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Salaried employees at DENSO Manufacturing Tennessee Inc. will have their pay cuts restored in January 2010.

Mike Brackett, vice president of DENSO's General Services Division, said Tuesday that DENSO has increased its production volumes as the automotive industry restores its dwindling inventories, some of which resulted from this summer's Cash for Clunkers program.

Hourly employees returned in July to a 40-hour work schedule at DENSO's Maryville plants -- up from a 36-hour per week work schedule in June and the first half of July. Their workweek had previously been cut as low as 32 hours.

"Our associates have helped keep our company stable through these difficult times with their dedication, cost-savings ideas and teamwork. As we go forward, we realize challenging times are still ahead, and we continue our focus on job security and company stability," Brackett said.

"We are also preparing to take advantage of any increased business opportunities presented by a recovering economy."

The company informed its salaried associates of the decision in October. Many hourly employees are now working overtime each week, Brackett said.

In February this year, DENSO announced the pay reduction of 5 percent for its salaried workforce. Vice presidents and above received a 10 percent pay cut.

The salary-level cost-saving effort -- established to protect employment stability in an economic downturn nationally and globally -- affected 667 of the company's 2,547 employees, according to a company statement at the time. About 1,700 to 1,800 production workers were affected by the hourly employees' workweek cuts.

DENSO avoided layoffs through the salary and workweek reductions.

Brackett said he hoped a strong new sales trend will follow recent increased production volumes.

"While remaining optimistic, we plan for many different scenarios and keep our priority on the company's stability and the jobs of our associates."

Industry signs

The DENSO action comes as the U.S. auto industry showed signs of stability in October.

Total sales of cars and light trucks were unchanged at just over 838,000 compared with October of last year, but rose 12 percent from a dismal September 2009, Autodata Corp. reported. The results signaled that some consumers are starting to spend again and the sputtering economy is beginning to pull out of trouble.

"It's ... a fairly stable kind of footing that the industry is getting under it," said Gary Dilts, a former Chrysler sales executive who is now senior vice president of global automotive operations for J.D. Power and Associates.

Last month's sales, if projected for an entire year, rose to 10.5 million after slumping to 9.2 million in September, the month after the government's Cash for Clunkers rebates ran out. Analysts said the figures are good for a normally weak October, but they're still far short of the 17 million annual rates from the late 1990s and early 2000s.

"Clearly we're seeing improvement in the economy and in the industry. It isn't huge, but it's a good sign given that Cash for Clunkers is over," said Mike DiGiovanni, General Motors Co.'s executive director of global market and industry analysis.

Emily Kolinski Morris, Ford's top economist, said uncertainty will continue as long as employment keeps declining, but she said October sales show a real underlying demand for new vehicles after the distorting effects of the clunkers program during July and August. Clunkers offered up to $4,500 rebates for people who traded in older models for more fuel efficient vehicles.

The economy, Kolinski Morris said, is in transition from recession to recovery with financial markets improving.

And the auto industry still has to see its way through a number of economic challenges, said Bob Carter, a Toyota vice president.

"We expect the recovery to be very gradual, extending into next year and beyond," he said.

The Associated Press contributed to this report.