Changing Dynamics of the North American Automobile Industry:

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  • The new automotive corridor in the U.S. stretches from Michigan to through several southern states. The US auto industry is concentrated in the midwest from Michigan to the South Many international manufacturers have expanded in the South seeking access to low-cost, unskilled labor. The South has provided incentives to develop infrastructure to support these facilities
  • The heart of the automotive industry in North America is clearly Michigan. Michigan has extensive people resources that are skilled in all trades needed to support manufacturing
  • The R&D centers in Michigan are concentrated around OEM headquarters and the Environmental Protection Agency located in Ann Arbor
  • Changing Dynamics of the North American Automobile Industry:

    1. 1. Changing Dynamics of the North American Automobile Industry: Crisis or Opportunity for Michigan? Kim Hill Director, Automotive Communities Program Associate Director, Economics and Business Group Center for Automotive Research Ann Arbor, MI
    2. 2. <ul><li>From the New York Times, January 24, 2006: </li></ul><ul><li>&quot;This may not be the end, but it is certainly the beginning of the end of the automobile industry as we knew it.&quot; </li></ul><ul><li>Gary N. Chaison, Professor of Industrial Relations, Clark University (Worcester, MA) </li></ul>
    3. 3. Some days……….
    4. 4. First, some questions: <ul><ul><li>Is the NA industry dying? </li></ul></ul><ul><ul><li>Is all the new investment occurring in the south? </li></ul></ul><ul><ul><li>Is the industry moving south? </li></ul></ul><ul><ul><li>Is labor a big issue/asset? </li></ul></ul><ul><ul><li>Why would new investment come to old “company towns”? </li></ul></ul>
    5. 5. An integrated industry
    6. 6. <ul><li>Is the North American auto industry dying? </li></ul>
    7. 7. Stuck on a Plateau! Total U.S. Sales of Light Vehicles: 1992 - 2007 Millions Year 13.3 13.9 15.0 14.7 15.1 15.0 15.6 17.0 17.4 16.9 16.9 17.2 17.1 16.8 16.6 16.9
    8. 8. Truck sales headed… in the right direction??
    9. 9. Employee deal for everyone is over now for trucks! Peak $2.62
    10. 10. SUVs & CUVs Source: CSM, JD Power
    11. 11. Can’t understand why sales have tanked?
    12. 12. 2004-2008 Change in N. American vehicle production capacity 4.0 Source: AutoData Millions
    13. 13. GM & Ford shutdowns: Retreat to the core? Oklahoma City-2006 Lansing Craft Centre-2006 Spring Hill - 2006 Atlanta – 2008 Oshawa 1 - 2006 Oshawa 2 - 2008 Moraine - 2006 Lansing Metal - 2006 Pittsburgh Metal - 2007 Portland - 2006 Ypsilanti SPO - 2007 St. Catherine’s Powertrain -2008 Flint Engine 1 - 2008 Baltimore - 2005 Linden - 2005 Lansing M - 2005 Lorain - 2005 St. Louis - 2006 Doraville - 2008 Wixom – 2007 Batavia – 2008 Windsor Casting – 2008 St Thomas – 2008 Nine more Ford shutdowns TBD
    14. 14. TX MS AL GA SC TN KY IN IL MI MMM-USA TOYOTA-PRINCETON SUBARU-TOYOTA HONDA EAST LIBERTY HONDA MARYSVILLE TOYOTA SPARTANBURG-BMW I-65 NISSAN-CANTON HYUNDAI- HOPE HULL HONDA-LINCOLN TOYOTA-SAN ANTONIO MERCEDES BENZ-VANCE TOYOTA-HUNTSVILLE OH NISSAN I-75 Roads heading south! International supplier and manufacturer locations KIA-WEST POINT
    15. 15. Transplant assembly facilities as of 2005 Source: Automotive News, Harbour Report, CAR research 64,260 300,000 1,100 2,000 Hope Hull, AL Hyundai 262,000 1,350 1,315 Lafayette, IN Subaru 200,000 250,000 2,200 500 (original investment) 4,600 2,775 Spartanburg, SC Ingersoll, ON BMW CAMI-GM 5,152,000 Total 250,000 300,000 500,000 2,400 2,600 5,310 4,342 4,659 6,934 Cambridge, ON Princeton, IN Georgetown, KY TMM-Canada TMM-Indiana TMM-Kentucky 370,000 1,300 5,715 Fremont, CA NUMMI-GM 400,000 550,000 1,430 1,600 4,100 6,700 Canton, MS Smyrna, TN Nissan 240,000 850 1,900 Normal, IL Mitsubishi 160,000 2,200 4,000 Vance, AL Mercedes-Benz 300,000 390,000 240,000 440,000 1,200 1,500 920 3,200 4,300 4,375 2,230 4,315 Lincoln, AL Alliston, ON East Liberty, OH Marysville, OH Honda Actual Capacity as of 2005 Total Investment-through 2005 ($ million) Employment as of 2004 Location Company
    16. 16. New International assembly facilities: 2006-2008 Source: Automotive News, Harbour Report, CAR research 7,500 750,000 New Vehicle Total 150,000 50,000 100,000 50,000 100,000 300,000 800 50 650 300 230 1,200 2,000 ----- 1,300 700 1,000 2,500 San Antonio, TX San Antonio, TX Woodstock, ON Woodstock, ON Lafayette, IN Troup County, GA TMM-Texas TMM-Texas (Addition) TMM-Canada TMM-Canada (Addition) Toyota-Subaru Kia New Capacity Investment ($ million) Employment Location Company
    17. 17. Major automotive investments from 1993-2005 Source: Book of Deals, CAR
    18. 18. U.S. / Canada production by region ACP: Ontario, Michigan, Ohio, Indiana, Illinois, Missouri Non-ACP: Rest of Canada and United States
    19. 19. Automotive manufacturing in the Great Lakes region Automotive Communities Program
    20. 20. Why North:Tool & Die facilities compared to other automotive states Source: 2002 Census Bureau
    21. 21. Why North: Large numbers of mechanical and industrial engineers
    22. 22. Michigan: The Automotive Research & Development Center 65%-75% of Annual U.S. Auto R&D $10.7 billion (2003) 55,000+ jobs
    23. 23. Major automotive investment has an enormous economic and employment impact on the regional economy. Why should we care?
    24. 24. 2003 average annual salary (U.S.)
    25. 25. Typical Assembly Plant 2,000 Jobs .56 Powertrain Plants or 560 Jobs . 56 Stamping Plants or 850 Jobs 3,800 Parts & Component Jobs or a Total of 7,210 Manufacturing Jobs! … and another 7,700 Non-manufacturing jobs for a total of 14,910 jobs. Vehicle assembly is a huge driver of economy
    26. 26. <ul><li>7.5 </li></ul>Approximate National Automotive Manufacturing Multiplier OR: 6.5 additional U.S. Jobs for each Job at a U.S. Motor Vehicle Firm Source: Average of many studies conducted by the Center for Automotive Research, including: Contribution of the U.S. Motor Vehicle to the Economies of the United States, California, New York, and New Jersey , Center for Automotive Research, 2003, Contribution of Toyota to the Economies of Fourteen States and the United States in 2003, Center for Automotive Research 2005 Automotive plant closures (and openings) affect regional economies
    27. 27. Automotive jobs drive all wages up <ul><li>Grant County (Indiana) example — 10 county region: </li></ul><ul><ul><li>A county with significant automotive industry employment (>6%) has higher salaries in all industries. </li></ul></ul><ul><ul><li>On average all jobs in a county will pay between 15% and 18% more than a similar county with low automotive industry employment. </li></ul></ul><ul><ul><li>This is true even in fields unrelated to manufacturing or the automotive industry. </li></ul></ul>
    28. 28. Bottom line <ul><li>Retain and attract automotive investment </li></ul><ul><ul><li>Look to attract suppliers to the new domestics </li></ul></ul><ul><ul><li>Emphasize assets (supplier infrastructure, educational levels, etc.) </li></ul></ul><ul><ul><li>Automotive R&D concentration </li></ul></ul><ul><li>Competition for new sectors — Bio/Nano/Homeland — is fierce </li></ul><ul><ul><li>49 other states want a piece of that pie </li></ul></ul><ul><ul><li>Once a strength, always a strength </li></ul></ul><ul><ul><li>Is Massachusetts attempting to attract auto? </li></ul></ul><ul><li>Highest job impact numbers of any industrial sector </li></ul><ul><ul><li>6.5 jobs nationally for every one job in an assembly plant </li></ul></ul>

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