The Automotive industry is one that has continuously contributed to America’s economy in many ways including large auto manufacturers, the companies that make the parts, and the truckers, trains, and ports that transport goods. Every state in America is an automotive state. According to the American Automotive Policy Council, the long-term success of any American automotive facility, whether an assembly plant or research lab, depends, in part, on how international public policies, including those relating to currency manipulation and automotive safety standards, affect an automaker’s ability to compete internationally.
From research labs and supplier factories to assembly lines and dealership showrooms, the auto industry supports nearly eight million American jobs. In sum, the industry pays $500 billion in annual compensation, and generates $70 billion in personal tax revenue. While FCA US, Ford and General Motors are just three of the sixteen automakers competing in the U.S. market, they employ two-thirds of America’s autoworkers. Why do FCA US, Ford and General Motors contribute so much more to our economy? They conduct the bulk of their engineering, manufacturing, marketing and finance work here, in the United States. One out of three FCA US, Ford and General Motors employees are based in the U.S. Conversely, at Toyota, Honda, Nissan, Hyundai-Kia, BMW, Mercedes and VW (the seven largest foreign automakers), only six in one-hundred employees are based here. That six-fold difference translates into millions of indirect U.S. jobs, and tens of billions of dollars in parts sales, R&D and capital investment each year. 1
As low-skill manufacturing has shifted overseas, the importance of high-skill manufacturing, such as automobile manufacturing, has risen. Likewise, with auto sales rebounding from the financial crisis of 2008 and 2009, the role of automakers in our economy will continue to grow. Industry experts predict FCA US, Ford and General Motors could hire 34,000 new workers over the next four years – those new jobs will support about 300,000 indirect new jobs at auto suppliers and other local businesses that serve FCA U.S., Ford and General Motors plants. The companies themselves currently operate more than 220 assembly plants, manufacturing facilities, research labs, distribution centers and other facilities, located in 32 states, across 115 Congressional districts. Further, their auto-dealer network independently employs 609,000 more Americans.
In total, FCA US, Ford, and General Motors account for more than 66 percent of U.S. auto-industry jobs, while only holding a 45 percent total share in the U.S. auto market. Because the three companies research, produce and manufacture more vehicles in the United States than any of their foreign competitors, they have proportionally more employees than the size of their market share. Compared to their competitors, six times more of their global work force is based in the U.S.2
The Automotive Supply Chain
More than 5,600 auto parts suppliers operate in the U.S. Together, they employ more than 871,000 U.S. workers.3 Approximately two-thirds of every vehicle’s parts content is produced by suppliers. For every worker employed by an automaker, two and a half other workers are employed by parts suppliers. Many supplier jobs are in R&D. In fact, suppliers account for approximately 40 percent of the auto R&D conducted in the U.S. each year.4
Last year, Americans bought more than 17.4 million cars and trucks. Nearly 11.3 million cars and trucks were produced at one of America’s 46 automotive assembly plants. Lined up end-to-end, the cars and trucks assembled in the U.S. would stretch 33,800 miles, enough to extend from the Statue of Liberty to the Golden Gate Bridge eleven and a half times.
Auto suppliers are the biggest reason why every state is an “auto state.” For example, 220 U.S. auto suppliers manufacture parts for hybrid, plug-in hybrid, and electric battery vehicle components. They operate across 23 different states.5 A state that hosts one or more assembly plants can support more than 100 different suppliers. For example, Texas and California host 106 and 160, respectively.
A typical auto plant requires between $1 and $2 billion in start-up capital investment and employs 2,000 to 3,000 workers. Each assembly plant job supports nearly seven other jobs with suppliers and in the surrounding community.6 While plant output varies, a single plant producing 200,000 vehicles each year can contribute nearly $6 billion to America’s gross domestic product. Each vehicle these plants assemble 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 U.S.7 Together, they employ more than 871,000 U.S. workers.
The components in a typical car or truck contain more than 3,000 pounds of iron, steel, rubber, and glass. Because of the size of each vehicle – and the number of vehicles made each year – automakers are also among the largest buyers of those American raw materials.
Designing each of those 15,000 parts and integrating them into a single vehicle is an enormous engineering challenge. Automakers and suppliers spent more than $21 billion on R&D in the U.S. last year – about $1,225 per vehicle sold here.
The National Science Foundation (NSF) estimates U.S. auto industry R&D totaled $13.2 billion in 2012. Since that time, global auto R&D has increased by 9.9 percent each year. Assuming U.S. automotive research matched the global rate, baseline auto research totaled $21.2 billion in 2017. New entrants into the automotive industry (including Apple, Google, Lyft, Tesla, and hundreds of start-ups) represent billions more in auto R&D.
Companies that distribute, market, sell, and service those vehicles employ hundreds of thousands of other U.S. workers. FCA US, Ford, and General Motors alone rely on more than 10,150 dealerships, which employ approximately 609,000 U.S. workers.
FCA US, Ford and General Motors’ National Footprint
For their part, FCA US, Ford, and General Motors operate 226 assembly plants, manufacturing facilities, research labs, distribution centers, and other facilities, directly employing nearly 250,000 U.S. workers. These facilities are located in 32 states across 115 congressional districts. FCA US’s, Ford’s, and General Motors’s 10,150 auto dealerships employ more than 609,000 additional U.S. workers.8
Over the past five years alone, domestic and foreign automakers have announced investments of $59.2 billion in their U.S. assembly, engine and transmission plants, R&D labs, headquarters, administrative offices, and other facilities. FCA US, Ford, and General Motors made more than $34.5 billion of those $59.2 billion (about 58 percent) in investments. Their announced investments in U.S. facilities are five times greater than all Japanese and Korean automakers combined. Together, Toyota, Honda, Nissan, Isuzu, Subaru, Suzuki, Mazda, Mitsubishi, and Hyundai-Kia announced only $7.3 billion during this same five-year period. American automakers’ investments are four times greater than the combined investments of the four major European automakers competing in the U.S. (BMW, Daimler, Volvo, and VW). Together, they invested only $9.1 billion over the past five years.
The auto sector was hit hard by the recession and the resulting credit crunch. As auto sales rebounded, they contributed greatly to the ongoing recovery. Approximately 10 percent of economic growth from the second quarter of 2009 to 2013 was produced by the auto sector.9 U.S. auto sales have increased by 66 percent since the financial crisis (from 10.4 million in 2009 to 17.4 million last year). CAR projects sales will exceed 16.8 million vehicles per year through 2025.10
During that same period, U.S. auto production has more than doubled (from 5.6 million vehicles produced in 2009 to 11.3 million vehicles last year). U.S. auto production is expected to exceed 11.5 million vehicles per year through 2021 and reach 12 million by 2025.
Electric Cars Demand on the Rise
Tesla Increased Car Delivery Productivity by 40 Percent in 2019
Data gathered by LearnBonds.com indicates that American electric car manufacturer Tesla increased car deliveries by 40 percent in 2019 compared to 2018. Tesla delivered a total of 367,200 vehicles worldwide compared to 2018’s 244,920 cars.
In 2019, Tesla had a set a target of delivering between 360,000 to 400,000 cars. The California based firm has recently seen an increase in the demand for its vehicles. In 2017, Elon Musk-led company managed to sell 103,020.
According to the report, “Generally, Tesla sold more cars in 2019 than it did in the previous two years combined.” The increasing demand for Tesla vehicles has been fuelled by the Model 3 Sedan. The least delivery for model three was in 2017 at 1,550 units. In 2018, 63,150 units of model 3 were delivered which account for an increase of 97.5 percent. Interestingly, in the fourth quarter of 2019 alone, Tesla delivered 92,550 Model 3 cars. Currently, Tesla holds 1.1 percent of the U.S. automotive market share which is dominated by General Motors at 16.9 percent.
It is projected that by the end of 2020, Tesla will be delivering at least 500,000 cars annually based on the rising demand for electric cars.11
Automakers and their suppliers are America’s largest manufacturing sector, responsible for percent percent of America’s GDP. No other manufacturing sector generates as many American jobs. They are also America’s largest exporters. In fact, over the past five years, automakers have exported more than $692 billion in vehicles and parts – nearly $50 billion more than the next largest exporter (aerospace). Not only are they America’s largest exporters, they also buy hundreds of billions of dollars worth of American steel, glass, rubber, iron, and semiconductors each year. They are also among America’s largest investors in R&D. The auto sector ranks third out of the forty largest industries, on a global basis, in R&D spending.12
1 CAR analysis (2014).
2 CAR, U.S. Light Vehicle Sales and Production Forecast 2018-2025 (April 2018).
3 CAR, U.S. Light Vehicle Sales and Production Forecast 2018-2025 (April 2018).
4 For a more complete analysis of “job multipliers” see reports from CAR’s Sustainability & Economic Development Strategies group.
5 CAR, Economic Contribution of the Ford Motor Company Michigan Assembly Plant to the Michigan Economy. Hill, Kim, Bernard Swiecki, Deb Menk, Joshua Cregger, and Michael Schultz (March 2013).
6 National Science Board, 2016 Science and Engineering Indicators (February 2016).
8 Motor & Equipment Manufacturers Association, Driving the Future (2017).
9 Motor & Equipment Manufacturers Association, Moving America Forward (2013).
10 CAR, Economic Contribution of the Ford Motor Company Michigan Assembly Plant to the Michigan Economy. Hill, Kim, Bernard Swiecki, Deb Menk, Joshua Cregger, and Michael Schultz (March 2013).
12 2018 “State of the U.S. Automotive Industry – Investment, Innovation, Jobs, Exports, and America’s Economic Competitiveness” by the American Automotive Policy Council