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Nov. 3, 2003, 8:30 a.m. EST

Fed's Moskow sees auto industry reducing capacity

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By Rex Nutting

WASHINGTON (CBS.MW) -- It is only a matter of time before the auto industry is forced to reduce capacity in the United States, Michael Moskow, the president of the Chicago Federal Reserve Bank, said Monday. The auto industry, including the Big 3 and foreign transplants, has the capacity to produce around 20 million units in the U.S., about 3 million units above the average sales pace in the last three years, Moskow said, in remarks opening a Chicago Fed conference on the outlook for the domestic auto industry. "The question now seems not if, but when and where capacity reductions are going to occur," Moskow said. "The Midwest could be adversly affected if reduction efforts are disproportionately taken by the Big Three," Moskow said.

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