Changes in Michigan Automotive Industry Employment

Bernard SwieckiIndustry Analyst

Economics and Business GroupCenter for Automotive Research

February 28, 2002

Contribution of the Auto Industry to the U.S. Economy in 1998: The

Nation and Its Fifty States

Performed by CAR for the Alliance of Automobile Manufacturers

Winter 2001

1998 Vehicle Firm Employment and Payroll by State

Illinois 14,603 2.4% 933 2.2%Indiana 44,694 7.2% 2,668 6.4%Michigan 260,444 41.9% 19,387 46.5%Minnesota 3,950 0.6% 161 0.4%Ohio 98,383 15.8% 5,982 14.3%Wisconsin 9,740 1.6% 601 1.4%Total 431,814 69.5% 29,732 71.2%

Automotive Employment

% of National Employment

Total Automotive Payroll (millions of $) % of National Payroll

1998 Automotive Compensation1998 Automotive Compensationper Employeeper Employee

Source: Company surveys

29,776

66,58461,53776,905

25,95131,647

0

20,000

40,000

60,000

80,000

100,000

120,000

Salaried Hourly Total

Co

mp

ensa

tio

n

Avg. Payroll Avg. Benefits

$102,856$93,184 $96,360

1998 Michigan Automotive Employment: Alliance Study

Vehicle Firms:Vehicle Firms:

Manuf. Supplier Empl.:Manuf. Supplier Empl.:

New Dealer Empl.:New Dealer Empl.:

Dealer Supplier Empl.:Dealer Supplier Empl.:

Spin-off Empl.:Spin-off Empl.:

Total Empl.:Total Empl.:

Total CompensationTotal Compensation

260,400260,400

274,400274,400

28,90028,900

21,70021,700

422,100422,100

1,007,5001,007,500

$44.7 bil.$44.7 bil.

1998 Michigan Automotive Employment 1998 Michigan Automotive Employment - Survey- Survey

Vehicle Firms:Vehicle Firms:

Parts and Component Firms:Parts and Component Firms:

Pre-production Firms:Pre-production Firms:

Other Manufacturing:Other Manufacturing:

Business Services:Business Services:

Wholesale Trade:Wholesale Trade:

260,444260,444

119,643119,643

88,33288,332

??

??

??

Jobs Contributed Across the 50 States

Michigan

Ohio

California

Illinois

Missouri

South Dakota

Alaska

1,007,500

630,800

462,900

311,900

221,200

14,000

4,600

1996 Value Added per Employee1996 Value Added per Employee

Source: U.S. Census Bureau, 1999 Statistical Abstract of the United States, p. 748.

Apparel and other textile productsFurniture and fixtures

823298

235137

120119118117114

10194938886

7372686156565244

0 100 200 300 400 500 600 700 800 900Dollars (Thousands)

Lumber and wood products

Leather and leather products

Fabricated metal products

Printing and publishing

All Manufacturing

Primary metal industries

Food and kindred products

Instruments and related products

Motor vehicles and equipment

Petroleum and coal products

Textile mill products

Misc. Manufacturing industries

Rubber and misc. plastic products

Stone, clay, and glass products

Industry machinery and equip.

Paper and allied products

Electronics; other electronic equip.

Transportation equip.

Chemicals and allied products

Tobacco products

($ thousands 1996)

Big 3 U.S. Employment

623,133

380,682

442,708

164,344137,264

72,320

10.4%

23.7%

30.2%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

85 95 98Year

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Hourly Salaried Salaried Percent of Employment

Source: Company Reports

Em

plo

ymen

t

Per

cen

t S

alar

ied

Big 3 Michigan Employment

245,095

192,915

161,316

50,369

97,20994,48417.0%

37.6%

32.9%

0

50,000

100,000

150,000

200,000

250,000

300,000

85 95 98Year

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Hourly Salaried Salaried Percent of Employment

Source: Company Reports

Em

plo

ymen

t

Per

cen

t S

alar

ied

Michigan: The High Technology Automotive State

Performed by CAR for the MEDC

April, 2000

R & D Spending by Industry - 1997R & D Spending by Industry - 1997Motor Vehicle is 1st of 39 Major U.S. IndustriesMotor Vehicle is 1st of 39 Major U.S. Industries

5,240

5,606

5,677

7,377

7,961

10,786

11,318

11,586

12,787

13,758

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

$millions

Motor vehicles & motor vehicle equipmentMotor vehicles & motor vehicle equipmentMotor vehicles & motor vehicle equipmentMotor vehicles & motor vehicle equipmentOffice, computing, & acctg. machines

Drugs and medicines

Computer & data processing services

Electronic componentsTrade

Communication equipmentAircraft & missiles

Other machinery, except electrical

Optical, surgical, photographic & other inst.

Source: National Science Foundation/SRS, Survey of Industrial Research and Development: 1997

States Ranked by IndustrialStates Ranked by IndustrialResearch & Development - 1997Research & Development - 1997

Michigan Ranked 2nd of the 50 StatesMichigan Ranked 2nd of the 50 States

5,608

6,248

6,609

6,610

7,265

8,300

9,939

11,069

13,009

34,011

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

$millions

MICHIGANMICHIGANMICHIGANMICHIGAN

CALIFORNIA

NEW JERSEY

MASSACHUSETTS

WASHINGTON

ILLINOIS

NEW YORK

TEXAS

PENNSYLVANIA

OHIO

Source: National Science Foundation

• Engineers, Math and Computer Scientists

• Engineering Technicians

• Science Technicians

• Computer Programmers

High-Tech OccupationsHigh-Tech Occupations

Big ThreeBig ThreeTechnology Employment Questionnaire ResultsTechnology Employment Questionnaire Results

Total 1998

Auto Employment

High-Tech Auto Employment

492,887

47,548

U.S.

235,807

37,489

Michigan

47.8%

78.8%

Michigan %

1998 Big Three1998 Big ThreeTechnology Employment Questionnaire ResultsTechnology Employment Questionnaire Results

235,807

257,080

37,48910,059

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000550,000

High-Tech Auto Employment Auto Employment

492,887 (U.S.)

47,548 (U.S)

Michigan All other states

1998 Big Three1998 Big ThreeTechnology Employment Questionnaire ResultsTechnology Employment Questionnaire Results

High-Tech Employmentas Percentage of TotalAuto Employment

3.9%

Other states

15.9%

Michigan

1998 Big Three1998 Big ThreeTechnology Employment Questionnaire ResultsTechnology Employment Questionnaire Results

3.9%

15.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

High-Tech Employment as % of Total Auto Employment

Michigan Other states

Well, the Unemployment Rate is Only 5.6%. . .and Things are Looking Up

. . .by Summer

• But 1.2 million Americans have been forced into part time work

• And 20-25% of Tooling and Small Manufacturing Firms will fail by summer

• Wages are falling, Pensions are Disappearing, and Health Insurance for the Nation may be seriously reduced . . .

• No Investment . . .And a Record Trade Deficit

1.6 Million Jobs Gone!Manufacturing Jobs and the Trade Deficit:

1980-2000

-500-450-400-350-300-250-200-150-100

-500

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

.

.

BOG-World Tot-Prod-Manuf

$-449.5 bil.

$-25.5 bil.

14.2 mil.12.6 mil.

Manuf. Wages Fall as the Deficit Rises!1980-2000

-500

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

$Bil.

Year

$13.60$13.80$14.00$14.20$14.40$14.60$14.80$15.00$15.20$15.40$15.60$15.80

BOG-World Wage-2001

$15.21/hr.

$14.77/hr.

No Connection Between Productivity and Growth in Manuf. Wages: 1981-2000

-0.02

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

%Wage Change Prod Growth

Premium for Automotive Labor?Relative Auto Wages 1959 - 2000

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

0%10%20%30%40%50%60%70%80%

Average U.S. Mfrg. Wage Average US ManufacturingSIC 3711 SIC 3711 Wage Premium

$2.80

66%

$24.59

$14.84

28%

$2.19

Source: BLS

16 ¢/Hr. in India!1998 and 1995 Total Compensation/Hr. for Motor Vehicle Manuf. Production Workers in Selected

Countries

26.5

527

.49

20.8

120

.5

2.51

2.94

29.2

5

23.3

8

10.8

5

7.75

7.06

6.68

41.5

836

.7

16.5

19.6

3

0

10

20

30

40

50

60

$/Hr.

U.S.Canada

Mexico

Japan

Korea

Taiwan

Germany

U.K.

1995 1998

Where Did 400,000 Jobs Go?U.S. Auto Parts Imports

1990 – 2001Billions of Current Dollars

31.7 29.833.5

38.344.9 46.4 48.4 50.7

54.361.6

66.9 69.8

90 91 92 93 94 95 96 97 98 99 0 01

Year

$Billions

Source: USDOC/ITA

InternationalAutomotiveSupplier andManufacturerLocations

InternationalAutomotiveSupplier andManufacturerLocations

HONDA EAST LIBERTY HONDA EAST LIBERTY

TOYOTATOYOTA

NISSANNISSAN

SUBARU-ISUZUSUBARU-ISUZU

I-75I-75

I-70I-70

I-65I-65

HONDA MARYSVILLE HONDA MARYSVILLE NISSAN-CANTONNISSAN-CANTON

Ala

bam

aA

laba

ma

Mis

siss

ippi

Mis

siss

ippi

MERCEDES-VANCEMERCEDES-VANCE

HONDA-LINCOLNHONDA-LINCOLN

New International Assembly Facilities 2001-2003New International Assembly Facilities 2001-2003

BMW-Expansion

Honda-OdysseyOdyssey-Engine

Mercedes-Benz-Expansion

Nissan-Truck

Nissan-V8 Engine

TMM-IndianaExpansion

Toyota V8 Engine

New Vehicle Total

Spartanburg, S.C.

Lincoln, ALLincoln, AL

Vance, AL

Canton, MS

Decherd, TN

Gibson County, IN

Huntsville, AL

1,400

2,000?

2,000

4,000

1,000

2,000

350

?

?

$600

$935

$600

$800

?

60,000

120,000120,000 eng

-80,000

200,000

200,000

200,000

?

860,000

NewEmployment

NewCapacity

Investment($ Millions)

LocationCompany

International Automotive NA Truck Incremental Capacity

1.0 million units

VW AAC +75K; MB Tall Wag +50KVW AAC +75K; MB Tall Wag +50K

Sienna +25K; Highlander +75K; Scenic +50KNissan FS PU +100K, SUV +50K, I/SUV +25KQuest +25K; Honda FS PU +100K, FS SUV +50K

Toyota Matrix +75K; RX300 +50KToyota Matrix +75K; RX300 +50KTracker –50K; Honda MAV +75K; Odyssey +50KTracker –50K; Honda MAV +75K; Odyssey +50K

Honda SUV +100K; Subaru ST/X +25K

2.1 million units

2001

2002

20032003

2004

20052005

2006

Source: CSM Worldwide

A Few Conclusions

• Michigan has done well in attracting high paying, desirable automotive employment, but…

• Needs to do better in attracting it from foreign vehicle firms and suppliers

• Despite impressive productivity improvements, manufacturing jobs have suffered