The U.S. motor vehicle manufacturing industry employs about 1 millions workers, or about 7.5% of the entire U.S. manufacturing workforce, including those who work in manufacturing parts and bodies, as well as those who assemble motor vehicles. Since 2000, the industry has eliminated about 300,000 manufacturing jobs, but the employment level is still almost as high as in 1990. By comparison, manufacturing in general has suffered a much higher rate of job loss.
The Detroit-based U.S.-owned manufacturers (General Motors, Ford, and Chrysler, collectively known as the “Big Three”), all of which are organized by the United Auto Workers union (UAW), have cut back domestic production by 3 million units since 2000, accounting for all the net employment losses. The shift in consumer preferences from trucks and SUVs to smaller vehicles has accelerated a loss of market share by the Big Three producers and gains for foreign-owned domestic manufacturers and imports. Big Three employment losses were partially offset by new investments by foreign-owned manufacturers in the United States. Today, companies owned by foreign investors produce 28% of all U.S.-made light motor vehicles, up from 11% in 1990.
The patterns of job loss and creation have not been evenly distributed around the country. Forty-four percent of all persons in the industry work in a “heartland auto belt” of three states, Michigan, Ohio, and Indiana, each of which has more than 100,000 persons in the industry. Michigan alone has accounted for more than a third of the net job loss in the industry since 2000. Losses in Ohio and Indiana have been less severe, offset somewhat by foreign investment. Alabama has been the big recent job gainer, adding 15,000 jobs since 2000. Tennessee and Kentucky, now the fourth and fifth largest producing states, have added the most jobs since 1990, and South Carolina has also seen a big net gain. These jobs, mostly non-union, have stretched the “auto belt” more to the South.
New fuel economy standards for automobiles and light trucks, as approved by Congress and signed into law (P.L. 110-140), may encourage greater development of small, fuel efficient cars, but the number of such U.S. plants, even for foreign-owned companies, has declined in recent years. S. 2191, approved at committee level in the Senate in December 2007, would use funds from the auction of emission allowances to support domestic manufacture of fuel-efficient vehicles and components. Congress may also consider the proposed Korea-U.S. Free Trade Agreement, which addresses the current imbalance in automotive trade. The Employee Free Choice Act (H.R. 800), approved by the House, but on which a cloture vote failed in the Senate, could help the UAW organize foreign-owned companies.
In seeking to improve the competitiveness of Big Three assembly operations against both non-union domestic producers and imports, the UAW and the Big Three in 2007 negotiated new contract bargaining agreements. The deals addressed health care costs, wage levels, and other issues.