Auto industry 'alive, healthy'
Study: Sector first among U.S. manufacturing, with rising share of gross domestic
product
By Jeff Plungis / Detroit News Washington Bureau 3/16/01
WASHINGTON -- The auto industry's recent boom years have erased the job losses of
a decade ago, but the overall character of the industry changed dramatically during
the 1990s, according to a study released Thursday.
In Michigan, a boom in technology related to safety and cleaner emissions has
fueled growth in supplier jobs, bringing overall industry employment levels nearly
back to where they were at the start of the decade, when the Big Three shed 100,000
jobs and suppliers lost 100,000 more.
"The U.S. auto industry is alive, is healthy and is making a greater impact on the
economy than ever before," said Jim Press of Toyota Motor Corp., who is chairman of
the Alliance of Automobile Manufacturers, the industry's main lobby group.
Press said the industry study, commissioned by the Alliance and conducted by the
University of Michigan, was the first of its kind -- aiming to quantify the overall
impact of the auto sector on the American economy. Previous studies have looked only
at the economic impact of American companies or a particular aspect of the auto
industry.
The study is a snapshot of an industry undergoing massive change -- the integration
of new computer technology, shifts in market share and the impact of globalization.
But none of these factors have diminished the importance of the auto sector to the
American economy.
The auto industry remains first among American manufacturing sectors, and it has
inched its way up in terms of its share of U.S. gross domestic product throughout the
1990s. "We're still an auto economy," said Center for Automotive Research director
David Cole.
The auto industry remains as dominant as ever in Michigan, according to the study's
authors. But it is a more diversified auto sector.
There are fewer factory jobs at General Motors Corp., Ford Motor Co. and
DaimlerChrysler AG. They have been replaced with salaried jobs in engineering, with
suppliers and at service companies that do business with auto firms. Among the
traditional Big Three, 17 percent of the workforce was salaried in 1985. Now it's 38
percent.
Michigan's role has shifted from production to global leadership in research and
development. Some automakers have engineering offices in Michigan -- even though they
don't market vehicles in the state. "Michigan is less of a production center," said
Cole. "But the intellectual center of the industry is in Southeast Michigan."
A big part of the auto industry recovery nationwide is being fueled by advances in
technology, according to Alliance president Josephine Cooper, as the Rust Belt has
transformed into an R&D Belt. The automotive sector spends about $18.4 billion on
research and development, more than any other sector of the economy.
"We're not only old economy, we're new economy as well," said Cooper.
But even as consumer and regulatory demands have helped fuel the explosion of
technology in vehicles, the fierce competition between automakers has kept auto prices
down. The average price increase for a new vehicle has remained below inflation since
1996.
The result is smaller margins per vehicle than the old days -- one factor that has
led to recent workforce reductions even as the auto industry projects its third-best
sales ever this year.
