A Revitalized Car Industry Cranks Up U.S. Exports

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from The Wall Street Journal,

The U.S. auto industry, in tatters just four years ago, is emerging as an export powerhouse, driven by favorable exchange rates and labor costs in a trend experts say could drive business for many years.

In a sign of the turnaround, Honda Motor Co, once a big importer of Japanese-made cars, says it expects to export more vehicles from North America—with nearly all of them coming from its U.S. factories—than it brings in from Japan by the end of 2014.

Last year, more than one million cars and light trucks were exported from U.S. auto plants, the highest recorded and a more than threefold rise from 2003, according to the U.S. International Trade Administration.

More competitive labor costs and restructurings that closed unproductive factories have made American auto plants tougher competitors in the global market. Some are also looking at U.S. production as a way to serve booming emerging markets.

By the end of 2014, Chrysler hopes to export as many as 500,000 vehicles a year to markets outside of North America, more than doubling the 210,000 it sent abroad in 2012.

Few manufacturers are planning a shift as dramatic as Honda. Last year, Honda exported 90,000 vehicles from North America. It eventually aims to increase that to more than 200,000 a year, taking advantage of factory expansions here and a weaker U.S. dollar.

At a Ford Motor Co.plant in Chicago, a quarter of its Explorer sport-utility vehicles are shipped outside of North America.

Labor agreements paved the way for GM & Ford to hire thousands of workers who earn $14 an hour, about half that of veteran workers.

Last year, BMW exported about 70% of the 301,515 vehicles it made in South Carolina. Daimler AG’s Mercedes-Benz exported about the same percentage of the 180,000 vehicles it made in Alabama last year.

In 2012, Toyota exported 124,000 U.S.-made cars and light trucks to markets globally, up from 86,000 in 2011.

U.S.-made cars are being shipped to China, the world’s largest auto market, Saudi Arabia, the second largest destination for U.S.-made cars behind Germany, and South Korea, which now has a free-trade agreement with the U.S. Lower fuel prices have helped the moves.

Still, autos make up a smaller portion of the overall U.S. trade deficit—just 14.5% of the deficit in 2012 down from 22% of the total in 1987.

The cars and trucks shipped overseas are equivalent to the annual output of three or four big assembly plants out of the nation’s about 44 total factories.

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