International Automakers That Build and Sell Vehicles in The United States Generates Nearly 1.3 Million American Jobs, Say U-M Researchers
30 March 1998
International Automakers That Build and Sell Vehicles in The United States Generates Nearly 1.3 Million American Jobs, Say U-M Researchers
ANN ARBOR, Mich., March 30 -- For every American employed at
international automotive plants and dealerships in the United States, another
two American "spin-off" jobs are created according to a new University of
Michigan study.
In all, nearly 1.3 million American jobs can be linked to the U.S.
international auto sector (USIAS), which both builds and sells vehicles in the
United States.
While about 69,000 Americans are directly employed in manufacturing and
support for USIAS plants and about 334,000 work in non-manufacturing jobs at
dealerships, another 870,000 Americans have jobs that are associated with the
presence of international automakers in the United States, say David E. Cole
and Sean P. McAlinden of the U-M Transportation Research Institute's Office
for the Study of Automotive Transportation and George A. Fulton and Donald R.
Grimes of the U-M Institute of Labor and Industrial Relations.
The researchers say that these "spin-off" jobs are split fairly evenly
between "indirect" sources (e.g., jobs at companies that supply parts,
materials and services to the USIAS) and "induced" sources (e.g., jobs at
businesses where USIAS-related employees spend their money).
"The vast majority of the total USIAS job contributions -- direct,
indirect and induced -- are in the private non-manufacturing sector," Fulton
says. "There is much more induced activity in this sector than in
manufacturing, although USIAS manufacturing jobs are high paying and have
strong leverage in the U.S. economy."
"What is less well-known, but important, is the level of indirect activity
in the private non-manufacturing sector that is linked to the auto business.
Activities such as business, professional and repair services, finance,
wholesale trade, and trucking are more linked to the supplier network for
autos than is often recognized."
In their study, "The Contribution of the International Auto Sector to the
U.S. Economy," the researchers found that within the manufacturing sector
alone, every USIAS job generates another 5.5 jobs (about 381,000). This is
higher, they say, than the spin-off rates of other significant high-tech
manufacturing industries such as computers, telecommunications, and audio and
video equipment.
In the non-manufacturing sector, every USIAS dealership job spins off
another 1.5 jobs (about 488,000), the researchers add.
While total USIAS-related jobs make up about 1 percent of the private-
sector jobs in the United States, they provide 1.3 percent of the
private-sector compensation (nearly $50 billion in wages, salaries and
benefits) in the American economy.
"The compensation share is greater than the employment share because the
jobs associated with USIAS activity are higher paid on average than the
average job economy-wide," Fulton says.
Average compensation for all USIAS manufacturing and support employees has
risen 23 percent and employment is up 18 percent since 1992, the study shows.
In fact, employee compensation is the second-fastest growing category of total
spending by the USIAS, greater than capital investment, but less than
purchases.
The report also found that total purchases have risen 54 percent since
1992, including a 90 percent increase (now at about $23 billion) in
manufacturing purchases of American-made parts, components and services.
According to the researchers, the USIAS is now the fastest-growing segment
of the motor vehicle industry. Since 1986, U.S. sales of American-built USIAS
vehicles have risen nearly 500 percent, while U.S. sales of imported USIAS
vehicles have steadily fallen. In fact, USIAS vehicles made in the United
States have outsold imported vehicles since 1994.
"The real story of the growth of the USIAS in the U.S. economy, of course,
is the sector's ever-increasing local production of vehicles," McAlinden says.
"The USIAS share of U.S. motor vehicle production temporarily reached a
plateau of about 17.5 percent during 1991-94, only to rise again to achieve a
new peak of more than 20 percent in 1996.
Other findings from the U-M study, which was prepared for the Association
of International Automobile Manufacturers, Inc., include:
-- USIAS manufacturing plants, compared with the U.S. auto industry as a
whole, enjoy labor productivity advantages of 26 percent in assembly
of vehicles, 44 percent in assembly of engines and 80 percent in
production of major stampings.
-- The domestic content (i.e., the percentage of U.S.-made parts) of
USIAS vehicles has steadily risen to 69.3 percent, compared with 77.6
percent for traditional domestic vehicles.
SOURCE University of Michigan
