By on April 23, 2013

In less than a decade, the number of auto company workers employed by companies other than the Big 3 has risen from 25 to 39 percent. But by 2017 that number could rise to 50 percent.

A report by Automotive News outlines the post-recession rise in American auto manufacturing driven by Asian and European auto makers

Overall, carmaker employment in North America is down by 104,524 jobs since 2005. Yet Asian and European companies added 28,654 jobs during that stretch as they built plants, installed r&d centers and put in other facilities in the United States, Mexico and Canada. Nondomestic automakers have opened seven assembly plants in North America in the eight-year-span, while the Detroit 3 closed 21.

The key growth factor here is not so much the strength of weakness of Detroit, but the desire of auto makers like Honda, Nissan and Volkswagen to localize production in the United States as a means of protecting themselves from currency fluctuations or, in the case of the Japanese auto makers, unforeseen disruptions to their supply chain like the 2011 tsunami. As John Casesa of Guggenhein Partners tells it

“The economic reality of the auto business is that it is most efficient to produce cars in the markets where they are sold, and that is what has drawn all these automakers to the U.S.”

 

 

Get the latest TTAC e-Newsletter!

40 Comments on “Transplants Could Account For Half Of American Auto Production In Five Years...”


  • avatar
    jacob_coulter

    And in 5 years there will still be jackasses telling us that “furrin” car companies are destroying American jobs as they drive off in their Italian-owned Dodge-brand truck that’s made in Mexico.

    • 0 avatar
      Skink

      In addition to focusing on where the production jobs are, we should also look at where the manufacturers are domiciled, and where the profits go.

      • 0 avatar
        mcs

        “we should also look at where the manufacturers are domiciled, and where the profits go”

        I suggest you take a look at the list of the top share holders of Toyota. You’ll find some U.S. addresses on the list. The fact is that investors from all over the globe invest in companies that aren’t domiciled in their own countries. You can’t determine “where the money goes” by looking up the mailing address of the corporate headquarters. It’s not that simple.

      • 0 avatar
        stuki

        Or, in the case of the Detroit ones, where the losses go…… If they were all domiciled overseas, perhaps “we” wouldn’t have to bail them out lest the world would end or something.

  • avatar
    thornmark

    Think about it, the transplants can open new US plants w/o the UAW curse so production flows into the US.

    But the “BIg” Three cannot do w/o UAW labor so they may tend to non-localize production outside the US to average down their US labor costs and, in effect, subsidize overpriced UAW labor while shrinking its overall %.

    So transplants bring employment to the US while the unionized domestics export it.

    • 0 avatar
      jacob_coulter

      Exactly, and the “foreign” car companies will somehow still get blamed for the horrible sin of bringing high-paying jobs to the US and shining a spot light on the inefficiencies of UAW manufactured products.

  • avatar
    APaGttH

    Hooray! We’re becoming the world’s manufacturing hub again largely thanks to wage stagnation and a gutting of pay and benefits compared to Japan, Europe and South Korea. Soon we’ll be the next Brazil, or maybe even Indonesia.

    Yay!!!

    • 0 avatar
      Summicron

      “The economic reality of the auto business is that it is most efficient to produce cars in the markets where they are sold, and that is what has drawn all these automakers to the U.S.”

      Poor little sentence, it’s as well written as all the others but nobody wants to read it.

    • 0 avatar
      DC Bruce

      Last time I checked, (at least in the case of Asia), the wage differential was going away, mostly because of rising compensation in Asian countries, including, now, China.

      US wages vs. Europe or Japan have never compared unfavorably in the last 30 or so years. At best, Paul Volcker’s high interest rate policies in the early 1980s drove up the value of US currency vs. Europe and Japan; but that was temporary and did not have to do with wages.

      The only recent wage-driven manufacturing phenomenon is the practice of making stuff in Mexico, which is both physically close, not subject to any trade barriers and does have cheaper labor. What’s interesting is that VW already builds in Mexico, but has elected to build in the U.S. as well.

    • 0 avatar
      gslippy

      Who told you pay and benefits were being gutted at these transplants – the UAW? I haven’t heard the workers at the transplants complaining.

      • 0 avatar
        APaGttH

        When you build in Bumblescum, Mississippi, the good residents of Bumblescum are happy to have a job.

        At some point, when the guy who puts the car together, can’t afford the car they are putting together, the wheels will metaphorically come off the economic bus.

        That Henry Ford and his silly concept before a union that the guy putting together the car should be able to afford the car, and have some vacation time, and become a homeowner through his hard work.

        Pity the American dream – either that or Henry Ford was the dumbest business man in the history of manufacturing.

        • 0 avatar
          bikegoesbaa

          So, is it your contention that the workers at transplant factories can’t afford the cars that they are building?

          The contents of the employee lots at Marysville, Chattanooga, and Montgomery indicate that they can.

          Of course that’s less the case with the luxury brand transplants, but even Spartanburg vehicles are heavily over-represented with their employees.

          Also not sure what you mean about the stagnation of pay and benefits. The transplant factories typically offer much better of both than any other local employer for people with similar backgrounds and skill sets; and are competitive with new UAW hires. If anything, they are driving *up* the wages and benefits for industrial labor and skilled trades in their area.

          Many industrial employers around Chattanooga, for example, have had to increase their compensation specifically in order to prevent their best people from packing up and going to work for VW.

          • 0 avatar
            sunridge place

            Soon, there will be 500 more of them in that Chattangooga job market so they should be good.

            Strangely, this story wasn’t covered here although a small adjustment of 100 employees for GM in advance technology last summer resulted in a story about ‘GM Eating Their Young’ or something like that.

            http://www.timesfreepress.com/news/2013/apr/19/vw-layoffs-marked-by-surprise-regret/

        • 0 avatar
          gslippy

          I used to design mass spectrometers that cost $300k in 1990 dollars. I couldn’t afford to buy one then, or now. So what?

          Do you think Rolls Royce assemblers drive one to work every day?

          By the way, unionized workers don’t get ahead via their hard work. Working hard won’t help them, but it does help the non-unionized worker.

        • 0 avatar
          toxicroach

          The chaps at Bumblescum make about $50/hour in total pay and benefits. They’re doing quite well. It’s the guys working the UAW line who are making 10/hour.

          You should really check your premise here— the guys who don’t have to deal with the UAW build new jobs. The guys who deal with the UAW do all they can to avoid the UAW. The workers at non-UAW are oddly hard to persuade to unionize.

          Seems like the UAW needs to realign it’s expectations with reality and ask itself what it’s doing wrong.

      • 0 avatar
        golden2husky

        ….Who told you pay and benefits were being gutted at these transplants – the UAW? I haven’t heard the workers at the transplants complaining….

        The transplants are not gutting pay and benefits because if they do, the factory would elect to unionize. When the UAW weakens to the point of irrelevance, you will probably not find gutting of pay, but you can be sure that wages will stagnate. Only the threat of unionization keeps the wage package at the transplants competitive.

        APaGttH: The American dream of yesterday is dying. I believe there are more opportunities to become wealthy today than in the past, but overall the standard of living for most Americans is in decline and will likely continue to decline as the wealth of the country gets redistributed into the hands of the few. Kind of like a replay of the Industrial Revolution except that there will be more fat cats this time around.

        • 0 avatar
          gslippy

          What keeps pay competitive in non-unionized jobs, like engineering?

          • 0 avatar
            benders

            Not all engineers are non-union. Look at Boeing. But you can’t really compare unskilled labor to a professional job that requires a Bachelors degree at minimum.

          • 0 avatar
            Vance Torino

            Um, you really just asked that.

            Try: skill set that takes quite a bit of not so common intelligence plus lengthy and expensive technical training, like university.
            Supply, demand?

            The drops outs of Bumblescum, MIssissippi….
            Promptly apply for disability and rail against guvment!

          • 0 avatar
            golden2husky

            gslippy: I am an electrical engineer. What kept pay competitive at my old employer? Well, back then there was a shortage of good engineers, so pay was pretty good. But the company started hiring all foreign-born young engineers that were willing to work for below market rates. That is, until they gained some skills or learned better and shopped around. The result for us younger Yankees was that our wages stagnated. The company was owned by Israelis, and a few of those with matching pedigree and seniority got the raises and they managed all the foreign engineers. Us Yanks simply moved on because it was obvious that too many forces were stacked against us. I found a new job easily and received a near 40% pay raise and no longer had to travel for the company (on travel money that was all fronted by me; reimbursement was a minimum of 5 weeks wait). All this worked then but now? Not so sure….

          • 0 avatar
            gslippy

            @golden2husky: I’m an ME. While your employer hired cheaper foreign engineers, your portable skill set enabled a move and pay raise.

            My point above is that a generally unskilled auto worker needs the union to artificially bend the wages, benefits, and job security in their favor. Unfortunately, this comes at a cost to the worker in the form of dues, and the transplant workers have repeatedly chosen not to go this route. Somehow, the UAW thinks the transplant workers are suffering.

  • avatar
    sportyaccordy

    Go go gadget quantitative easing!!!! Its a race to the bottom, and we’re winning!!!

  • avatar

    “The economic reality of the auto business is that it is most efficient to produce cars in the markets where they are sold, and that is what has drawn all these automakers to the U.S.”

    I believe that it was Isaac Singer, of Singer sewing machine fame, who realized that manufacturing locally for foreign markets was more profitable than exporting those goods from U.S. factories. Later, Henry Ford would follow Singer’s model.

    Heck, even Rolls Royce assembled cars in the U.S. in Springfield, Mass and over 100 years ago Mercedes cars were built on Long Island.

    Exports can take you only so far, eventually you have to make your goods in local markets.

  • avatar
    mfgreen40

    It is so simple, Detroit just has to build a car that is better than the competition, just as good only might not do it. They have been in the business a long time, they should know how to do it.

    • 0 avatar
      danio3834

      Let’s say they did make a better product. The challenge then would be to convince the buying public that it actually was a better product.

      Simple, right?

      • 0 avatar
        toxicroach

        Simple. Just let them drive it, and keep being good. Not easy. Or fast.

        They can’t complain though. The only reason they didn’t go out of business in the 80s is because of how damn stubborn people are with their car loyalty.

      • 0 avatar
        Lie2me

        Isn’t that what they’re doing now. After years of producing crap and finally losing they’re loyal customer base they have slowly been improving product and car buyers have been slowly returning?

        • 0 avatar
          Summicron

          Well, after 28 years of Japanese car evangelism I’m considering an American car again. But I’ve never completely lost faith because of the American trucks I’ve owned.

          However I know boucoup age and education peers who will never, ever lose their core anti-Americanism to do so. This involves so much more than just vehicle quality, it’s a middle-class Boomer thing and they’re pretty much lost for good.

    • 0 avatar
      highdesertcat

      mfgreen40, I think that is happening. I bought my wife a 2012 Jeep Grand Cherokee, built by the UAW and imported from Detroit, in Nov 2011 and it has been just as good as the 2008 Japan-built Highlander it replaced.

      I was never a Chrysler fan. But I made an exception this time because my wife liked the styling. And so do many other Americans. Along with the 300 the Grand Cherokee is a best-seller for Italian parent company Fiatsler.

      But we have to overlook the fact that all the hard work was done by Daimler on both of those best-sellers since the Grand Cherokee is really a thinly-disguised Mercedes M-class and the 300 rides on E and S-class underpinnings dating from the last century.

      Ford is doing very well in North America. The ONLY American auto maker left standing.

      I believe that bailed-out GM could also shine if they divested themselves from GMC and Buick to focus solely on Chevrolet and Cadillac.

      But as far as transplants go? I’m all for it. They create jobs for Americans, building cars in America. Are they better off without UAW interference? Yes, I do think so!

      So why wait until 2017 to go to 50%? Let’s do it sooner! Let’s build up the South. Let the South rise again! Invest in America, regardless of reasons.

      • 0 avatar
        NMGOM

        highdesertcat – - -

        Good observations.

        You said: “I believe that bailed-out GM could also shine if they divested themselves from GMC and Buick to focus solely on Chevrolet and Cadillac.”

        Agree on removing the duplication of GMC (and going only with Chevy Trucks), but Buick is a bit more complicated. The Chinese love Buicks, and it was Chinese designers that came up with the current generation of them.

        Maybe Buicks could be built and sold only in China, and the US could stick with various models of Cadillac and Chevy? All told, I count 8 types of cars, 4 crossovers/SUV’s, and 5 trucks/vans for Chevy; and 8 cars/wagons, plus 5 crossovers/SUV’s for Cadillac: just US brands/models. That is still a lot of variety to “do right”.

        Someone above (mfgreen40) made the comment that if they did the build the best in each class, that would do it. But that “best” still has to be dispersed over 30 vehicles! That is a huge number, even with GMC and Buick removed….

        I don’t want to lose faith in GM, but it may be too late**: once production of superior German, Japanese, and Korean cars are made here and priced competitively, GM may be reduced to a little vestige of its former self. Perhaps it could make a few Cadillacs, Corvettes, and Chevy Trucks, but is that enough to avoid bankruptcy once again? Just asking…

        —————–
        ** After all, GM did twitter away most of the 80′s and 90′s, and that lost time is difficult to make up.
        —————–

      • 0 avatar
        sunridge place

        From the linked article, looks like the push to 50% will come from growth in Mexico, not the US. Nothing wrong with that, but you shouldn’t be waving your flag chanting USA! USA!.Long live the south!

        VW just laid off 500 at their one US plant. The dropped workers were temps making $12 to $13 per hour striving to be hired on as VW employees making $30k a year.

        VW has to watch the bottom line…they just did by cutting a shift and their temps.

  • avatar
    sunridge place

    The headline and other references should read ‘North American’ not ‘American’ per the linked article.

  • avatar
    Big Al from Oz

    I’ve seen some comments, boy, there are some misguided souls in the good Old US of the A.

    1. Unionists/Socialist (what you Americans refer to as a Socialist) support the worst form of capitalism. Unionist are capitalist, really.

    The only difference between them and a genuine capitalist is the fact that a capitalist is prepared to take a risk and work to advance.

    A unionist wants what a capitalist has without taking any risk.

    2. To the people who complain about ‘foreign companies’ taking money and jobs out of the US. What bullshit. This article supports the fact that while the Big 3 are shedding jobs while the so called foreigners are creating jobs. You need more foreign vehicle manufacturers in the US to create jobs.

    Not only have the UAW destroyed Detroit, their policies towards supporting regulations has made the US less competitive. The US is only becoming more competitive because your dollar is reducing in value against all the countries that have money buy your exports.

    3. Read the link below and you can see how ‘foreign’ companies like Apple and Google don’t pay taxes in Australia and reap big bucks.

    From what it appears the US companies aren’t any better, unless it’s different rules for the US to the rest of the world.

    Before anyone bitches clean your own home first. Then realise we live in a global economy, not an American economy.

    The US can make it, but it doesn’t have the influence economically it had 40 years ago, it’s dwindling.

    smh.com.au/business/how-savvy-multinationals-curb-their-tax-bills-20121116-29hhm.html

    • 0 avatar
      NMGOM

      Big Al from Oz – - –

      You said: “….you Americans….”

      Just curious: what country are you commenting from?

      —————-

    • 0 avatar
      hubcap

      “3. Read the link below and you can see how ‘foreign’ companies like Apple and Google don’t pay taxes in Australia and reap big bucks.”

      You sound as if you’re saying Australian multinationals wouldn’t do everything within their power to lower what goes out and maximize what comes in. Most if not all companies, especially global powerhouses with teams of lawyers and accountants, will go through great lengths to put and keep the largest numbers in black ink.

      You’re not daft so I don’t know why you’d elude that only U.S. companies exhibit this behavior when you know that’s not true.

      The article you included is one part of a multifaceted issue. The Australian government(as are others) is experiencing a shortfall due to global economic circumstances. They need revenue targets and certain companies have gigantic bull’s-eyes on their backs.

      • 0 avatar
        Big Al from Oz

        @hubcap
        Did I state that? It doesn’t make it correct to avoid paying your fair share of tax. I would bet Australian companies are also doing it.

        By the sounds of it, your logic idicates that if someone hits their thumb with a hammer you would also do it?

        I’m commenting on the fear that alot of Americans have toward the globe, outside of the US. It seems per capita there are more fearful Americans that blame the world for it woes than in other countries.

        What is the US doing right now to maintain itself? Its devaluing its currency, like the Eurozone, Japan. It seems the most heavily subsidised economies globally are the one suffereing. Doesn’t that tell you something.

        America isn’t targeted by ‘outsiders’, that impression I’m getting. Fear of the unknown.

  • avatar
    threeer

    Being a car-nut and a very patriotic American (perhaps over the top sometimes, but I won’t apologize for that), this topic is one that is near and dear to my heart. I truly…truly, want to support American companies, employing American workers, assembling cars in America made from parts also made in America. Problem is, a large majority of cars that I am interested in don’t fit (with perhaps the exception being the Jeep Wrangler…and even that now has some “Italian” connection to it). The arguement about “where the profits go” gets hard to stand behind when you consider the amount of money that goes to a local economy when a Hyundai or BMW decides to park a manufacturing facility in your hometown. Which benefits the most Americans? The profit, or the taxes and paychecks to the local community? If looking small cars, if I buy the Ford Fiesta (an “American” company) is that supporting Americans more, even though the car is assembled in Mexico? I absolutely love the Fiat Abarth…does it help the American economy (Michigan) because the engine is built here, thought the car is also assembled in Mexico (and in the Fiat’s case…if Fiat is healthy and profitable, doesn’t that also help Chrysler?)? Don’t even get started on cars like the Toyota Camry and Avalon and Honda Accord. By parts content and assembly, they are more “American” than most of the American nameplated cars on the road. Heck, the new Buick Encore is 50% Korean and 18% Chinese…hardly American at all.

    Bottom line, trying to take a stand to “Buy American to support our citizens” isn’t easy or black and white. In the end, it would be wonderful if American car companies built world-class cars right here in America that not only were competitive, but measurably better than their “foreign” competitors. That would make the argument much easier to substantiate and support. Meanwhile, I can’t decide between the Wrangler and the Abarth when I come back from my overseas assignment…

  • avatar
    Dave M.

    I always look at which vehicle best fits my needs. All things similar or equal, then I prefer to support the home team, meaning made in US. Preferably non-UAW.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • J & J Sutherland, Canada
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India