2015 Auto Industry Jobs Report

ContributionoftheAutomotiveIndustry
totheEconomiesofAllFiftyStates
andtheUnitedStates
3005BoardwalkDrive
AnnArbor,MI48108
www.cargroup.org
January2015
Allstatements,findings,andconclusionsinthisreportarethoseoftheauthors
anddonotnecessarilyreflectthoseoftheAllianceofAutomobileManufacturers.
ContributionoftheAutomotiveIndustry
totheEconomiesofAllFiftyStates
andtheUnitedStates
CenterforAutomotiveResearch
ReportPreparedby:
KimHill,Director,Sustainability&EconomicDevelopmentStrategiesGroup
Director,AutomotiveCommunitiesPartnership
AssociateDirector,Research
DebraMarangerMenk
JoshuaCregger
MichaelSchultz
ReportPreparedfor:
AllianceofAutomobileManufacturers
1401EyeStreet,N.W.,Suite900
Washington,DC20005
January2015
CenterforAutomotiveResearch2015
ACKNOWLEDGEMENTS
TheCenterforAutomotiveResearch(CAR)wouldliketothanktheAllianceofAutomobile
Manufacturersforsupportofthiswork.
Thisstudyistheresultofagroupeffort.TheauthorswouldliketothankourcolleaguesatCAR
fortheirassistancewiththisstudy,inparticular,BernardSwieckiforhisassistancewith
organizingandconductinginterviewsandYenChenforhisinputandguidanceoneconomic
modeling.AdditionalassistancewasprovidedbyDianaDouglass,whocontributedgreatlyto
thecoordinationoftheprojectandtheproductionofthisdocument.
Theauthorswouldalsoliketothanktherepresentativesfromallofthecompaniesthat
providedemploymentandcompensationdatatoinformthisstudy.Inparticular,theauthors
wouldliketothankrepresentativesatalloftheautomakersthatcontributedtothisstudy,
includingBMW,Chrysler,Ford,GeneralMotors,Honda,Hyundai,Kia,Mazda,Mercedes,
Mitsubishi,Nissan,Subaru,Toyota,andVolkswagen.Theauthorswouldalsoliketothank
representativesatBalluff,HitachiAutomotiveSystemsAmericas,JohnsonControls,Kentucky
AutomotiveIndustryAssociation,KyosanDensoManufacturingKentucky,ToyodaGosei,andZF
SteeringSystemsformeetingwithCARresearchersandprovidinginsightintotheautomotive
suppliersector.
KimHill
CenterforAutomotiveResearch
www.cargroup.org
ii
TABLEOFCONTENTS
ACKNOWLEDGEMENTS...........................................................................................................................II
TABLEOFCONTENTS.............................................................................................................................III
EXECUTIVESUMMARY...........................................................................................................................1
INTRODUCTION....................................................................................................................................3
SECTIONIAUTOMOTIVEINDUSTRYBACKGROUND....................................................................................5
OverviewoftheAutomotiveIndustry........................................................................................5
U.S.AutomotiveGeography....................................................................................................5
RecentDevelopmentsintheAutomotiveIndustry....................................................................7
EconomicSignificanceofAutomotiveIndustry..........................................................................9
Sales,Production,andEmploymentForecasts.....................................................................10
AutomotiveInvestment.........................................................................................................11
Research,Development,andInnovationintheAutomotiveIndustry.....................................13
TechnologyTrendsintheAutomotiveIndustry.......................................................................15
AdvancedandAlternativePowertrains................................................................................15
MaterialsandJoining............................................................................................................17
ConnectedandAutomatedVehicles....................................................................................18
SectorsoftheAutomotiveIndustry..........................................................................................20
Suppliers................................................................................................................................20
Dealers..................................................................................................................................21
MediumandHeavyDuty.......................................................................................................22
AftermarketSuppliers...........................................................................................................24
RoleofSmallandMediumsizedBusinessesintheAutomotiveIndustry..............................25
KentuckyCaseStudy.................................................................................................................26
SECTIONIIESTIMATESOFTHEECONOMICCONTRIBUTIONOFTHEMOTORVEHICLEINDUSTRYTOTHEUNITED
STATESECONOMY..............................................................................................................................29
VehicleManufacturerActivities...............................................................................................30
AutomobileDealerships............................................................................................................33
SECTIONIIIESTIMATESOFTHEECONOMICCONTRIBUTIONOFTHEMOTORVEHICLEINDUSTRYTOINDIVIDUAL
STATEECONOMIES.............................................................................................................................37
SECTIONIVMETHODOLOGYOVERVIEW................................................................................................43
TheMacroeconomicModel..................................................................................................43
Methods&Assumptions.......................................................................................................44
BIBLIOGRAPHY...................................................................................................................................45
APPENDIXA......................................................................................................................................51
iii
iv
EXECUTIVESUMMARY
Over7millionprivatesectorjobssupportedbyautomanufacturers,suppliersanddealers
intheUnitedStates
$500billionpaidinannualcompensationtoemployeessupportedbytheautomotive
industry
Everyvehiclemanufacturerjobcreatesalmost7otherjobsinindustriesacrossthe
economy
Alldirectautoindustryemploymentcreatesalmost4additionaljobsinotherindustries
acrosstheeconomy
TheautomotiveindustrycontinuestobeoneofthemostimportantindustriesintheU.S.
economy,supportingmorethansevenmillionprivatesectorjobsand$500billionin
compensation,alongwithattractingforeigndirectinvestment(FDI)currentlyvaluedat$74
billionapproximately3percentofallFDIintheUnitedStates.1Additionally,theindustryhas
collectivelyinvestedalmost$46billionexpandingandretoolingU.S.basedfacilitiessince2010.
FourteenautomotivecompanieshavenumerousfacilitiesintheUnitedStates,withsome
companiessupportingfullyintegratedoperationsinthecountryincludingresearch,
development,design,engineering,headquarters,andmanufacturingoperations,whileothers
haveamuchsmallerfootprint.Beyondthenumberofjobscreated,theindustrycontributes
substantiallytofederal,stateandlocaltaxrevenues,providingmorethan$200billiontothe
federalandstategovernments.ThisstudyhighlightsthesecontributionstotheU.S.economy.
OnlyhalfadozenyearsaftertheworstrecessionintheU.S.sincethe1930s,theAmerican
economydemonstratesmanysignsofstrengthening,andtheautoindustryishelpingtodrive
therecovery.Despiterecenteconomichardships,automanufacturers,suppliersanddealers
themselvesemployover1.5millionpeopleanddirectlycontributetothecreationofanother
5.7millionjobs.Intotal,theautoindustryisnowresponsiblefor7.25millionprivatesector
jobs,accordingtoCenterforAutomotiveResearch(CAR)analysis.
CARresearchersalsofoundthemillionsofemployeeswhosejobsaresupportedbytheauto
industrycollectalmost$500billioninannualcompensation,deliveringnearly$65billionin
personaltaxrevenuestogovernmententities.ThisfigureunderscoresanotherrecentCAR
study,whichfoundthatmotorvehiclemanufacturingandusegeneratedatleast$110billionin
stategovernmenttaxrevenueandanother$96billioninfederalgovernmenttaxrevenue,
amountingtoabout$206billionintaxesormorethantheGrossNationalProductof142
countriesacrosstheglobe.2
BEA.(2015).ForeignDirectInvestmentintheUnitedStates:SelectedItemsbyDetailedIndustryofU.S.Affiliate,20082013.Bureauof
EconomicAnalysis,U.S.DepartmentofCommerce.AccessedJanuary16,2015.<http://www.bea.gov/international/xls/fdius
current/FDIUS%20Detailed%20Industry%2020082013.xlsx>.
2
Hill,Kim,DebraMarangerMenk,andJoshuaCregger.(2015).AssessmentofTaxRevenueGeneratedbytheAutomotiveSectorfortheYear
2013.CenterforAutomotiveResearch.January2015.<http://www.cargroup.org>.andWorldBank.(2014).GDPRanking.TheWorldBank.
Website.AccessedDecember16,2014.<data.worldbank.org>.
Theindustryasawholeemploysabout1,553,000peopledirectlyengagedindesigning,
engineering,manufacturing,andsupplyingpartsandcomponentstoassemble,sellandservice
newmotorvehicles.CARfoundvehiclemanufacturersautomakers,alsoknownasoriginal
equipmentmanufacturers(OEMs)directlyemployed322,000peopleintheU.S.intheir
respectiveheadquartersandinotheroperationalfacilities,suchasassemblyandmanufacturing
plantsandonresearchanddevelopmentcampuses.Additionally,thereare521,000people
employedintheautomotivepartssector,includingworkersintherubber,plastics,battery,
aftermarket,andpartsexportsectors,andanother710,000peopleemployedinthedealer
networksellingandservicingnewvehicles.
Butjobsrelatedtotheautoindustrygofarbeyonddesigning,buildingandsellingvehicles.
Americasautomakersarealsoamongthelargestpurchasersofaluminum,copper,iron,lead,
plastics,rubber,textiles,vinyl,steelandcomputerchips.CARmodelsdiscernedthateveryOEM
employeehadanemploymentmultipliereffectof7.6(or6.6additionaljobsforeverydirect
OEMjob),whiletheemploymentmultiplierfortheentireindustryis4.7.3Therearemany
workersinintermediateandspinoffjobsfromtheautoindustryduetothecomplex
manufacturingsupplynetworkwithmanytiersofsuppliersacrossawidearrayofindustries.
BreakoutoftheemploymentandeconomiccontributionsbyOEM,allautomotive
manufacturing,anddealersectorsareasfollows:
Direct,intermediate,andspinoffemploymentfromOEMactivitiesestimatedat2.4million
Totalcompensationof$168billion
Estimatedpersonaltaxpaymentsofnearly$23billion
Totalemploymentgeneratedbyallautomotivemanufacturing(includingautomakers)is
estimatedtobe5.6million
Estimatedpersonaltaxpaymentsofnearly$45billion
Totalemploymentgeneratedbythedealershipnetworkisestimatedtobe1.65million
Estimatedpersonaltaxpaymentsofapproximately$20billion
Thesefiguresarelikelytoriseaswell.CARsU.S.automotiveemploymentforecastprojects
hiringwillincreasebyapproximately10.8percent,withacompoundaveragegrowthrateof2.1
percentfrom2013to2018.U.S.productionisforecasttocontinueexpanding,growingata
compoundaveragegrowthrateof2.4percent,resultinginaprojectedriseof12.6percentin
productionfrom2013to2018.CARseconometricanalysisalsosuggestsautosalesoverthe
nextseveralyearswillcontinuetoincrease,from15.6millionunitsin2013to17.6millionunits
in2018.
Theemploymentmultiplierderivedfrommanufacturingvehiclesislowerthanthepreviousstudycompletedin2010,whiletheparts
manufacturing,salesandtotalindustrymultipliersareslightlyhigherthanmultipliersseeninpreviousstudies.Theauthorsbelievethatsince
therecession,increasesinproductivity,aswellasthetendencyformanufacturingoperationstorunthreeshifts,havedampenedthe
employmentcontribution,asdaytime,officeandbusinessservicesjobsprovidesupportforaroundtheclockproduction.
INTRODUCTION
Theautomotiveindustryisacriticalcomponentofeconomicgrowth,withextensive
connectionsacrosstheindustrialandculturalfabricoftheUnitedStates.Thisreportoutlines
manyknownelementsandhighlightstremendouslyimportantassociationsbeyondthemarket
spaceofautomotivemanufacturing.Nationalandregionalemployment;research,
developmentandinnovation;stateandlocalgovernmentrevenues;foreigndirectinvestment;
education;healthcare;U.S.trade;andqualityoflifearealltiedtotheautomotiveindustry.
Thisreportreviewsmanyofthefactorsthatsupporttheautoindustrysimportanceand
standinginthenationaleconomy,andprovidesacurrentestimateoftheindustrys
employmentandeconomiccontributiontothenationaleconomyandtoeachofthe50states
andtheDistrictofColumbia.
Thepaperisorganizedintoseveralsections:SectionIprovidesqualitativecontextandcurrent
marketmetricsfortheautomotiveindustry,bothofwhichareneededtotrulyappreciatethe
contributionsoftheindustrytothebroadereconomyandgaugewheretheindustrymaybe
heading.SectionIIfeaturesanindepthquantitativeanalysisofemploymentandpersonal
incomeassociatedwiththeautomotiveindustry.SectionIIcapturesthedistinctcontributions
ofassemblers,motorvehicleandpartsmanufacturing,anddealerstothenationaleconomy.
SectionIIIdescribesthestatelevelemploymentassociatedwiththeautomotiveindustry.
SectionIVdiscussesthemethodologyoftheeconomicmodelingusedtoproducetheresults
discussedinSectionIIandSectionIII.Thisstudyupdatestheeconomiccontributionestimates
froma2010studypublishedbytheCenterforAutomotiveResearch(CAR)onthenational
contributionoftheautomotiveindustryintheUnitedStates.4
TheautoindustryisoneofthemostimportantindustriesintheUnitedStates.Ithistoricallyhas
contributed3.03.5percenttotheoverallGrossDomesticProduct(GDP).Theindustrydirectly
employsmorethan1.5millionpeopleengagedindesigning,engineering,manufacturing,and
supplyingpartsandcomponentstoassemble,sellandservicenewmotorvehicles.Inaddition,
theindustryisahugeconsumerofgoodsandservicesfrommanyothersectors,includingraw
materials,construction,machinery,legal,computersandsemiconductors,financial,
advertising,andhealthcare.Automakersspendanaverageof$1,200forresearchand
development(R&D)pervehicle599percentofwhichisfundedbytheindustryitself.Dueto
theindustrysconsumptionofproductsfrommanyothermanufacturingsectors,itisamajor
4
Hill,Kim,DebraMarangerMenk,andAdamCooper.(2010).ContributionoftheAutomotiveIndustrytotheEconomiesofallFiftyStateand
theUnitedStates.CenterforAutomotiveResearch.PreparedfortheAllianceofAutomobileManufacturers,theAssociationofInternational
AutomobileManufacturers,theMotorandEquipmentManufacturersAssociation,theNationalAutomobileDealersAssociation,andthe
AmericanInternationalAutomobileDealersAssociation.April2010.
<http://www.cargroup.org/?module=Publications&event=View&pubID=16>.
5
Hill,Kim,DebraMenk,BernardSwiecki,andJoshuaCregger.(2014).JustHowHighTechistheAutomotiveIndustry?CenterforAutomotive
Research.Page9.January8,2014.<http://www.cargroup.org/?module=Publications&event=View&pubID=103>.
driverofthe12percentmanufacturingcontributiontoGDP.Withouttheautomotiveindustry,
itisdifficulttoimaginemanufacturingsurvivinginthiscountry.
Duringtherecession,NorthAmericanvehiclesalesandproductionfellsharply.In2007,U.S.
automotiveplantsbuiltnearly11millionvehicles;by2009,productionhadfallentoslightly
morethanhalfofthat,5.8millionvehicles.Toaddpressuretothesupplychain,priortothe
recession,manysupplierswerecompetingforautomakerbusinessprimarilyonprice,leading
themtooperateatverynarrowmargins.Thelossofbusinesscoupledwithrazorthinmargins
ledtoareductioninthenumberofsuppliercompanies.Somecompaniesrestructuresor
consolidated,butmanysimplywentoutofbusiness.6
TheU.S.turnaroundinvehiclesaleshappenedmuchmorequicklythanrecoveryinother
sectorsoftheeconomy.Afteralowpointof10.4millionvehiclessoldin2009,salesinthe
UnitedStateshavesteadilyincreasedandexceeded16millionunitsin2014.Correspondingly,
U.S.automotiveproductionisexpectedtoexceed11millionvehicles.Asproductionhas
increased,suppliersareoperatingtheirfacilitiesatveryhighcapacityutilizationlevels.Withthe
financialpainoftherecessionfreshinmemory,mostsuppliershavebeenreluctanttoreopen
closedplantsorbuildnewfacilities.
Asaresultoftransformationoftheautomotiveindustryatthehighestlevels,coupledwitha
fasterthanexpectedresurgenceinsales,manyautosuppliersnowfindthemselvesunder
intensecustomerpressuretoincreasetheircapacityandcapabilitiesbyinvestingcapital,
addingnewtechnologies,increasingefficiency,improvingquality,upgradingworkforceskills,
andcollaboratingwithotherfirms.7
Aspreviouslymentioned,morethan1.5millionpeopleareemployedbytheautoindustry.In
addition,theindustryisahugeconsumerofgoodsandservicesfrommanyothersectorsand
contributestoanetemploymentcontributionintheU.S.economyofmorethan7millionjobs.
Approximately3.8percentofallU.S.privatesectorjobsaresupportedbythestrongpresence
oftheautoindustryintheU.S.economy.Peopleinthesejobscollectivelyearnnearly$500
billionannuallyincompensationandgenerate$65billionintaxrevenues.Goingforward,
motorvehiclesales,productionandemploymentintheindustryareexpectedtocontinueto
rise.Coupledwithrelentlesstechnologicaladvances,theautomotiveindustrywillcontinueto
beasignificantsectoroftheU.S.economy.
Ibid.Hill,Kim,DebraMarangerMenk,andAdamCooper.(2010).
OESA.(2014).AutomotiveSupplierBarometer.OriginalEquipmentSuppliersAssociation.November35,2014.
<http://www.oesa.org/KnowledgeCenter/AutomotiveSupplierBarometer/2014SupplierBarometers/2014NovemberOESAAutomotive
SupplierBarometer.pdf>.
SECTIONIAUTOMOTIVEINDUSTRYBACKGROUND
ThissectiongivesabriefoverviewoftheU.S.automotiveindustry.Itdiscussesthechanging
marketshareandgeographyoftheindustry,theeffectsoftherecentrecessionandsubsequent
recovery,neartermforecasts,recentlyannouncedinvestments,automotiveinnovation,and
importantsectorswithintheautomotiveindustry,includingsuppliers,dealers,mediumand
heavydutyvehiclemanufacturers,andautomotiveaftermarketfirms.
OverviewoftheAutomotiveIndustry
TheU.S.automotivelandscapeisdynamicandconstantlyshifting.Traditionally,theDetroit3
(D3)domesticautomotiveassemblyfirms(Chrysler,Ford,andGeneralMotors)werethe
dominantindustryforceparticularlyintheU.S.Midwest,theundisputedhomeoftheindustry.
However,withtheentryofinternationalfirms(BMW,Honda,HyundaiKia,Mercedes,Nissan,
Toyota,andVolkswagen)andtheirinvestmentsacrossthecountry,theindustryisnowmore
vibrantandcomplex.Decadesofintensecompetitionfrommanyrivalautomakershaveledto
increasedqualityandchoiceforconsumers.Thesechangeshavealsoledtonewjob
opportunitiesandexpandedproductiontonewlocations.
U.S.AutomotiveGeography
WithintheUnitedStates,thetopthreestatesforestablishmentsrelatedtoautomotive
production(includingcompaniesproducingvehicles,bodies,andparts)areMichigan,Indiana,
andOhio.Texasisalsohighonthelist,asareotherMidwestern(IllinoisandMissouri)and
Southern(Tennessee,Kentucky,Alabama,andMississippi)states.Table1.1showsthe
establishmentcountforthetop10statesintheUnitedStates,andprovidestotalestablishment
countsfortheUnitedStates,Canada,andMexico.
Table 1.1: North American Automotive Manufacturing Establishments, by State and Country
State/Country
Bodyand
MotorVehicle
Parts
Trailer
Manufacturing
Manufacturing
Manufacturing
(NAICS3361)
(NAICS3363)
(NAICS3362)
All
Establishments
(NAICS3361
3363)
Michigan
Ohio
Indiana
Texas
Illinois
Tennessee
Missouri
Kentucky
Alabama
Mississippi
AllOtherU.S.
UnitedStates
90
24
23
31
24
9
15
11
10
8
221
466
95
96
165
178
55
53
74
26
41
22
1,183
1,988
790
479
331
293
292
218
136
179
149
55
2,659
5,581
975
599
519
502
371
280
225
216
200
85
4,063
8,035
Canada
Mexico
157
23
600
61
1,080
670
1,837
754
Sources:BureauofLaborStatistics,StatisticsCanada,InstitutoNacionaldeEstadisticayGeographia,2014
Note:U.S.andCanadianfiguresrepresent2013data.Mexicanfiguresarefor2012.
Traditionally,thegeographiccenteroftheautomotiveindustryhasbeenlocatedinthe
MidwesternstatesofIllinois,Indiana,Michigan,Missouri,andOhio,aswellastheprovinceof
OntarioinCanada.U.S.automakershavealsohistoricallyhadassemblycapacityinotherstates
intheformofbranchassemblyplants(e.g.,GeneralMotorsandFordassemblyplantsinstates
suchasCalifornia,Georgia,NewYork,andTexas),8thoughmostofthoseplantshavesince
closed.9U.S.foreigndirectinvestmenthasfacilitatedtheexpansionoftheautomotiveindustry
beyondtheindustrialMidwest,asinternationalautomakersarelargelylocatedintheSouthern
statesofAlabama,Georgia,Mississippi,andTennessee.Thecurrentautomotivefootprint,
sometimesreferredtoastheautomotivecorridorinNorthAmerica,whichcanbeseenin
Figure1.1,stretchesfromtheupperMidwesttotheGulfofMexico.
Rubenstein,JamesM.(1992).TheChangingU.S.AutoIndustry:AGeographicalAnalysis.Routledge,NewYork,NewYork.1992.
Brugeman,ValerieSathe,KimHill,andJoshuaCregger.(2011).RepurposingFormerAutomotiveManufacturingSites:Areportonclosedauto
manufacturingfacilitiesintheUnitedStates,andwhatcommunitieshavedonetorepurposethesites.CenterforAutomotiveResearch.
PreparedfortheOfficeofRecoveryforAutoCommunitiesandWorkers,U.S.DepartmentofLabor.November2011.
Figure 1.1: North Americcan Automakerr and Automotiive Supplier Prroduction Faciility Locations
Sources:Cen
nterforAutomo
otiveResearch,2
2014(supplierloccationsfromELM
MAnalyticsand
dMarkLines)
Thesupp
plierfootprin
ntfollowsro
oughlythesaamecourseaastheautom
makerplantfootprint,
thoughittismorefullydeveloped
dinareasthathavebeeenengagedw
withautomo
otive
manufacturingforalongerperio
odoftime.TThegreatestdensityofsuppliersislo
ocatedin
Michigan
n,whichalso
ohostsmore
eautomotive
eassemblypplantsthanaanyotherstate.
RecentD
Developmen
ntsintheAutomotiveIn
ndustry
Intheearlypartofth
hiscentury,annualU.S.lightvehicleesalespeakeedat17.4m
million,and
sustained
dlevelsof16
6millionuniitsormoretthrough20007.Thisunprrecedentedssalesactivityywas
supporte
edbyaboom
mingstockm
market,housingdevelop mentpatterrnsnecessitaatingincreassed
vehicleo
ownership,anenhancedsenseofpe
ersonalwealtth,andgeneerousvehicleepurchasingg
incentive
es.
In2008aand2009the
efinancialcrrisisandsub
bsequentreccessionresultedinashaarpcontraction
ofautom
motivesales.Vehicleasse
emblers,sup
ppliersandddealersassemblersthathadexpand
ded
capacityduringthee
earlypartofthedecadewerevulnerrablewhenvvehiclesalessfell40perccent
Centerfo
orAutomotiveResearch2015
5
in2009.WhiletheU.S.automotiveindustryhadbeenrestructuringformanyyears,the2009
marketcrashandsubsequentbankruptcyoftwoautomakersandscoresofsuppliers
providedimpetusforfurtherreductionsinU.S.automakersandsuppliersproductioncapacity.
Since2010theU.S.automobileindustryhassteadilyrecovered.Manyoftheleadingeconomic
indicatorshavecomebacktoprecrisislevels.10Cumulativevehiclesaleshaveregistered
doubledigitgrowthrateseachyearsincethecrash,and2014U.S.autosalesthrough
Decemberhaveincreasedby5.8percentcomparedtofiguresfrom2013.11
Duringtherecession,automakersandsuppliersreducedtheirliabilitiesandrationalized
capacitybyclosing,selling,orconsolidatingplants.Astheeconomybegantorecover,
automakersandautomotivesupplierswerereluctanttooverexpandandmetindustry
demandsbyrunningextrashiftsandovertimeatexistingfacilitiesratherthanbuildingnew
capacity.Withhigherlevelsofcapacityutilization,manycompaniesarenowlookingtoinvestin
incrementalcapacityexpansionbothintheUnitedStatesandabroad.12
Manymanufacturingcompaniesarealsoreshoringjobs,orbringingpreviouslyoutsourced
jobsbacktotheUnitedStates.13Amajorreasonforreshoringjobsisthatthewagesinformerly
lowcostcountrieshaveincreasedwhilerealwageshaveseenlittlegrowthintheUnitedStates.
Amoreflexibleandproductiveworkforceandintensiveuseofautomatedmanufacturing
methodshasreducedtheimportanceoflaborcostwhenchoosingtoproducedomesticallyor
abroad,whileotherfactorssuchasfreightandenergycostshavebecomemoreimportant.One
exampleofreshoringintheautomotiveindustryisFordsrecentdecisiontorelocatesome
productionfromChinaandMexicotoOhioandMichigan.14
Concernswithlogistics,aswellasfreightinandfreightoutcosts,haveresultedinpressureon
supplierfirmstolocatefacilitiesneartheircustomers.Manufacturingfirmsarealsosensitiveto
indirectcosts,suchastheriskassociatedwithmoredistantsupplychains.Theseconcernshave
notonlyresultedinsomecompaniesbringingmanufacturingbacktotheUnitedStates,butalso
encouragedareagglomerationofautomotivesupplierstocoreautomotiveproducingregions.
10
FRED.(2014).FederalReserveEconomicData.EconomicResearch,FederalReserveBankofSt.Louis.AccessedJune6,2014.
<http://research.stlouisfed.org/>.
11
AutomotiveNews.(2014).U.S.CarandLighttruckSalesbyMakeDec.2014(RankedbyTotalSales).AutomotiveNewsDataCenter.
January5,2015.<http://www.autonews.com/section/datacenter>.
12
CAR.(2015).BookofDeals.CenterforAutomotiveResearch.January2015.
13
Northam,Jackie.(2014).AsOverseasCostsRise,MoreU.S.CompaniesAre'Reshoring'.NationalPublicRadio.January27,2014.
<http://www.npr.org/blogs/parallels/2014/01/22/265080779/asoverseascostsrisemoreuscompaniesarereshoring>.;CSG.(2014).Made
intheUSAReshoringBringsManufacturingBack.CapitolIdeas:CouncilofStateGovernmentsInsights&Innovations.March/April2014.
<http://www.csg.org/pubs/capitolideas/2014_mar_apr/2014_mar_apr_images/CIMarApr14.pdf>.;andEconomist.(2013).Reshoring
ManufacturingComingHome.Specialreport:Outsourcingandoffshoring.TheEconomist.January18,2013.
<http://www.economist.com/news/specialreport/21569570growingnumberamericancompaniesaremovingtheirmanufacturingback
united>.
14
Ibid.Economist.(2013).
EconomicSignificanceofAutomotiveIndustry
Formorethanacentury,theautomotiveindustryhasbeenamajorcontributorinshapingthe
U.S.economy,andhasgeneratedandsupportedmillionsofjobs.AsofSeptember2014,the
U.S.motorvehicleandpartsmanufacturingindustryemployedmorethan870,000workers.15
Beyondthosedirectemployeesworkinginassembly,body/trailer,andpartsplants,thereare
manymoreworkersinintermediateandspinoffjobsthataresupportedthroughautomotive
productionactivities.
Theeconomicperformanceoftheautomotiveindustry,aswellasmanufacturingmorebroadly,
isimportantforthecontinueddevelopmentandgrowthofnationalandregionaleconomies.
Manufacturingandautomotiveindustrytrendscanbeindicatorsofthestateoftheeconomy,
withperiodsofgrowthinautomotivemanufacturingcloselylinkedtoperiodsofgrowthinthe
economyasawhole.Asofthesecondquarterof2014,thevalueofU.S.lightvehiclesaleswas
$519billiononanannualizedrate;thisisthehighestrateeverrecorded.16
Theeconomicimplicationsoftheautomotiveindustrysactivitiesextendbeyondpeople
directlyemployedintheindustry,duetothecomplexmanufacturingsupplynetworkwith
manytiersofsuppliersacrossawidearrayofindustries.Afewofthemoreobviousindustries
supportedbyautomotivemanufacturingincludemotorvehicleparts,primaryandfabricated
metal,plastics,andrubberproducts.Outsideofmanufacturing,theautomotiveindustry
supportsjobsinprofessionalandtechnicalservices,administrationandservices,wholesaleand
retailtrade,transportationandwarehousing,financeandinsurance,andmanagementof
companies.
InJanuary2015,theCenterforAutomotiveResearch(CAR)publishedthestudy,Assessment
ofTaxRevenueGeneratedbytheAutomotiveSectorfortheYear2013fortheAllianceof
AutomobileManufacturers.17Thestudyexaminedmultipleinstrumentsoftaxrevenue
generationandfocusedprimarilyonstateandfederaltaxrevenues.Taxesaregeneratedat
variouspointsintheautomotiveproductlifecycle.Forinstance,inadditiontothesalestaxes
generatedwhenvehiclesarepurchased,governmentagenciescollecttaxesfromavarietyof
sourcespayrolltaxesfromemployeesworkingintheautomotiveindustry,fueltaxesfromgas
stations,registrationandlicensetaxesfromdriversandvehicleowners,andcorporateincome
taxesandlicensingfeesfromtheautomakers,automotivesuppliers,anddealerships.These
taxessupportavarietyofgovernmentservicesthroughoutthecountry,suchasconstructing
andmaintainingthehighwaysystem,andsupportanumberofjobsinavarietyofother
industries.
15
BLS.(2014).BureauofLaborStatistics,U.S.DepartmentofLabor.Website.AccessedOctober24,2014.<http://www.bls.gov/>.
BEA.(2014).BureauofEconomicAnalysis,U.S.DepartmentofCommerce.Website.AccessedOctober24,2014.<http://bea.gov/>.
Hill,Kim,DebbieMarangerMenk,andJoshuaCregger.(2015).AssessmentofTaxRevenueGeneratedbytheAutomotiveSectorfortheYear
2013.CenterforAutomotiveResearch.January2015.<http://www.cargroup.org>.
16
17
Asaresultofthedepthandbreadthoftheautomotiveindustry,everystateinthenation
generatestaxrevenuesrelatedtomotorvehicleproductionanduse.CARresearchersproduced
estimates18oftaxesthataregeneratedbyoperationsrelatedtomotorvehicles.In2013,the
automotiveindustrygeneratedatleast$110.0billioninstategovernmenttaxrevenue(This
representsapproximately13percentofstategovernmentrevenues).19Theestimatesofthe
federaltaxrevenuesinthetaxstudydonotexhaustallofthecontributionsmadebythe
automotiveindustry,andtherefore,theestimatesserveasalowerboundestimate.In2013,
theautomotiveindustrygeneratedatleast$95.5billioninfederalgovernmenttaxrevenue
(Thisrepresentsapproximately3.4percentoffederalgovernmentrevenues).20
Sales,Production,andEmploymentForecasts
CARproducesanannualvehiclesalesforecastbasedonaneconometricanalysisofkey
variablesofautomotivedemand.From2013to2018,salesareforecasttoincreaseby
approximately12.8percent.Figure1.2displayshistoricalandforecastedsalesfortheU.S.
automotiveindustry.Theforecastsuggeststhatautomobilesalesoverthenextseveralyears
willcontinuetoincrease,returningtothelongtermtrendfrom16.9to17.6millionunits
annually.
Figure 1.2: U.S. Automotive Sales and Forecast, 2007-2018
Source:CenterforAutomotiveResearch,January2015
CARsU.S.automotiveemploymentforecastprojectsthatfrom2013to2018,employmentwill
increasebyapproximately10.8percent,withacompoundaveragegrowthrateof2.1percent.
U.S.productionisforecasttocontinueexpanding,growingatacompoundaveragegrowthrate
18
Allmodelednumbersusedinthetextarerounded.
Totalstaterevenuesfor2013wereapproximately$846billion.SeeCensus.(2013).StateGovernmentTaxCollections:2013.UnitedStates
CensusBureau,U.S.DepartmentofCommerce.March2013.
<http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=STC_2013_STC003&prodType=table>.
20
Totalfederalrevenuesfor2013wereapproximately$2.8trillion.SeeCBO.(2013).MonthlyBudgetReviewSummaryforFiscalYear2013.
CongressionalBudgetOffice.November7,2013.<https://www.cbo.gov/publication/44716>.
19
10
of2.4percent;theresultisaprojectedincreaseof12.6percentinproductionfrom2013to
2018.TheseforecastedtrendsaredisplayedinFigure1.3.
Figure 1.3: U.S. Vehicle Production & Automotive Employment Forecasts, 2013-2018
Sources:CenterforAutomotiveResearch,AutomotiveNews,BureauofLaborStatistics,October2014
AutomotiveInvestment
Thoughthe20082009recessionhamperednewinvestmentsandledmanyautomakersand
supplierstotemporarilyidleorpermanentlyclosemanyfactories,insubsequentyears,
automakersandsuppliershaveinvestedandreinvestedintheirU.S.facilities.Fromthe
beginningof2010throughtheendof2014,automakershaveannouncedinvestmentstotaling
nearly$70billioninNorthAmerica(seeFigure1.4).Theseinvestmentsincludenewfacilitiesas
wellasexpandingandretoolingexistingfacilities.Thefacilitiesincludeassembly,engine,
transmission,stamping,andpartsplantsalongwithotherfacilities.OftheNorthAmerican
investmentsmadeduringthatperiod,twothirdsoftheinvestmentdollarswenttofacilities
locatedintheUnitedStates.
11
Figure 1.4: Announced North

N
American
n Automaker In
nvestments, 20010 2014
Source:CenterforAutomottiveResearch,January2015
Ofthe$6
69.6billioninannounced
dNorthAme
ericanautom
makerinvesttmentsfrom
m2010to20
014,21
$18.2billionwasann
nouncedin2
2014.Ofthattotal,$10.55billion,or58percento
ofthetotal
mericananno
ouncedauto
omakerinvestmentsfrom2014arewithintheU
UnitedStates.
NorthAm
Manyoftheindividu
ualinvestmentsandtheirlocationsccanbeseeninFigure1.5
5.Foreigndiirect
investme
entintheUn
nitedStatesiscurrentlyvaluedat$774billionaapproximateely3percenttof
allFDIintheUnitedSStates.22
21
Theinvestm
menttotalsinclude
eannouncementssforbuildingnewandretoolingoreexpandingexistinggfacilities.Thetotaalsalsocoverarangeof
facilitytypes,includingassemb
bly,engine,transm
mission,stamping,andpartsplants.
22
BEA.(2015).ForeignDirectInvestmentintheUnitedStates:SelectedItemsbyDeetailedIndustryoffU.S.Affiliate,200082013.Bureauof
EconomicAnalysis,U.S.DeparttmentofCommercce.AccessedJanuaary16,2015.<htt p://www.bea.govv/international/xls/fdius
current/FDIUS%20Detailed%20
0Industry%202008
82013.xlsx>.
Centerfo
5
12
Figure 1.5: Announced Automaker

A
Inveestments in Norrth America, Ja
January Deceember 2014
Source:CenterforAutomottiveResearch,January2015
OtherU.SS.investmen
ntannounce
ementsnotsshownintheemap(butincludedinthe2014totaal)
include:
distributionccenterinTexxas
BMWopeninganewregionalpartsd
Fo
ordopeninggnewtechnicalsupportcenterforF ordRacinginNorthCarolina
Mercedesbu
M
ildinganew
wvehiclepreparationcennterandoth
herofficesin
nCalifornia
Mercedesexp
M
pandingitsTTuscaloosaaassemblyplaantinAlabam
ma
Toyotaconso
olidatingitsm
manufacturing,salesanddmarketingg,andcorporrateoperations
ntoasinglen
newheadqu
uartersinTexxas(movingoperationsfromKentucckyand
in
California)
TeslaestablisshingasmalllmanufacturingsiteataaformerChrryslerserviceeparts
operationinC
California
Teslabuildingga$5billion
nbatteryGiigafactoryinNevada
Research
h,Developm
ment,andInn
novationintheAutomo
otiveIndustry
Theauto
omotiveindu
ustryinvestsheavilyinre
esearchand developmeent.Unlikeottherindustrries,
automotiveresearch
handdevelo
opmentefforrtsarelargelyfundedbyytheindustrry,ratherthan
omotiveindu
ustry
throughpublicsourcces.In2007,thelastyeaarwhenfedeeralfundingfortheauto
onepercentofR&Dinth
heautomotivveindustrywasfundedthroughthee
wasdiscllosed,onlyo
federalggovernment,leavingtheindustrytobearessenttiallythefullcostofcreaating,design
ning,
testing,aandimpleme
entingnewttechnologiess(seeFiguree1.6).
Centerfo
5
13
Figure 1.6: R&D Funding Sources by Industry, 2007
R&DFundingSource(PercentofTotal)
CompanyandOther
100%
90%
80%
32%
29%
27%
Federal
15%
15%
10%
10%
10%
85%
85%
90%
90%
90%
Utilities
NonMfg.
Industries
All
Industries
Mfg.
Industries
1%
70%
60%
50%
40%
30%
68%
71%
73%
99%
20%
10%
0%
Architectural Scientific
&Eng.
R&DSvcs.
Aerospace Computer
Products &Electronic
&Parts
Products
Automotive
Industry
Source:NationalScienceFoundation,2009
In2011,theU.S.automotiveindustry,respondingtotheneedtoimprovesafetyinvehicles,
consumerdemandsfornewmodeltypeswithenhancedcosmeticanddriveperformance
characteristics,andregulationofemissions,invested$11.7billionintoR&D.From1999to
2007,automotiveR&Dspendinglevelsrangedbetween$15billionand$18billion.In2008,U.S.
automotiveR&Dspendingfellto$11.7billionandin2009itcontinuedtodeclinetojustunder
$10billion.AnnualautomotiveR&DexpenditurescanbeseeninFigure1.7.Severalother
industries,allofwhichcompriseasmallershareofGDPandnationalemploymentthan
automotive,oftenreceiveasubstantialamountofR&Dfundingfromthefederalgovernment.23
23
NSF.(2014).BusinessR&DandInnovationSurvey,andSurveyofIndustrialResearchandDevelopment.NationalScienceFoundation.
MultipleYears.AccessedDecember8,2014.<http://www.nsf.gov/>.
14
Figure 1.7: U.S. Automotive R&D Spending, 1999-2011
$20.0
AutomotiveR&DSpending
$18.0
$16.0
$18.3 $18.4
$16.1
$16.9
$15.2
$15.7 $16.0
$14.0
$16.7
$16.0
$11.7
$12.0
$11.7
$10.0 $10.1
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year
Source:NationalScienceFoundation,2014
Motorvehiclemanufacturingiscomplexandrequiresahighlyskilled,highlyeducatedlabor
force.Diversityinskillsets,education,andequipmentalsoaffordspartssuppliersthe
opportunitytodiversifyanddevelopproductsforavarietyofindustriesoutsideofautomotive.
IfitwerenotfortheR&Dinvestmentswithintheautomotiveindustry,thisdynamiccross
fertilizationoftheR&Dprocesswouldnotbeavailabletootherindustries.
TechnologyTrendsintheAutomotiveIndustry
AutomotiveR&Dspendingandrequirementsareexpandingrapidlytokeeppacewiththe
demandsforevermoresophisticatedandeffectivenewtechnologies.Automakersspendan
averageof$1,200forR&Dpervehicle.24Improvedfueleconomyandemissionstargets
continuetodriveautomakerimprovementsinvehiclepowertrain,lightweighting,
aerodynamics,andothervehicleattributes.Consumerpreferences,increasingcongestion,and
moremobilitychoicesmeanthatcarshavetoincorporateavarietyofcreativetechnologiesto
attractbuyers.Areasofparticularfocusarepowertrain,materials,andelectronics.A
combinationofpowertrainimprovements,newmaterials,andnewmaterialprocesses
comprisethestrategiesforautomakerstoachievegreaterperformanceandprovidebetter
utilitywhilestillimprovingfueleconomy.
AdvancedandAlternativePowertrains
Thepowertraincontinuestobeanimportantvehiclesystemforfueleconomyimprovements.
Vehiclemanufacturersaredevelopingawiderangeofadvancedpowertraintechnologyoptions
24
Hill,Kim,DebraMarangerMenk,BernardSwiecki,andJoshuaCregger.(2014).JustHowHighTechistheAutomotiveIndustry?Centerfor
AutomotiveResearch.Page9.January8,2014.<http://www.cargroup.org/?module=Publications&event=View&pubID=103>.
15
tomeetenvironmentalregulations,consumerpreferences,andenergysavinggoals.Whilethe
sparkignitedinternalcombustionengine(ICE)willremainthedominanttechnologyforthe
foreseeablefuture,otherpowertrainoptionswillseeincreasedmarketacceptance,andno
singleoptionisexpectedtoemergeasthebestsolution.Areasoftechnologygrowthrelatedto
powertrainsystemsincludeadvancedinternalcombustionengines(gasolineanddiesel),
transmissions,vehicleelectrification,andalternativefuels.Eachofthesecategoriespresentsa
widerangeoftechnologyoptionsandcostconsiderations.
Theinternalcombustionengine(ICE)hasundergoneremarkablechangeinthepastdecadeand
newlydevelopedadvancedinternalcombustionenginesareexpectedtoimproveICE
environmentalperformanceandalsohaveacostadvantagevisvisotherpowertrainoptions.
AutomakerscontinuetoimprovefueleconomyofICEenginesusingadvancedtechnologies
suchasdownsizing,turbocharging,variablecompressionratiocapability,andleanburnengine
operation.
AutomatictransmissionswillremainthedominantchoiceforU.S.consumers.Incomingyears,
consumersshouldexpecttoseemorevehicleswithdualclutchtransmissions(DCT),
continuouslyvariabletransmissions(CVT),andhighergeared(sevenspeedorhigher)
transmissions.
Electrifiedvehiclesholdbothpromiseanduncertainty.ElectricvehiclessuchastheChevrolet
Volt,NissanLeaf,FordFocusElectric,andTeslaModelShaveenteredthemainstreambut
certainlynotmassmarket.Vehicleelectrificationincludingmildhybrids,hybridelectric
vehicles,pluginhybridelectricvehicles,andbatteryelectricvehiclesishighlydependent
uponfurtherbatterydevelopmentandconsumeracceptance.
Alternativefuels,suchasnaturalgas,hydrogen,andbiofuels,willalsohaveaplaceinthe
advancedpowertrainmix.Naturalgashasbeenusedinvehiclesformanyyears,buthasbeen
mostlylimitedtoheavydutyandfleetapplications.Promotersofnaturalgassuggestthatits
abundanceandrelativelycleanburningcharacteristicsmakeitanidealcandidateforincreased
usageinmotorvehicles.Hydrogenisanotheralternativefuelthathasbeenresearchedfor
decades.Someautomakersarealreadysellingorleasingfuelcellelectricvehicles,andseveral
othershaveannouncedtheywillintroducefuelcellelectricvehiclesinthenearfuture.Biofuels
hadstronggovernmentsupportinrecentyearswithtaxincentivesandanationalRenewable
FuelsStandardgearedtowardsincreasingbiofuelsproductionanduse.Issueswiththe10
percentethanolblendwallhaveresultedinregulatorsreducingbiofuelsproduction
16
requirements.25Allalternativefuelsfaceinfrastructureavailabilityissuesaswellasthe
challengeofrelativelyinexpensivegasoline.
MaterialsandJoining
Vehicleweightisaconsiderablefactorinvehiclefueleconomy;itisestimatedthata10percent
reductioninvehiclemasscanresultinafueleconomyimprovementofupto57percent.26
Thoughachievinggreaterfueleconomyisamaindriverformanylightweightingmaterialand
processtechnologies,thereareotherbenefits.Weightreductionisalsoappealingto
automakersbecauseittendstoincreaseotherperformancefactorsvaluedbyconsumers:ride
andhandling,braking,andacceleration.Anotherkeymotivationforusingnewandmorehighly
engineeredmaterialsistoimprovevehiclesafetyandcrashworthiness.
Byswitchingtolightweightingmaterials,suchashighstrengthsteel,aluminum,magnesium,
andcomposites,andadoptingnewforming(e.g.,hotstampingandhighintegritycasting)and
advancedjoining(e.g.,adhesives,frictionstirwelding,fasteners,andlaserwelding)
technologies,automakerswillbeabletosignificantlyreducetheweightofnewvehicles.By
2025,automakersareexpectedtoreducetheaveragevehiclemassby10percentorgreater
versus2010vehicles.27
Automakershavehistoricallyconcentratedonimprovingthematerialsusedtocreatevehicles.
Inthelastfewdecades,therehasbeenincreaseduseofadvancedhighstrengthsteel(AHSS),
composites,andaluminum,aswellasadecreaseintheuseofironcastingsandregular(mild)
steel.ThesetrendscanbeseeninFigure1.8.Asautomakerscontinuetoimplement
lightweightingstrategies,thesematerialtrendswillpersistandmayevenaccelerate.
25
CBO.(2014).TheRenewableFuelStandard:Issuesfor2014andBeyondCongressionalBudgetOffice.June2014.
<http://www.cbo.gov/sites/default/files/45477Biofuels2.pdf>.
26
NHTSA.(2012).CorporateAverageFuelEconomyforMY2017MY2025PassengerCarsandLightTrucks.NationalHighwayTransportation
SafetyAdministration,U.S.DepartmentofTransportation.Pages435436.August2012.
<http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/FRIA_20172025.pdf>.
27
ThisexpectationisbasedonconversationsbetweenCARandrepresentativesfromtheautomotiveindustry.
17
Figure 1.8: Vehicle Mateerial Compositiion in U.S. Ma

arket, 1978 20012
Sources:Wa
ardsAutoandA
AmericanChemisstryCouncil,201
14
Inadditio
ontothemaaterialsthem
mselves,mucchoftheadvvancementintheautom
motivematerials
relatesto
omanufactu
uringanddesignmethod
ds.Someoftthebiggestd
developmen
ntsinmateriials
technolo
ogyinvolvesapplicationttechnologiesssuchasjoi ning(e.g.,reesistancespotwelding,
fastenerss,adhesives,,weldbondadhesive,laaserweldingg)andfabricaation(hotfo
orming,thinwall
diecastin
ng,composittemolds,an
ndaluminum
mforming)teechniques.M
Materialasseessmentisaalso
importan
nt,andcomp
puteraidedengineeringg(CAE)isuseedtomodelnewmaterials(e.g.,mo
old
flowanalysis,formab
bility,andcrrashsimulatiions).
ConnecteedandAutom
matedVehiccles
Roadtransportationcontinuesto
oundergosiignificantte chnologicaltransformattionsaswireeless
technolo
ogyincreasin
nglyenablesvehiclestoccommunicattewitheach
hotherandw
withsurroun
nding
infrastructurewhileadvanceddrriverassistan
ncesystemssenablewarrningsandlim
mitedamou
unts
ofautom
mation.Thisttransformationisdriven
nbytheprol iferationofsensors,acttuators,wireeless
connectivvity,andarttificialintelliggencesystem
msthatareeenablingveh
hiclestoperrceiveandreeact
totheire
environmenttinwaysthaathumandriverscannott.Connected
dvehicletecchnologywill
enableve
ehiclestoinstantaneousslycommunicatewitheaachotheran
ndtheroadw
wayprovid
ding
informationtomake
etransportattionsaferan
ndmoreefficcient.Autom
matedvehicletechnologgy
cansense
edangerousssituationsaandissuedriverwarninggsorevenacctivelycontrrolvehicle
systemsinresponse..28
28
Wallace,RichardandGarySilberg.(2012).SellfdrivingCars:The
eNextRevolution..CenterforAutoomotiveResearchaandKPMG.Augusst2012.
w.cargroup.org/?m
module=Publication
ns&event=View&p
pubID=87>.
<http://www
Centerfo
5
18
Connectedvehicletechnologywillenablevehiclestocommunicatewitheachother(vehicleto
vehicleV2V)andwiththeroadway,trafficsignals,bridges,andotherpiecesofinfrastructure
(vehicletoinfrastructureV2I)usingtechnologiessuchasdedicatedshortrange
communications(DSRC)andcellularnetworks(i.e.,4GLTEconnectivity).DSRCisawireless
channelusingthe5.9GHzspectrumthatwasspecificallydesignedforuseinvehicular
communications.Connectedvehiclesystemscanbeembedded,aswithfactoryinstalledunits,
ormaybebroughtintothevehicleintheformofamobiledevicethatcanbepluggedintoor
wirelesslyconnectedtothevehicle.Manyvehiclesinoperationhavesomeformofconnectivity
(suchasChryslerUconnect,FordSync/MyFordTouch,GMOnStar,HyundaiBlueLink,orToyota
Entune),andvehiclesequippedwithDSRCwillbecomecommerciallyavailableinthenexttwo
years.VehiclesequippedwithV2VandV2Icommunicationcapabilitiesbroadcastinformation
(brakestatus,location,direction,speed,andothervehicledata)astheyaredriven,andthe
systemsusecuessuchassounds,lights,displays,andseatvibrationstoalertdriversofvarious
threats.
Automatedvehicletechnologiesusesensorinputssuchasvideocameras,radar,andLiDAR(a
laserbasedrangingsystem)alongwithcomputingpoweranddetaileddigitalmapstoissue
warningsoractivelyreacttohazards.Severalautomatedfeaturesalreadyexistinmanyvehicles
soldtoday,suchasautomatedemergencybraking,lanekeepingassistsystems,adaptivecruise
control,andactiveparkingassistance.Automakersmaysoonoffervehiclesthatcombinesome
oftheseexistingsystems,allowingavehicle'sspeed,steering,andbrakestobeautomatically
controlled.Inthenearfuture,severalautomakers,includingGeneralMotors,Ford,Mercedes,
andVolvo,aresettoreleasesystemscapableofsemiautomateddrivingincertainsituations,
suchasexpresswayorlowspeedstopandgo(trafficjam)conditions.
Thefinalfrontierofautomatedvehicletechnologyistheselfdriving,fullyautomatedvehicle
capableofoperatingontheroadinmixedtraffic.Despitethecomplexityinvolved,multiple
stakeholdersareworkingtodevelopsuchvehicles.Googleistestingfullyautomatedvehicles
onpublicroadsinNevadaandCalifornia,andhasloggedhundredsofthousandsofmilesinits
testvehicles.Traditionalautomakers,suchasGeneralMotors,Toyota,andVolkswagen,are
developingadvancedautomatedfunctionalityaswell.Additionally,hightechautomotive
supplierfirmssuchasBosch,TRW,Delphi,andothersaredevelopingadvancedtechnologies
bothincooperationwith,andindependentfrom,theautomakers.
Currentlyfourstates(Nevada,Florida,California,andMichigan)andtheDistrictofColumbia
havepassedlawsaddressingfullyautomatedvehiclesonpublicroads,andseveralotherstates
throughoutthecountryhaveconsideredsimilarlegislation.InMay2013,theNationalHighway
TrafficSafetyAdministrationreleasedguidelinesforstatesissuinglicensesfortestingfully
automatedvehiclesonpublicroads.
19
SectorsoftheAutomotiveIndustry
Theautomotiveindustryconsistsofseveraldifferentsectorsupstreamanddownstreamofthe
automakers.Theseothersectorsincludeautomotivesuppliers,autodealers,mediumand
heavydutyvehiclemanufacturers,andautomotiveaftermarketsuppliers.
Suppliers
Inthisreport,theautomotivesuppliersectorisdefinedasalargegroupofindependent,non
automaker,partsproducersthatsellfinishedgoodstobothdomesticandinternational
automakers,aswellasaftermarketpartsreplacementretailers.Forthepurposeofthisstudy,
theautomotivesuppliergroupincludesemployeesbeyondNAICS3363(theindustry
classificationcodeformotorvehicleparts)toaccountforproductsdevelopedbyother
manufacturingindustriesthatareusedintheproductionofvehicles.
Thetotaldirectemploymentcountatsuppliercompaniesis521,000workers;29thisfigure
includesemployeesassociatedwithmanufacturingtires,hoses,hardware,lighting,batteries,
andplasticsformotorvehiclesaswellasfirmsproducingaftermarketpartsandpartsfor
export.Withouttheinclusionofproductssuchasrubberhosesandtires,NAICS3363wouldnot
besufficienttofullydescribeallproductsusedtomanufactureafinishedvehicle.30
Inrecentyears,thesuppliersresponsibilitytoaddtechnologyandvaluetotheautomobilehas
grown.PartsR&D,production,andsubassemblyhavebeenshiftedontosuppliers,as
automakersfacingdecliningprofitsandotherbusinessoperationissueshavespunoffmany
oftheirinhousepartsoperations.Thistransitionissignificantfortworeasons:1)2840percent
ofR&Dspendingundertakenbythesuppliersandapproximately40percentofallR&D
scientistsandengineersintheautomotiveindustryareemployedbysuppliers,31and2)thecost
ofR&Dwastransferredintoanindustrysectorwithalargeproportionofsmalltomedium
sizedbusinesses.
Eventhoughthemajorityofautomotivesuppliersaresmallbusinesses,manyparts
manufacturershaveconsiderableengineeringcapabilitytocontinuerefiningtheirproducts,
developnewproducts,andintegratethoseproductsintoautomakersvehicles.32The
combinationoftheaddedpressuretoinvestinresearchwithoutanimmediatelyrecognizable
revenuestreamandthesizemakeupofsuppliershashadsubstantialeffectontheviabilityof
thesuppliersector.NotallautomotiveR&Dhasbeentransferredtothesuppliersector;
however,automakersstilllargelyfundvehicleengine,body,andtransmissiondesign,aswellas
partsintegrationR&Dforthedevelopmentoffuturemodellines.
29
Thisnumberrepresentsallautomotivemanufacturingemployeeslessthoseemployedbytheautomakers.SeeTable2.1.
DatafromorganizationssuchasBatteryCouncilInternationalandtheRubberManufacturersAssociationwereusedbyCARresearchersto
determinewhatpercentageofemployeesinthoseindustriesservetheautomotiveindustry.
31
Ibid.NSF.(2014).
32
ThisassessmentisbasedonconversationsbetweenCARandrepresentativesfromtheautomotiveindustry.
30
20
Innovationiskeytoproductivity,yetbreakthroughsdonotalwaysoccurinatimelymanner.
Theresponsibilitytodesignnewproductshasputgreatfinancialstrainonsuppliers.Inaddition,
thereturnofvehicleproductionvolumestotheirprerecessionlevelshasputatremendous
strainonsuppliersastheystruggletomeetdemandafterhavingreducedtheirproduction
capacityjustafewshortyearsago.
Dealers
Tothelayperson,theautomobiledealershipisthemostvisibleandtangiblecomponentofthe
sophisticatedautomotivemanufacturinganddistributionsystem.Dealershipsareaperfect
reflectionofthefabricoftheU.S.familyownedbusinessesoperatingincommunitiesacross
thenation,forgenerationaftergeneration.BeyondtheirheartfeltAmericanStoryaspect,itis
importanttounderstandthecontributionofdealershipstotheregionaleconomiesand
governmentrevenues,especiallygiventhedeclineandrecoveryinautomobilesalesinrecent
yearsanddealershipclosuresduringtherecession.
EventhoughthebankruptciesofGeneralMotorsandChryslerwerestructured,their
occurrenceshookthefoundationoftheautomotiveindustrytoitscore.Asassemblyfacility
operationsslowedandultimatelystopped,thefateoffranchisedealershipswasclosely
followedincommunitiesacrossthenation.Accordingtocompanyrestructuringplans,during
20092010,approximately2,000plusGMandChryslerdealershipsclosed.33Evenbeforethe
financialcrisisandsubsequentbankruptcies,thenumberofdealershipsintheUnitedStates
hadbeendecliningfordecades(from1988to2007,onaverage,thenumberofoperating
dealershipsdeclinedbynearly200peryear).34ByJanuary2008,therewere20,770newvehicle
dealershipsoperatingintheUnitedStates,butbyJanuary2012,thenumberhaddeclinedby
3,230andonly17,540dealershipswereoperating.SinceJanuary2012,thenumberof
dealershipshasbeenexpanding,albeitslowly.AsofJanuary2014,therewere17,665new
vehicledealershipsinoperation.
Evenaftertheclosingofthousandsofdealershipsinrecentyears,newandusedvehicle
dealershipsstillemploymorethan1,000,000workers(anaverageofnearly60workersper
dealership).35In2013,totaldealershiprevenuesintheUnitedStateswere$730billion,with
57.1percentofthoserevenuesassociatedwithnewvehicles,31.3percentwithusedvehicles,
and11.6percentwithserviceandparts.Theaveragepretaxprofitofadealershipwasmore
33
Hill,Kim,DebbieMarangerMenk,andAdamCooper.(2010)ContributionoftheAutomotiveIndustrytotheEconomiesofallFiftyStateand
theUnitedStates.CenterforAutomotiveResearch.April2010.<http://www.cargroup.org/?module=Publications&event=View&pubID=16>.
34
NADA.(2006).NADAData2006:EconomicImpactofAmericasNewCarandNewTruckDealers.NADAData.NationalAutomobileDealers
Association.May17,2006.<https://www.nada.org/NR/rdonlyres/538D2699BF004C73A1627A4FBBAC62E0/0/NADA_Data_2006pdf.pdf>.
andNADA.(2013).NADAData2013:StateoftheIndustryReport.NADAData.NationalAutomobileDealersAssociation.July1,2013.
<http://www.nada.org/NR/rdonlyres/1B512AC7DCFC472CA8546F5527931A2F/0/2013_NADA_Data_102113.pdf>.
35
NADA.(2014).NADAData2014:AnnualFinancialProfileofAmericasFranchisedNewCarDealerships.NADAData.NationalAutomobile
DealersAssociation.May28,2014.<http://www.nada.org/NR/rdonlyres/DF6547D8C0374D2EBD77
A730EBC830EB/0/NADA_Data_2014_05282014.pdf>.
21
than$900,000(2.2percentofsales)andallthreeareas(newvehicles,usedvehicles,and
serviceandparts)wereprofitable.Profitabilityforserviceandpartspeakedin2008(carowners
weremaintainingtheirvehiclesratherthanreplacingtheminthemidstoftherecession),and
havedeclinedinsubsequentyears,butpartsandservicestillrepresentsthemajorityof
dealershipprofits.
Everystateinthenationhasnewcarandusedcardealershipsoperatinginitscommunities.
Thedealershipssupportlocalcommunitiesthroughcontributionstocharities,payingproperty
taxes,andsponsoringlocalyouthsportsteams.Theseactivitiesarecriticaltomaintaininga
highqualityoflifeintownsandcitiesacrossthenation.Thesecontributionsshouldbe
consideredwhenassessingthevalueofdealershipstoregionaleconomiesandcommunities.
MediumandHeavyDuty
Whilenotincludedintheeconomicmodelingofthecontributionanalysis,themanufactureof
mediumandheavydutytrucksandpartsisakeycomponentofthemotorvehicleindustry.An
overviewoftheactivityofthissectoroftheindustryisincludedinthissection.Mediumduty
trucksincludeClasses3to6(10,000to26,000lbs.)andheavydutytrucksincludeClasses7and
8(26,001toover33,000lbs).Abreakoutoftruckweightclassesfollows:
Table 1.2: Truck Weight Categories
Type
Class1
Class2
Class3
Class4
Class5
Class6
Class7
Class8
Category
LightDuty
MediumDuty
HeavyDuty
GrossVehicle
Weight
06,000lb.
6,00110,000lb.
10,00114,000lb.
14,00116,000lb.
16,00119,500lb.
19,50126,000lb.
26,00133,000lb.
33,001lb.andover
Note:ThistableisbasedonFederalHighwayAdministration(FHWA)weightclassifications.TheU.S.CensusBureau,U.S.
EnvironmentalProtectionAgency,andWardsAutomotiveGroupeachuseslightlydifferentmetricsfordelineatinglight,
medium,andheavydutytruckcategories,buttheFHWAclassificationsareusedthemostconsistentlythroughouttheindustry.
Source:U.S.DepartmentofEnergy2014
Currentlytherearenearly12.3millionmediumandheavydutytrucksregisteredintheUnited
States.36Together,themediumandheavydutytruckmarketsintheUnitedStatessoldmore
than605,000unitsin2013withrevenuesof$33.1billionin2013,puttingtheaveragerevenue
36
Wards.(2014).TruckRegistrationsbyStateandType.Ward'sMotorVehicleFacts&Figures2014.Page34.WardsAutomotiveGroup,
Southfield,Michigan.
22
atapproximately$54,700pervehiclesold.37OfallClass4andabovevehiclessoldin2013,over
340,000weredomesticallyproducedandnearly11,000wereimported.38
Mediumandheavydutyvehiclescomprisednearly3.8percentofallU.S.motorvehiclesalesin
2013,withmediumdutytrucksaccountingformorethan373,000unitssoldandheavyduty
trucksaccountingformorethan232,000unitssold.39In2013,theU.S.mediumdutyvehicle
marketconsistedprimarilyofClass3vehicles(approximately68percentofmediumdutyunits
sold).Class5vehiclesrepresentedover16percentofmediumdutyunitssoldandClass6
vehiclesrepresentednearly13percentofmediumdutyunitssold.Theheavydutyvehicle
marketconsistedprimarilyofonroadinterstatetrucksintheClass8category(nearly80
percentofunitssold).40Table1.3containssalesdatapertainingtotheU.S.trucksalesin2013.
Table 1.3: U.S. Retail Sales of Trucks, 2013
Type
Category
Class1
Class2
Class3
Class4
Class5
Class6
Class7
Class8
Total
LightDuty
LightDuty
MediumDuty
MediumDuty
MediumDuty
MediumDuty
HeavyDuty
HeavyDuty
Sales
5,615,227
2,077,367
253,771
11,909
60,045
47,475
47,524
184,784
8,298,102
Percentof Category
Percentin
Total
Total
Category
67.7%
70.7%
7,946,365
25.0%
26.1%
3.1%
3.2%
0.1%
10.0%
373,200
0.7%
50.3%
0.6%
39.8%
0.6%
20.5%
232,308
2.2%
79.5%
100.00%
Source:Wards2014
Theannualproductionandsalesofheavydutyvehiclesarehighlycyclical.Theheavyduty
vehiclesector,similartothatoflightdutyvehicles,isaffectedbytheeconomicforcesofthe
generaleconomy,butitscyclesarealsoaffectedbygovernmentalregulation.Forinstance,
Class8trucksalespeakedin2006at280,000unitsasoperatorswantedtopurchasevehicles
beforenewpollutionregulationsondieselenginestookeffect.Since2006,annualsalesfellto
justover150,000in2007andcontinuedtodecreasetoaround133,000unitsin2008,similarto
thesalesnumbersfrom2001to2003.41From2008to2010,Class8trucksaleswerealsodown
duetotherecession,butsince2011,Class8trucksaleshaverangedbetween170,000and
200,000unitsperyear.
37
Ward's(2014).U.S.SalesofTrucksbyManufacturer,GrossVehicleWeightRating,andSource.Ward'sMotorVehicleFacts&Figures2014.
Page22.WardsAutomotiveGroup,Southfield,Michigan.
Datamonitor.(2014).Medium&HeavyTrucks:NorthAmerica(NAFTA)IndustryGuide.IndustryProfile.May16,2014.
<http://www.datamonitor.com/store/Product/medium_heavy_trucks_north_america_nafta_industry_guide?productid=ML00016112>.
38
Ward's(2014).U.S.TruckSalesbyCountryofOrigin.Ward'sMotorVehicleFacts&Figures2014.Page23.WardsAutomotiveGroup,
39
Ibid.Ward's(2014).U.S.SalesofTrucksbyManufacturer,GrossVehicleWeightRating,andSource.
40
Ibid.Ward's(2014).U.S.SalesofTrucksbyManufacturer,GrossVehicleWeightRating,andSource.
41
Ward's(20032014).U.S.SalesofTrucksbyManufacturer,GrossVehicleWeightRating,andSource.Ward'sMotorVehicleFacts&Figures.
MultipleYears20032014.WardsAutomotiveGroup,Southfield,Michigan.
23
U.S.productionofheavydutytruckswasover230,000unitsin2013withassemblyfacilities
employing25,900workers.42In2014,employmentintheproductionofheavydutyvehicleshas
increasedtomorethan27,000workers.Inadditiontomanufacturingheavydutytrucks,more
than80,000individualswereemployedmanufacturingtrucktrailers,motorhomes,travel
trailers,andcampersin2013.43Thisestimatedoesnotincludetheconsiderablenumberof
individualswhoworkatsupplierstotheheavydutytruckmanufacturers.Thesesuppliers,in
manycases,supplybothheavydutyandlightdutymotorvehiclemanufacturers.
MediumandheavydutyvehiclesareinstrumentalinkeepingAmericaseconomygoingby
transportinggoodsandproductsinatimelyandcosteffectivemanner.Asof2012,70percent
ofAmericasfreighttonnageishauledbytruck.Whenconsideringthevalueofshipments,this
figureincreasestoaround74percent.44Between1980andthepresent,useofmediumand
heavydutytrucksonU.S.highwayshasincreasedbyafactoroftwofromnearly1.3trillion
tonmilesoffreightin1980tomorethan2.6trilliontonmilesoffreightin2011.45
AftermarketSuppliers
Whilenotexplicitlydetailedintheeconomiccontributionanalysisofthisreport(SectionsIIand
III),theaftermarketsectorispartiallyincludedinthesupplieranddealershiptotals.46The
aftermarketsegmentconsistsofsupplierswhoprovideproductsfortherepairand
maintenanceoflightandheavyvehicles.Forsomeautomotiveproducts,aftermarketsalesare
fargreaterthansalesinthenewvehiclemarket.Forexample,anewcargetsonlyonebattery
installedbythevehicleassembler,butduringthelifeofthatcar,fiveorsixreplacement
batteriesmaybepurchased.Forfrequentlyreplacedserviceproductslikeoilfilters,asmanyas
35replacementpartsmaybeused.Theseaftermarketproductsaresoldthroughautoparts
storesandusedbyservicetechniciansindealerships,garages,andspecialtyserviceprovidersto
maintainthevehiclesinuseonAmericasroadways.Asaresult,theautomotiveaftermarket
manufacturerssupportserviceanddistributionjobsthatarenotincludedinthisstudy.
Theaftermarketmanufacturingsupplysectorprovidespartsandequipmentforthe
maintenance,repair,andenhancementofthemorethan250millionlightdutyvehicles
currentlyontheroadintheUnitedStates.In2011,aftermarketserviceandretailoutlets
42
BLS.(2014).Employment,Hours,andEarningsfromtheCurrentEmploymentStatisticssurvey(National).BureauofLaborStatistics.
AccessedNovember3,2014.<http://www.bls.gov/ces/data.htm>.
Ibid.BLS.(2014).
44
BTS.(2013).Table1ShipmentCharacteristicsbyModeofTransportationfortheUnitedStates:2012.CommodityFlowSurvey.Bureauof
TransportationStatistics,ResearchandInnovativeTechnologyAdministration.December2013.
<http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/commodity_flow_survey/2012/united_states/table1.html>.
45
BTS.(2014).Table150U.S.TonMilesofFreight(BTSSpecialTabulation).NationalTransportationStatistics.BureauofTransportation
Statistics,ResearchandInnovativeTechnologyAdministration.July2014.
<http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/index.html>.
46
Forexample,partsandserviceoperationsatadealershipareconsideredaftermarketactivities.Thecategoryofpartsandserviceisthe
largestportionofdealershipprofitscontributingmorethan$290,000innetprofitfortheaveragedealershipin2014(NADA2014).
43
24
employednearly4millionworkersandhadrevenuesofnearly$223billion.47Revenuesare
forecasttoincreaseto$256billionfor2015.Inadditiontothelightdutyvehicleaftermarket,
revenueforthemediumandheavydutyaftermarketwasnearly$74billionin2011andthe
2015forecastsuggestsitwillincreasetonearly$85billionin2015.Intotal,theU.S.light,
medium,andheavydutyaftermarketvaluewas$296billionin2011,anditisforecastto
increaseto$341billionin2015.48
RoleofSmallandMediumsizedBusinessesintheAutomotiveIndustry
Theautomakersareamongthelargestandmostcompaniesinthenation,whichcanmaskthe
extenttowhichtheautoindustryitselfbothiscomprisedofsmallbusinessesandsupports
smallandlocalbusinesses.AutomakersandlargeTier1suppliersrequireservices,materials
andproductsfromalargeanddiversesupplychain.Industriesasdiverseasprintingservices,
fabricmakers,carpetwholesalers,railroads,employmentagencies,designservicesand
softwarecodingcompaniesallsupplytheautoindustry.Manyofthesecompaniesarevery
smallfirms,sometimeswiththeownerasthesoleemployee.Commonly,intheautomotive
corridor(seethemapinFigure1.1),newcompaniesarestartedasemployeesofthe
automakersorlargesuppliersseeopportunitiesinnicheareasandleavetheirjobstostarttheir
owncompanies.Thisstudyincludesananecdotalexaminationoftheinfluenceofthe
automotiveindustryonsmallbusinesseswithinthestateofKentuckyaswellastheindustrys
generalcontributiontothestateseconomy.
Thereisnoonesingledefinitionofsmallbusiness,butratheraplethoraofstandards.The
NationalSmallBusinessAssociationconsidersanybusinesswithfewerthan500employeesto
besmall.49Thefederalgovernment,viatheSmallBusinessAdministration,simultaneously
holdsseveraldefinitions,contingentuponeithernumberofemployeesorannualreceipts,with
thresholdsvaryingacrossindustries.50Forexample,certainmanufacturersmaystillqualifyas
smallbusinesseswithasmanyas1,500employees,whilenoformofagriculturalbusiness
wouldbeconsideredsmallwithannualreceiptsinexcessof$9million.
The500employeethresholdisthemostcommonlyappliedstandard.51Usingthisstandard,96
percentofautomotiveestablishmentsaresmallbusinesses.Inlookingatthevarioussectorsof
theindustry,81percentofmotorvehiclemanufacturingoperationsaresmallbusinesses,asare
96percentofvehiclepartsmanufacturingcompanies.Intermsofthebroadereconomy,
businesseswithintheautomotiveindustryare,overwhelmingly,small.
47
nd
AAIA.(2013).DigitalAutomotiveAftermarketFactbook:22 Edition,2013.AutomotiveAftermarketIndustryAssociation.2013.
Ibid.AAIA.(2013).
49
NBSA.(2014).NationalSmallBusinessAssociation.Website.AccessedDecember29,2014.<http://www.nsba.net/>.
50
SBA.(2014).WhatisSBA'sDefinitionofaSmallBusinessConcern?U.S.SmallBusinessAdministration.AccessedDecember29,2014.
<https://www.sba.gov/content/whatsbasdefinitionsmallbusinessconcern>.
51
FactCheck.org.(2010).WhatsaSmallBusiness?FactCheck.org,AnnenbergPublicPolicyCenter.
<http://www.factcheck.org/2010/08/whatsasmallbusiness/>.
48
25
KentuckyyCaseStudyy
Tohighligghttheconttributionofttheindustrybothinsuppportingsmaallbusinesseesandasa
measureoftheindusstrysimporttancetostatteeconomiees,CARreseearchersinteerviewedsevveral
ntucky.52Ken
ntuckywascchosenbeca useitiscentrallylocateedwithinthee
autosuppliersinKen
automotivecorridorandbecauseithasalon
ngstandingaandwellestaablishedauttomotivebase.
TheinterrviewswithTTier1andTiier2supplie
ersillustratetheextento
oftheirsupp
plychainsan
nd
theinteggrationofthe
eindustryw
withinthestaateofKentu cky.Foralisstofdiscussionquestion
ns,
pleasese
eeAppendix A.
Kentuckyyishometofourvehicle
eassemblyp
plants:theFoordMotorKKentuckyTru
uckPlant,Fo
ord
MotorLo
ouisvilleAsse
emblyPlant,,ToyotaMotorManufaccturingKenttuckyGeorgeetown1&2
Assemblyyplants,and
dGeneralMotorsBowlin
ngGreenAssemblyplan
nt.Thelocationsofthesee
plantsaredisplayedinFigure1.9
9.
Figure 1.9: Assembly Pla
ants and Suppliers in Kentuckky, 2014
Sources:Cen
nterforAutomo
otiveResearch,2
2014(supplierloccationsfromELM
MAnalytics)
Becauseofthelargeautomakerassemblyplants,only444percentoffKentuckysmotorvehiccle
manufacturingestab
blishmentsaresmallbussinesses.53ThhelargeopeerationsinKentuckysup
pport
alargean
ndvariedsu
upplychainthroughouttthestate.Neearly90perccentoftheeestablishmen
ntsin
Kentuckyysautomotivesupplych
hain(bodyandpartsmaanufacturingg)areconsideredtobessmall
businesses.
52
PleaseseetheAcknowledgem
mentssectionforalistofcompanie
es.
Establishmentsrefertoindivvidualproductionffacilitieswhilecom
mpaniesrefertofi rmsthatmaycon sistofasingleestablishmentormany
nts(e.g.,anautomakeroralargeTie
er1supplierisasinglecompany,buutmayconsistofm
manyestablishmen
nts).
establishmen
53
Centerfo
5
26
Table 1.4: Kentucky Business Establishments by Size
AllIndustries
Manufacturing
Vehicle
Manufacturing
Automotive
BodyorParts
Manufacturing
AllEstablishments
89,795
3,776
202
193
Lessthan50employees
84,715
2,933
55
51
Lessthan500employees
4,840
773
120
120
240
70
27
22
500ormore
%Below100
97.40%
86.70%
55.40%
44.40%
51.70%
%Below250
99.20%
95.00%
77.40%
44.40%
77.60%
%Below500
99.70%
98.10%
86.40%
44.40%
87.10%
Source:Census,2012CountyBusinessPatterns,KentuckyCabinetforEconomicDevelopment
Kentuckystop10automotiveemployersprovideapproximately34,200jobsinKentucky,
representingnearly42percentofthestatesautomotiveworkforce.54ToyotaandFordarethe
toptwoautomotiveemployers,providingmorethan20,000jobsinthestate.Othertop
automotiveemployersinKentuckyincludeAkebonoBrakeIndustryCo.,Hitachi,Martinrea
International,JohnsonControls,DanaHoldingCorporation,GrupoProezaSAdeCV,Toyota
TsushoCorporation,andZFFriedrichshafenAG.
MostofthecompaniesinterviewedbyCARresearchershavehadalongpresenceinKentucky,
withsomehavingbeenestablishedinthestatemorethanthirtyyearsago.Whileanywhere
from30to90percentofproductsmadebytheseKentuckycompaniesareshippedtoother
manufacturingplantsinKentucky,almostallexporttheirproductsworldwideandthroughout
theUnitedStates.Notallofthesuppliersareentirelydedicatedtotheautomotiveindustry;
someofthecompaniesderiveasmuchashalfoftheirrevenuesfromindustriesotherthanauto
manufacturing.
Theintervieweesexpressedaninterestinbeingabletosourcemorematerialsandpurchased
partslocally.Thesemanufacturers,onaverage,purchaseaboutfivetotenpercentoftheirraw
materialsandintermediatecomponentsfromotherKentuckybusinesses.Mosthaveactive
programstoincreasetheirpurchasesfromlocalbusinessesandminorityownedcompanies.For
themostpart,however,thecapacitytodosoonalargescalehasnotyetbeendeveloped.
Mostcompaniesdidindicatethatsmall,nearbybusinesseswerecriticaltooperations,
particularlybecausethesesmallerlocalcompanieshavetheabilitytoprovidespecialordersor
emergencyservicesandcomponentryrapidlyandwithhighquality.Thesecompaniesoftendo
nothavethecapacitytobelargescalesuppliers.Onecompanynotedthatithasagrowing
programtosupportsmallandlocalsuppliers,Wewantthelocalbusiness.Thecloserwecan
findthem(suppliers)theresbenefit,buttheyhavetohavethecapabilityforitandthe
54
KYEDC.(2014).KentuckyCabinetforEconomicDevelopment.Website.AccessedJanuary8,2015.<http://www.thinkkentucky.com/>.
27
experience.Ithinkthiscanbeimprovedforourarea.Anothercompanymentionedagoalto
increasedomesticsourcing,Wewanttohave90percentdomesticsourcingandascloseaswe
cangetinside200miles.
ThestateofKentuckyssupportofitsbusinessesrankedhighlyamongalloftheexecutives
interviewed.Kentuckyhasnumerousprogramstostayengagedwithandsupportitsresident
companies.IntervieweesallcommentedthattheyhaveagreatrelationshipwiththeEconomic
DevelopmentCabinetandastrongrelationshipwiththegovernor,Whetheritstraining
supportorothergrantsthestateofferstoanyindustry,theyarealwayswillingandableto
provideussupport.Afewofthecompaniesaresubsidiariesofforeignbasedcorporations,
andrepresentativesfromthosecompaniesnotedthatthestateandthegovernormaintain
goodrelationshipswiththeircorporateheadquartersandexecutives,Theydoeverything
possiblewithintheirpowertosupportus.
FromthetourofKentuckyandvisitsthroughoutthestate,thecontributionsoftheindustryto
localeconomiesareevidentandvalued.Thechallengefortheindustrywithinthestatemirrors
anoverallindustryconcernnamely,thecapacityandavailabilityofsmallsuppliersdeepinto
thesupplychain.ThestateandlocaleconomicdevelopersofKentuckyreceiveduniversallyhigh
marksfortheircommitment,support,andresponsivenesstotheconcernsofeachofthe
companiesinterviewed.
28
SECTIONIIESTIMATESOFTHEECONOMICCONTRIBUTIONOFTHEMOTORVEHICLEINDUSTRYTOTHEUNITED
STATESECONOMY
Thetablesinthissectiondetailtheestimatedemploymentcontributionstotheeconomiesof
eachofthe50states,andthecountryasawhole,bytheU.S.motorvehicleindustry.
Employmentestimatesarebrokenoutbydirectemployment(peopleemployeddirectlyby
automotivecompanies),intermediateemployment(peopleemployedbysupplierstothemotor
vehicleindustry),andspinoffemployment(expenditureinducedemploymentresultingfrom
spendingbydirectandintermediateemployees).
Employmentandincomeestimatesarederivedfromanalysesusingaregionaleconomicmodel,
suppliedbyRegionalEconomicModels,Inc.(REMI),ofAmherst,Massachusetts.Themodeland
methodologyusedwillbediscussedfurtherlaterinthisstudy(SectionIV).Theemploymentand
compensationdatausedtoperformtheresearchwereprovidedbymotorvehiclecompaniesor
gatheredthroughpubliclyavailabledata;theintermediateandspinoffeffectsweregenerated
bythemodel.TheremainingdataontheU.S.economyandtheautomotiveindustrywere
collectedbyCARfromawidevarietyofpubliclyavailablesourcesandarelistedinthe
references.Directemploymentdataincludeheadquarters,office,research,designand
development,manufacturing,assemblyandlogisticsjobclassifications.Allemployment
numberscitedbelowarerounded;incomeandtaxreceiptnumbersarealsorounded.
Table2.1sumsthecombinedeffectsfromallmotorvehiclemanufacturingandretail
operations.Summingthedirectemploymentfromalloperations(1,553,000),intermediate
employment(2,316,000)andspinoffemployment(3,381,000),morethan7millionjobsare
supportedordirectlyprovidedbytheindustrytotheU.S.economy.Comparingtotal
employmenttodirectemploymentproducesanoverallemploymentmultiplierof4.755.This
meansthatthereare3.7additionaljobsintheU.S.economyforeveryjobintheindustry.The
industrycomprises3.8percentofallprivatesectoremploymentintheUnitedStates.
55
Themultiplierisdeterminedbydividingthetotalemploymentcontributionbythenumberofdirectemployees:(7,250,000/1,553,000)=4.7.
29
Table 2.1: Total Contribution of all Motor Vehicle Manufacturing and Dealership Operations to the Economy of the
United States
EconomicImpact
Automakers
AllMotorVehicle
related
Manufacturing
(inclAutomakers)
Auto
Dealerships
TOTAL
Employment
Directemployment
322,000
843,000
710,000
1,553,000
Intermediate
805,000
2,069,300
246,700
2,316,000
Total(Direct+Intermediate)
1,127,000
2,912,300
956,700
3,869,000
Spinoff
Total(Direct+Intermediate+Spinoff)
1,316,000
2,443,000
2,687,700
5,600,000
693,300
1,650,000
3,381,000
7,250,000
7.6
6.6
2.3
4.7
167.7
375.3
116
491.3
21.6
41.5
15.9
57.4
23
44.7
19.4
64.1
123.2
289.1
80.7
369.8
1.6
1.7
2.9
2.7
0.9
0.6
3.8
3.3
Multiplier
Compensation($billionsnominal)
Less:transferpayments&socialinsurance
contributions
Less:personalincometaxes
Equalsprivatedisposablepersonalincome
($billionsnominal)
Contributionas%oftotalprivateeconomy
Employment
Compensation
Source:CenterforAutomotiveResearch,2014
Totalcompensationforall7.25millionprivatesectorjobsisnearly$500billion,which
represents3.3percentoftheprivatesectorcompensationintheU.S.economy.Fromthis
amount,morethan$64billionispaidforpersonalincometaxesand$57billioninotherpublic
contributions,suchasFICA.Netdisposableincomefortheseworkerstotals$370billion.
VehicleManufacturerActivities
InformationonU.S.automotivemanufacturingandrelatedoperationsemploymentwas
suppliedbyeachofthemajortheautomakersoperatingintheUnitedStates.56Togetherthese
automakersemployedatotalof322,000employeesintheUnitedStates.Automaker
employmentwasclassifiedaccordingtotheNorthAmericanIndustryClassificationSystem
(NAICS)intomultiplejobtypecategoriesforinputintothemodelmotorvehicleandmotor
vehiclepartsmanufacturing(categorynumbers:NAICS33613363);managementofcompanies
(NAICS551);professional,scientificandtechnicalservices(NAICS541);securities,commodity
56
AutomakerscontributionemploymentdatatothisstudyincludedBMW,Chrysler,Ford,GeneralMotors,Honda,Hyundai,Kia,Mazda,
Mercedes,Mitsubishi,Nissan,Subaru,Toyota,andVolkswagen.
30
contractsandinvestments(NAICS523);warehousingandstorage(NAICS493);administrative
services,facilitiesandsupportservices(NAICS521)andwholesaletrade(NAICS42).
AscanbeseeninTable2.1,thereare2,069,300intermediatejobsthatsupportthedirect
employmentatautomanufacturersandpartsmakers.Thespinoffjobssupportedbythe
incomesandspendingofthepeoplewhoworkinthedirectandintermediatejobsaddanother
2,687,700jobs,bringingthetotaljobsassociatedwithmotorvehiclemanufacturingactivitiesin
theUnitedStatesto5,600,000jobs.Theratiooftotaljobscreatedtodirectemployment
producesanemploymentmultiplierof6.6(5,600,000843,000).Themultiplierformotor
vehiclemanufacturingandassembly(automaker)aloneis7.6(2,443,000322,000).Thereare
morethansixadditionaljobsintheU.S.economyforeveryjobinautomobilemanufacturing
operations.
Thedirectemployeesofautomakersincluderesearchers,engineers,managersand
administrativesupport,aswellasworkersontheassemblylines.Becausetheactual
manufacturingofpartsandassemblyofvehiclesdrawsonadeepsupplychainforcomponents
andmaterials,manufacturingjobshaveahighdownstream(intermediateandspinoff)
employmentmultiplier.Whenconsideringonlyassemblylineemployment,thejobsmultiplier
forautomakervehiclemanufacturingactivitiesisapproximately11.57Thatis,foreveryjobon
anassemblyline,10additionaljobsarecreatedorsupportedintheeconomy.
Compensationintheprivatesectorassociatedwiththetotaljobs(directplusintermediateplus
spinoff)amountsto$375.3billion.Estimatedpersonaltaxestobepaid,resultingfrom
employmentinautomotivemanufacturingoperations,arenearly$45billion.
Toputthecompensationandemploymentnumbersincontext,thedirect,intermediate,and
spinoffjobsassociatedwithvehicleandpartsmanufacturingaccountfornearlythreepercent
ofemploymentintheentireU.S.economyandtwopercentoftotalU.S.compensation.
Table2.2offersamoredetailedlookattheintermediateandspinoffemploymentassociated
withvehicleandpartsmanufacturing.Intheintermediateemploymentcategory,thereare
2,069,300jobsspreadacrossnumerousmanufacturingandnonmanufacturingindustries.As
mentionedearlier,theintermediatecategorycapturestheemploymentnecessarytosatisfy
manufacturersdemandsforthematerialsandservicesneededtodesign,produceandsell
motorvehicles.Thiscanbebroadlyconsideredtheautomotivesuppliernetwork.Thissupply
networkconsistsoftheTier1supplierswhosupplypartsandservicesdirectlytovehicle
assemblersalongwiththelowertiersupplierswhosupplythebasicmaterialsandservicesto
57
NotshowninTable2.1.Vehicleassemblyoperationsandemploymentareasubset(andcompriseapproximately70percent)ofthe322,000
totaljobsatautomakers.
31
theTier1group.Someofthesecompaniessupplybasiccommoditiesandcanbeseveralsteps
removedfromthevehicledesignandmanufacturingprocessandservemultipleindustries.
Table 2.2: Intermediate and Spin-off Employment Contribution of Motor Vehicle and Parts Manufacturer-related
Operations in the U.S.
EconomicImpact
Manufacturing
DurableGoodsManufacturing
NondurableGoodsManufacturing
Intermediate
Spinoff
597,000 150,600
492,000 83,200
105,000 67,400
NonManufacturing
1,472,300 2,537,100
AdministrationandServices
FinanceandInsurance
ManagementofCompanies
ProfessionalandTechnicalServices
RetailTrade
TransportationandWarehousing
WholesaleTrade
OtherServices
OtherNonManufacturing
345,000
118,300
45,000
237,300
77,000
51,700
238,000
286,000
74,000
Total
2,069,300 2,687,700
97,000
254,300
93,000
160,400
369,000
162,200
106,500
919,700
375,000
Atanautomotivemanufacturingfacility,primaryassemblersrequireplasticandmetalparts,
electroniccomponents,andothermaterialstoproducevehicles;itistheseintermediate
demands,satisfiedbyavastgroupofspecializedmanufacturers,thatformthebasisofU.S.
intermediateemploymentcontributions.AsshowninTable2.2,CARfindsnearly600,000
intermediatejobsinthemanufacturingsector,primarilyintheindustriesnecessarytoproduce
automobilespartsmanufacturing,primarymetalmanufacturing,fabricatedmetalproducts
manufacturing,andplasticsandrubberproductsmanufacturing.Employeesofthesesuppliers
aremanufacturingthepartsandcomponentsnecessarytoproducetheservicesandmaterial
inputsatassemblyoperationsandareinadditiontothe322,000peopledirectlyemployedby
theautomakersandthe521,000peopleemployedinTier1partsmanufacturers,aftermarket
firms,andexportpartssuppliers.
Thebulkofemploymentintheintermediatecategoryisinthenonmanufacturingsector,
totalingnearly1,500,000jobs.Industrieswithinthiscategoryarenotnormallythoughttobe
associatedwithautomobilemanufacturinginsuchhighnumbers.However,asaresultofthe
separationofthecompletevehicledesignandpartsmanufacturingprocesses(fromthe
32
automobilemanufacturingcompanytothesuppliersector),manymoredistinctindustrieshave
becomemajorsupplierstotheautomobileindustry.Industriesofnoteinthenon
manufacturingcategoryareprofessionalandtechnicalservicesemploying237,300,
administrationandservices,345,000jobs,wholesaletrade,238,000jobs,andfinanceand
insurance,118,300jobs.
Table2.2alsoshowsthereare2,687,700totalspinoffjobsassociatedwithmotorvehicleand
partsmanufacturingoperations.Theseareexpenditureinducedjobs,createdasaresultof
spendingbythepeopleemployedinthedirectandintermediatecategories.Ascouldbe
expected,alargeportionofthespinoffjobsareinthenonmanufacturingsectorofretail
trade,whichemploys369,000people.Whenemployeesusetheirpaycheckstopurchasegoods
(forexample:electronicsequipment,clothing,food,andevennewautomobiles),employment
iscreatedtosupplytheirdemands.
AutomobileDealerships
Autoassemblyoperationsandmotorvehiclepartsmanufacturingoperationsarebusiness
operationsoftenclusteredtogetherwithincertainareasinmanufacturingorientedregionsof
thecountry.Autodealerships,ontheotherhand,arefoundinnearlyeverycommunityacross
thecountryinruralandurbanareasalike.Justasthemanufacturingsegmentofthemotor
vehicleindustryhassufferedintherecenteconomicdownturn,theretailandservicesegment
oftheindustryhasalsoincurredheavylosses.Iftheamountofcolumnspaceinnewsmediais
consideredameasureofissuesofimportance,theeconomicandculturaleffectofthe
downturnonautodealershipsdidnotgounnoticedanywhere.Theomnipresenceofauto
dealershipsincommunitiesacrosstheU.S.allowforadeepconnectionbetweentheirbusiness
operationsandcivicevents.Iftherewereacompetitiveeventtomeasurethephilanthropyof
businessesinAmerica,thelocalcardealerwouldalwaystakethetopprize.IfyougotoaLittle
Leagueoryouthhockeygameoranyotherlocallyorganizedsportingevent,thesponsors
alwaysseemtobelocalautodealers.58
EmploymentandincomeestimatesarederivedfromanalysesusingtheREMImodelmentioned
earlier.Theemploymentandcompensationdatausedtoperformtheresearchwasprovidedby
theNationalAutomobileDealersAssociation(NADA);theintermediateandspinoffeffects
weregeneratedbythemodel.TheremainingdataontheU.S.economyandtheautomotive
industrywascollectedbyCARfromawidevarietyofpubliclyavailablesources,whicharelisted
inthereferences.
WhiletotalemploymentatU.S.autodealershipsisslightlyoveronemillionpeople,thedirect
employmentandresultingdownstreamjobsestimatesarefornewvehiclesalesandservice
58
Crain,Keith.(2009).ClosingDealerships?BeCareful.AutomotiveNews.September7,2009.
<http://www.autonews.com/article/20090907/RETAIL/309079865/closingdealerships?becareful>.
33
only.Focusingonthesalesandserviceofnewvehiclesonly(andnotused)moreaccurately
reflectsthefootprintofnewmotorvehiclesales.CompleteU.S.automotivedealership
employmentfornewvehiclesalesandservicetotaled710,000employees.Ascanbeseenin
Table2.3,thereare246,700intermediatejobsthatsupportdirectemploymentintheindustry.
Thespinoffjobsassociatedwithspendingfromthepeoplewhoworkinthedirectand
intermediatejobsaddanother693,300jobs,bringingthetotaljobsassociatedwithnewmotor
vehicleretailoperationsintheUnitedStatesto1,650,000jobs.Theratiooftotaljobscreated
todirectemploymentproducesanemploymentmultiplierformotorvehicleretailoperations;
thisnumberis2.3.Thismultiplierof2.3meansthereisslightlymorethanoneadditionaljobin
theU.S.economyforeveryjobinautomobiledealershipoperations.
Compensationintheprivatesectorassociatedwithtotaljobs(directplusintermediateplus
spinoff)amountsto$116billion.Estimatedpersonaltaxestobepaidresultingfrom
employmentinautomotivemanufacturingoperationsarenearly$20billion.
Table 2.3: Total Contribution of New Motor Vehicle Dealership Operations to the Economy in the United States
EconomicContribution
Employment
Direct
Intermediate
Total(Direct+Intermediate)
Spinoff
Total(Direct+Intermediate+Spinoff)
Multiplier:(Direct+Intermediate+Spinoff)/Direct
Compensation($billionsnominal)
Less:transferpayments&socialinsurance
contributions
Less:personalincometaxes
Equalsprivatedisposablepersonalincome($billions
nominal)
Contributionas%oftotalprivateeconomy
Employment
Compensation
710,000
246,700
956,700
693,300
1,650,000
2.3
116.000
15.890
19.440
80.670
0.9
0.6
34
Thedirect,intermediate,andspinoffjobsassociatedwithU.S.autodealershipsaccountfor
nearlyonepercentofemploymentintheentireU.S.economyandnearlyonepercentoftotal
U.S.compensation.Table2.4providesamoredetailedlookattheintermediateandspinoff
employmentassociatedwithdealershipoperations.Intheintermediateemploymentcategory,
thereare246,700jobsspreadacrossnumerousindustries.
Table 2.4: Intermediate and Spin-off Employment Contribution of New Motor Vehicle Dealership Operations in the
U.S.
EconomicImpact
OfficeAdministrative&BusinessSupportServices
FacilitiesSupportServices
Professional&TechServices
Accounting,TaxPreparation,Bookkeeping,andPayrollServices
AdvertisingandRelatedServices
Architectural,Engineering,andRelatedServices
ComputerSystemsDesignandRelatedServices
LegalServices
ManagementofCompaniesandEnterprises
Management,Scientific,andTechnicalConsultingServices
Scientificresearchanddevelopmentservices
Specializeddesignservices
Finance,Insurance
Manufacturing
Metals,MachineryandFabricatedMetalProd
MotorVehiclesandRelatedEquip
AllOtherDurableGoods
ConsumerNondurableGoods
RetailTrade
Transportation&Warehousing
TruckTransportation
WarehousingandStorage
AllOtherTransportation&Warehousing
Information:Publishing,Broadcasting,Internet
Accommodations&FoodServices
WholesaleTrade
AllOtherServices,includingHealthCareandEducation
ConstructionandUtilities
Forestry,FishingandMining
Intermediate
41,544
18,351
42,710
6,387
4,320
6,612
3,285
4,804
3,282
8,122
4,542
1,356
35,791
12,224
3,373
1,070
2,711
5,070
10,147
8,838
2,650
1,582
4,605
6,360
16,062
15,178
28,872
9,182
1,441
SpinOff
9,028
4,997
45,227
3,374
2,468
3,954
4,954
3,671
3,335
16,141
6,128
1,202
55,120
40,936
6,995
5,571
12,813
15,557
184,488
27,713
10,575
8,753
8,384
13,141
43,976
12,613
149,159
96,991
9,912
Total
50,572
23,348
87,937
9,761
6,788
10,566
8,239
8,475
6,617
24,263
10,670
2,559
90,911
53,160
10,368
6,641
15,524
20,627
194,634
36,550
13,226
10,336
12,989
19,501
60,038
27,791
178,031
106,173
11,353
Themultipliereffectfornewvehicledealersismuchlowerthanthemultiplierassociatedwith
manufacturingactivitiesbecause90percentoftheindustriesthatcomprisethesupplier
networkforvehicledealersarenonmanufacturingindustries.Ingeneral,manufacturing
industriesdemandthemostfromunderlyingintermediateandsupplyingindustries,as
35
manufacturedgoodsreachdeepintothesupplychainallthewaytotheoriginandsourcingof
rawmaterials.
36
SECTIONIIIIESTIMATESSOFTHEECONO
OMICCONTRIB
BUTIONOFTHEEMOTORVEH
HICLEINDUSTRY
YTOINDIVIDUA
AL
STATEECO
ONOMIES
Themoto
orvehicleindu
ustrysbreadtthanddepthofoperation sextendsintoeverystateeeconomyinthe
nation.Th
heindustryin
nfluencesanu
unusuallylarggenumberoffindividualco
ommunitiesb
becausethe
suppliern
networkspreaadsacrossmaanystates.Be
eyondthat,m
motorvehicledealershipsh
haveapresen
ncein
nearlyeve
erycommunityinthecoun
ntry.Thetabllesandfigureesinthissectiionexaminettheestimated
d
employmentandincom
mecontributiionsoftheindustrytoind ividualstateeconomies.
Evenfortthosestatesw
withrelativelyyfewdirectjo
obsintheinddustry,thetottalnumbero
ofjobssupporrted
bytheind
dustryissignificant.Inman
nystates,larggenumbersoofjobsaregeneratedduettothestatess
proximityytomanufacturingortechnicalfacilitiesslocatedinn eighboringsttates.Allstatesseemajor
additionalemploymen
ntcontributionfromsubstaantialnumbeersofspinofffjobsresultin
ngfromthe
eemployeesoftheindust ry.
spendingofdirectandintermediate
Theautom
motiveindusttryisamatureindustry,w
withalargeaggglomeration ofassemblyandparts
manufacturingplantsw
wellestablish
hedfromtheupperMidweesttotheGullfofMexico.TThisconcentrration
eninFigure3
3.1,whichsho
owsthetopsstatesforautoomotiveemp
ployment(direectand
canbesee
intermediiatejobsfrom
mautomakerss,partssuppliers,andmottorvehicledeealerships),assapercentaggeof
statelabo
orforce.
Figure 3.1: Automotive Industry
I
Emplo
oyment as Perccent of State Laabor Force
Note:Includ
desdirectandintermediatejobs,,butdoesnotin
ncludeexpendituureinduced(spinnoff)jobs.
Source:CenterforAutomottiveResearch,20
014
Centerfo
5
37
Intermso
ofsheernumberofjobssu
upportedbyttheindustry,FFigure3.2belowdisplaysthedirectand
intermediiateemploym
mentcontribu
utioninthein
ndustryformootorvehicleaassemblers,p
partssuppliers,
motorveh
hicledealersh
hips,andthesupplierstottheseoperati ons.Thismap
pdoesnotinclude
expenditu
ureinduced(spinoff)emp
ployment.Ascanbeseen, theindustryprovidessign
nificantnumb
bers
ofjobstoeverystateinthenation.Evenamongthestatesin thelowesteemploymentcclassificationin
themap((theunder20
0,000jobscattegory),theavveragenumbberofsupporttedjobsisweellover7,000
0.
Figure 3.2: Automotive Industry
I
Emplo
oyment by Statee
Note:Includ
desdirectandintermediatejobs,,butdoesnotin
ncludeexpendituureinduced(spinnoff)jobs.
Source:CenterforAutomottiveResearch,20
014
Theautom
motiveindusttryemployme
entcontributioninonestaateisnotattrributableonlyytothe
investmen
ntinthatstatte,butisalsosupportedbyautomotiveeindustryinvvestmentsand
dactivitiesin
nearbystaatesaswell.A
Asaresult,em
mploymentm
multipliersareenotcalculattedforindivid
dualstates.
Employmentmultipliersapplytoth
henationalecconomyandaarenotappliccableto,norccanbederiveed
from,anyyonestatese
economy.
Centerfo
5
38
Table 3.1: Automotive Industry Employment Contribution by State
State
TotalIndustry
Employment
Contribution
Alabama
165,470
Alaska
4,790
Arizona
68,210
Arkansas
62,110
California
381,830
Colorado
69,060
Connecticut
63,740
Delaware
28,220
D.C.
10,540
Florida
242,335
Georgia
206,810
Hawaii
5,270
Idaho
24,210
Illinois
413,900
Indiana
420,570
Iowa
79,000
Kansas
59,460
Kentucky
205,800
Louisiana
84,230
Maine
19,215
Maryland
82,640
Massachusetts
94,270
Michigan
943,620
Minnesota
110,380
Mississippi
73,820
Missouri
167,060
Montana
9,110
Nebraska
45,720
Nevada
24,680
NewHampshire
13,990
NewJersey
137,680
NewMexico
17,040
NewYork
288,380
NorthCarolina
197,465
NorthDakota
31,045
Ohio
629,180
Oklahoma
69,400
Oregon
46,600
Pennsylvania
256,360
RhodeIsland
4,760
SouthCarolina
138,800
SouthDakota
30,840
Tennessee
268,870
Texas
460,650
Utah
45,495
Vermont
8,645
Virginia
152,760
Washington
60,530
WestVirginia
39,160
Wisconsin
182,170
Wyoming
4,110
U.S.Total
7,250,000
StateLabor
Force
2,118,000
366,700
3,049,900
1,307,400
18,757,100
2,805,100
1,886,300
454,500
378,800
9,659,600
4,762,700
667,800
774,400
6,531,100
3,245,900
1,711,600
1,495,500
1,996,800
2,165,300
703,800
3,100,400
3,545,800
4,737,600
2,988,200
1,250,100
3,057,700
520,200
1,021,400
1,368,400
739,800
4,528,800
922,300
9,539,700
4,646,400
415,500
5,737,600
1,790,200
1,957,500
6,363,500
555,400
2,192,200
451,400
3,001,500
13,039,200
1,436,300
351,000
4,263,000
3,488,500
796,800
3,098,700
311,300
156,054,700
AutoContribution
as%ofLaborForce
7.8%
1.3%
2.2%
4.8%
2.0%
2.5%
3.4%
6.2%
2.8%
2.5%
4.3%
0.8%
3.1%
6.3%
13.0%
4.6%
4.0%
10.3%
3.9%
2.7%
2.7%
2.7%
19.9%
3.7%
5.9%
5.5%
1.8%
4.5%
1.8%
1.9%
3.0%
1.8%
3.0%
4.2%
7.5%
11.0%
3.9%
2.4%
4.0%
0.9%
6.3%
6.8%
9.0%
3.5%
3.2%
2.5%
3.6%
1.7%
4.9%
5.9%
1.3%
4.6%
39
Table 3.2: All Jobs for Automakers by State (Direct, Intermediate, and Spin-off)
State
AllJobsforMotorVehicleManufacturers(Automakers)
Expenditure
Direct
Intermediate
Induced
Alabama
12,000
Alaska
10
Arizona
800
Arkansas
300
California
13,000
Colorado
600
Connecticut
200
Delaware
200
D.C.
100
Florida
1,100
Georgia
5,800
Hawaii
10
Idaho
10
Illinois
12,500
Indiana
25,500
Iowa
100
Kansas
1,200
Kentucky
18,500
Louisiana
50
Maine
10
Maryland
500
Massachusetts
200
Michigan
124,500
Minnesota
200
Mississippi
8,000
Missouri
10,800
Montana
10
Nebraska
200
Nevada
100
NewHampshire
40
NewJersey
3,500
NewMexico
10
NewYork
5,700
NorthCarolina
1,000
NorthDakota
10
Ohio
34,500
Oklahoma
50
Oregon
300
Pennsylvania
600
RhodeIsland
10
SouthCarolina
7,400
SouthDakota
10
Tennessee
17,500
Texas
11,500
Utah
50
Vermont
10
Virginia
700
Washington
200
WestVirginia
1,300
Wisconsin
1,100
Wyoming
10
U.S.Total
322,000
22,700
50
3,500
5,000
38,000
3,000
1,000
1,000
1,000
10,000
29,000
100
200
53,100
48,000
2,000
2,000
20,000
5,000
250
5,800
8,200
202,000
8,000
8,000
16,000
100
3,000
2,600
900
9,000
300
27,400
16,000
300
100,000
3,500
2,200
17,000
100
10,050
200
27,900
58,550
2,200
100
7,000
1,300
7,300
15,000
100
805,000
32,000
100
7,000
7,000
50,000
9,000
6,040
8,000
3,500
32,000
45,000
300
500
94,000
73,900
9,100
19,060
25,000
11,000
500
12,700
16,300
244,000
18,000
9,000
34,800
400
7,700
4,600
2,000
31,000
700
35,000
25,000
3,700
152,400
7,000
4,000
25,000
400
12,000
6,000
55,000
85,000
5,000
200
22,400
4,000
9,000
50,500
200
1,316,000
TOTAL
66,700
160
11,300
12,300
101,000
12,600
7,240
9,200
4,600
43,100
79,800
410
710
159,600
147,400
11,200
22,260
63,500
16,050
760
19,000
24,700
570,500
26,200
25,000
61,600
510
10,900
7,300
2,940
43,500
1,010
68,100
42,000
4,010
286,900
10,550
6,500
42,600
510
29,450
6,210
100,400
155,050
7,250
310
30,100
5,500
17,600
66,600
310
2,443,000
40
Table 3.3: All Jobs for Motor Vehicle Dealers by State (Direct, Intermediate, and Spin-off)
State
AllJobsforMotorVehicleDealers
Expenditure
Direct
Intermediate
Induced
Alabama
9,900
Alaska
1,700
Arizona
16,900
Arkansas
5,900
California
77,500
Colorado
11,800
Connecticut
9,300
Delaware
20
D.C.
1,900
Florida
47,200
Georgia
20,800
Hawaii
1,600
Idaho
2,800
Illinois
28,200
Indiana
14,100
Iowa
8,300
Kansas
6,900
Kentucky
8,200
Louisiana
10,700
Maine
6,200
Maryland
15,200
Massachusetts
15,000
Michigan
23,300
Minnesota
12,900
Mississippi
5,200
Missouri
14,400
Montana
2,400
Nebraska
4,900
Nevada
3,400
NewHampshire
2,900
NewJersey
20,600
NewMexico
5,700
NewYork
32,600
NorthCarolina
21,500
NorthDakota
5,700
Ohio
27,700
Oklahoma
11,200
Oregon
8,400
Pennsylvania
31,200
RhodeIsland
1,100
SouthCarolina
10,100
SouthDakota
2,200
Tennessee
13,600
Texas
64,300
Utah
5,900
Vermont
3,400
Virginia
19,600
Washington
14,500
WestVirginia
4,100
Wisconsin
15,700
Wyoming
1,400
U.S.Total
710,000
2,900
500
6,000
1,600
33,200
4,800
2,600
10
500
17,400
7,500
400
800
11,300
4,500
2,100
1,900
2,300
3,500
1,700
3,900
5,300
8,500
4,800
1,300
4,500
700
1,400
900
800
5,900
1,600
13,900
6,700
1,600
9,400
3,000
2,900
9,100
300
2,800
600
4,600
27,600
2,600
900
5,300
4,700
700
4,500
400
246,700
11,000
1,600
15,100
6,700
65,800
12,700
8,200
50
1,800
41,300
22,000
1,600
2,700
28,500
15,800
8,500
7,200
9,700
12,400
5,900
13,900
13,300
22,500
12,100
6,700
14,600
2,300
5,100
3,200
2,800
20,300
5,400
34,800
21,300
5,400
26,800
10,000
7,700
28,600
1,000
11,400
2,100
17,300
65,700
7,300
3,200
18,300
11,800
4,100
14,400
1,300
693,300
TOTAL
23,800
3,800
38,000
14,200
176,500
29,300
20,100
80
4,200
105,900
50,300
3,600
6,300
68,000
34,400
18,900
16,000
20,200
26,600
13,800
33,000
33,600
54,300
29,800
13,200
33,500
5,400
11,400
7,500
6,500
46,800
12,700
81,300
49,500
12,700
63,900
24,200
19,000
68,900
2,400
24,300
4,900
35,500
157,600
15,800
7,500
43,200
31,000
8,900
34,600
3,100
1,650,000
41
42
SECTIONIVMETHODOLOGYOVERVIEW
Theestimatesinthisreportoftheintermediateandinducedemploymentassociatedwith
directemploymentwithvehicleassemblers(automakers)anddealershipsareproducedusinga
dynamic,interindustrymodeldevelopedbyRegionalEconomicModels,Inc.(REMI).Atotal
footprintoftheindustry,includingallvehicleandcomponentmanufacturing,aswellasnew
vehicledealershipemployment,wasalsocalculatedtoarriveatthetotalindustryemployment
contributionof7.25millionjobs.TheREMImodelisdesignedforindustryandregionspecific
contributionanalysis.Themajorinteractionsbetweenprimarydatainputandmodelstructure
aredescribedbelow.
TheMacroeconomicModel
Toestimatethetotalemploymentandcompensationprovidedbypartssuppliers,motor
vehicleassemblersandnewvehicledealershipoperations,theresearchteamatCARuseda51
region,169industrysectormodeldevelopedbyREMItocaptureeffectsinallfiftyU.S.state
economies,theDistrictofColumbiaandtheU.S.nationaleconomy.Themodelprovidesa
baselineforecastofregionalandnationaleconomies.Variouseconomicscenariosarethen
inputintothemodelandsimulationsbasedonthenewdataarecalculatedbythemodel
Changesfromthebaselinearemeasuredusingresultsfromthesesimulations.Underlying
demographicandindustryspecificinformationforeveryregionarecontainedinthebaseline
forecast.
Tradeflows,migrationpatternsandcommuterflowsconnecteachstateeconomy,allowingfor
dynamicmultiregionalanalysis.Simulationresultscanbeinterpretedastheneweconomic
equilibrium(givenachangetothebaseline)andaretheproductofmultiplestructuralequation
iterationsacrossthestateeconomies.Asimulationbeginswiththeuserinputtingadirect
changetothebaselineeconomy.Oncethischangeisenteredintothemodel,newvectorsof
transactionsbetweenbusinessesarecalculatedalongwithconsumerpurchasesofgoodsand
services.Thesevectorsmaychangeasestimatedhouseholdincomeincreasesordecreases
underthenewscenariobeingmodeled.Themodelreportstheeconomicchangesfromthe
baselineinanumberofvariables,withthemosteasilyunderstoodbeingemployment.
ThedynamicmultiregionalcharacteroftheREMImodelisadefiningelementnotfoundin
othercommercialcontributionanalysismodelsandenablesCARtoproducetheresults
containedinthisstudy.Inessence,themodelcansimulateeconomiccontributionsthatmay
occurinanyonestateresultingfromchangingthelevelsofemploymentinanyorallofthe
otherstates.
43
Methods&Assumptions
Thegeneralanalyticalmethodistorunindependentsimulationsformotorvehicleassemblers,
allvehicleandcomponentmanufacturing,andnewvehicledealershipoperationsby
subtractingtheemploymentofeachgroupfromthebaselineregionaleconomiesatthestate
level.Thiscounterfactualtechniqueallowsfortheseparationofeconomicactivityinfluenced
bytheoperationsofassemblers,allvehicleandcomponentsmanufacturinganddealersfrom
theaggregateeconomy,andpermitsthecaptureofeconomiccontributionsfromcontinued
employmentinthesectorsofinterestforanygiventimeperiod.Ingeneral,thedifference
betweenthebaselineforecastandthesimulationrepresentstheeconomiccontributionof
assemblers,dealersandthetotalfootprintoftheindustry.
Thisstudyshouldnotbeinterpretedasrepresentingtheeconomicactivitythatwouldbelostif
theautomotiveindustrydidnotoperateintheUnitedStates.Thatscenariowouldgenerate
significantcompensatingadjustments(overtime)intheeconomyandisnotexaminedinthis
study.CARspurposeistodissectandpresenttheindustryscurrentpresenceinthedomestic
economy.Thisstudyrepresentsasnapshotoftheautomotiveindustrystotalemployment
contributiononthenationseconomy.
Considerationwaspaidtothepotentialofdoublecountingactivitiesbetweensupplier,
dealershipandassemblerruns.WithintheframeworkoftheREMImodel,thereisaninter
industry,inputoutput(IO)tablethatcalculatesdemandforintermediateinputsusedinthe
productionofafinishedgood.Amorerigorousefforttoavoiddoublecountingwasappliedto
thisstudyversusthe2010study.Inthisstudy,allautomakeremployeeswhomanufactureparts
werenotincludedasdirectemployeesintheassemblersimulation.Next,commontoboth
studies,theautomakersimulationmodelwasrunfirst,thenthecalculateddemandforparts
suppliersassociatedwithautomakerswerediscounted(thesearethesupplierswhowillbe
includedasdirectemployeesofpartsmanufacturersinthesecondrun).Withbothtypesof
partsmakers(thoseemployedbyautomakersandthoseemployedbyTier1partssuppliers)
removedfromtheassemblerssimulation,theCARresearchteamwasabletoadjustfor
systemicdoublecountsandcalculateonlythenetemploymenteffectsfortheassembler
simulationruns.
Asaconsequenceofthisupfrontefforttoavoiddoublecountingbetweensegmentsofthe
industry(automakers,partssuppliersanddealerships),theresultsforeachofthesesegments
canbeaddedtogethertoarriveatthetotaleconomiccontributionoftheindustry.These
resultsfairlyrepresentthesizeoftheindustryanditscontributiontotheU.S.andindividual
stateeconomies.Allsimulationresultsarerelevanttotheeconomicconditionsofcalendaryear
2014.
44
BIBLIOGRAPHY
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50
APPENDIXA
ContributionoftheAutomotiveIndustrytoSmallManufacturersinKentucky
TheCenterforAutomotiveResearchisperformingastudyanalyzingthestatejobscontribution
of the automotive industry to small manufacturers in Kentucky. This effort is sponsored by
Alliance of Automobile Manufacturers, in cooperation with all of the major automakers. A
majorpartofthiseffortisamappingofthesupplychaininKentucky.CARsresearchwillalso
featureacasestudyofsmallandmediumsuppliers,beginningwithinterviewsfromavoluntary
group of key suppliers. These interviews will help paint a picture of how Kentuckybased
assemblyplantsarecontributingtothesupportofsuppliersinthestate.
QuestionList
1) Whatportionofyourrevenuescomesfromtheautomotiveindustry?
2) What parts does your plant produce which will ultimately make their way to any of the
Kentuckybasedassemblyplants?
3) How many employees work in your plant whose job is related to work on parts that
ultimatelymaketheirwaytoKentuckyassemblyplants?
4) HowmanyofyourKentuckybasedsuppliersprovidepartsusedinyourproductsthatare
deliveredtoKentuckybasedassemblyplants?
5) Were there any tooling purchases from Kentucky companies made specifically for these
parts?
6) As a Tier 2 supplier, what is your level of responsibility for engineering and R&D for the
partsthatultimatelymaketheirwaytoKentuckyassemblyplants?
7) Haveyourecentlybeguntrackingyoursupplychainmorecloselythaninthepast?Isyour
firmincreasinglocalsourcing?
8) Whatarethemajorissuesandchallengesyoufaceinyourcurrentoperations?
9) HowhaveautomakersandTier1suppliersengagedwithyou,andhowhavetheyassisted
youwithovercomingchallenges?
10) Please describe your interactions with state and local government agencies. What about
economicdevelopmentorganizations?
51

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ContributionoftheAutomotiveIndustry

Figure 1.4: Announced North

Figure 1.5: Announced Automaker

Figure 1.6: R&D Funding Sources by Industry, 2007

Figure 1.7: U.S. Automotive R&D Spending, 1999-2011

Figure 1.8: Vehicle Mateerial Compositiion in U.S. Ma

Table 1.4: Kentucky Business Establishments by Size

Table 3.1: Automotive Industry Employment Contribution by State

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