hall in Detroit.

"The good news for the U.S. auto industry is we’re pretty much going to remain our same size in terms of production, and perhaps even employment recovers by the end of the decade," McAlinden said. "The bad news is, it may not happen here in the state of Michigan."

And it’s not going to get any better for at least two or three years, he said.

"All the bad headlines you’ve seen this year are going to get bigger since none of the large plants have closed yet. None of the biggest layoffs of salaried workers have actually happened yet — they’re about to in the next couple months," McAlinden said. "The good news at the end of the day, well, at the end of the decade, is we’re going to have three profitable (auto) companies."

Sowerby agreed and said his company is not buying auto stocks.