Past Issue

Automakers’ Status

By Stefan Budricks

11/01/16

Last month, we spent some time looking at a couple of studies that attempted to divine the future of in-city transportation. The common conclusion seemed to be that city streets were destined to become less accommodating of traditional personal car ownership. This, of course, does not necessarily mean a reduction in the number of cars on U.S. roads overall but rather a geographic redistribution.

This is just as well, as auto manufacturers play an outsize role in the wellbeing of our economy as a whole and in the survival of umpteen smaller businesses and communities. Exactly how large that role is becomes evident in reading the 2016 State of the U.S. Automotive Industry report prepared by the American Automotive Policy Council, a body comprised of FCA (Fiat Chrysler Automobiles) US, Ford, and GM (General Motors).

If the content of the report comes across a bit like an industry tooting its own horn, so be it — the automakers are entitled. They are, together with their suppliers, not only the country’s largest manufacturing sector, they are also its largest exporter. Over the past six years, they have exported more than $775 billion in vehicles and parts.

Of the 17.4 million cars and trucks Americans bought last year, more than 11.8 million were produced at one of the country’s 47 automotive assembly plants. According to the report, a typical auto plant requires between $1 billion and $2 billion in start-up capital investment and employs between 2,000 and 3,000 workers. Each vehicle being assembled contains 8,000 to 12,000 different components and as many as 15,000 individual parts. More than 5,600 suppliers produce auto parts in the United States, together employing more than 734,000 workers, the report says.

FCA US, Ford, and GM together employ roughly 232,000 workers. Accounting for all 16 major automakers in the United States, that figure climbs to approximately 353,000. All told, according to the report, the auto manufacturers, their suppliers, dealerships, and the local businesses that support them are responsible for more than 7.25 million jobs in the United States.

Manufacturing, assembly, research, and distribution jobs at FCA US, Ford, and GM are spread across 32 states and 115 congressional districts, while 10,150 dealerships serve as direct contact with consumers. The report rightly claims, “Every state is an auto state.”

Automakers are second only to the pharmaceutical and biotech industry in research and development spending, investing roughly $115 billion every year. Much of the R&D is focused on in-vehicle electronics. The report points to an example in a Center for Automotive Research (CAR) report that compares the single microprocessor that might be found in a smartphone to the roughly 60 contained in a new car or truck. These microprocessors manage 100 or more sensors throughout the vehicle. These very sensors, some of which involve automated collision avoidance, are creating headaches in the professional car wash industry.

In a pleasant reversal of past trends, the report notes that many automakers have recently brought jobs back home, shifting production from other countries to the United States. As examples it points to Ford’s Ohio assembly plant now producing its medium duty trucks that were previously made in Mexico, and its Cleveland engine plant making EcoBoost engines that were previously produced in Spain.

While every business that depends on the consumer having discretionary spending dollars in his pocket benefits from job creation in its own backyard, the professional car wash industry is more closely tied than most to the fortunes of the automakers. It behooves us to pay attention to where they are heading.



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