U.S. Automotive Industry Employment Trends
Office of Aerospace and Automotive Industries
U.S. Department of Commerce
March 30, 2005
Overview
The decline of domestic auto producers, GM and Ford, has been well documented in the national
media. General Motors lost more than $5.6 billion on its North American automotive operations
in 2005, while Ford dropped $5.5 billion on its North American automotive operations. Their
market shares have been declining for years. GM’s share, 36% in 1990, now stands at 26%.
Ford’s 1990 share, 24%, is now 17%. This situation forced their plants to run below optimal
utilization levels, resulting in decisions by both firms in 2000 to shed several thousand
production line workers. (However, those laid-off before September 2007 receive 95% of their
wages, in accordance with the current and previous UAW union contracts, for up to three years.)
With no immediate end in sight for their shrinking market share, the companies now have
announced plans to close a dozen North American plants and to eliminate an additional 60,000
jobs through layoffs and early retirement buyout offers.
Falling vehicle assembly by these automakers has resulted in declining sales for the thousands of
domestic auto parts companies that derive the majority of their business from them. GM’s and
Ford’s production in the United States has dropped 26 % from its 1999 peak. (Total light vehicle
production is down just 8%.) This, coupled with Detroit’s simultaneous demands for lower
prices from their suppliers – many of whom also are facing higher input costs – has resulted in
more than a dozen bankruptcies by key American auto parts producers, plus the loss of 174,000
jobs in the parts industry.
Total Automotive Industry
According to data from the U.S. Labor Department’s Bureau of Labor and Statistics (BLS), total
automotive employment in the United States increased by 8% from 1991 to 2005 (but by just 4%
since 1990), rising from 1,054,000 workers to 1,098,000. (See chart on following page.)
However, looking only at these end points hides a significant and dramatic downturn that has
decimated the industry since the year 2000. In that year, employment reached a peak of
1,313,600 workers, but the drop from that peak over the ensuing five years to 2005’s le vel
represents a decline of 16%, with a total loss of 215,500 jobs. The two major halves of the
automotive industry – the parts producing companies and the motor vehicle assembly companies
– show different trends over the long-term, but similar declines in recent years.
Thousands of Employees
Total U.S. Automotive Industry Employment (NAICS 3361, 3362, 3363)
is up 4% between 1990 and 2005, but is down 16% since peaking in 2000.
1,350
1,300
1,250
1,200
2nd Order Polynomial Trend Line
1,150
y = -4.1851x2 + 77.504x + 901.19
2
R = 0.8059
1,100
1,050
Source: USDOL/BLS/Current Employment Statistics
1,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Motor Vehicle Industry
The motor vehicle producing companies, including Ford and General Motors, have seen
employment move in a somewhat cyclical fashion during the period from 1990 to 2005, but with
an overall declining trend. In part this is due to productivity gains, sales of vehicle companies’
parts divisions, and declining production (Big 2 production is down 24 % since 2000). In 1990,
total motor vehicle employment stood at 271,400 workers. By 2005, there were only 249,700
workers employed by the industry – a loss of 8% (3% since 1991). However, this hides an even
more dramatic decline from 1995’s peak employment of 294,700.
Thousands of Employees
U.S. Motor Vehicle Assembly Industry Employment (NAICS 3361,)
declined 8% between 1990 and 2005, 15% from 1995 peak, and 14% from 2000.
300
290
280
2nd Order Polynomial Trend Line
270
260
2
y = -0.6192x + 10.067x + 246.22
2
R = 0.7231
250
Source: USDOL/BLS/Current Employment Statistics
240
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
The decline from 1995 to 2005 was a drop of 15 %, with a total job loss of 45,000 workers
(despite some hiring by the new foreign-affiliated producers, see below). Looking to the future,
collectively GM and Ford have announced job cuts of almost 60,000 (30,000 each) North
American workers over the next six years, most of which likely will be in the United States.
Automotive Parts Industry
The automotive parts companies experienced an 8% increase in employment from 1990 to 2005
(12% from 1991), growing from 782,800 to 848,400 workers, at least partly as a result of the
many workers reclassified as parts industry employees when GM, in 1999, and Ford, in 2000,
spun off their in- house auto parts divisions (Delphi and Visteon, respectively). Employment
growth has been tempered both by increasing worker productivity and by decreasing motor
vehicle production by Detroit. There also is evidence that workers in other countries effectively
are replacing U.S. auto parts workers. U.S. auto parts imports increased dramatically between
1991 and 2005, rising 309% in current dollars to $92.2 billion. Like the motor vehicle industry,
the recent employment trend is not good. Since the year 2000, when employment for the sector
peaked at 1,022,200 workers, the parts industry has seen a 17 % decline, a loss of 173,800 jobs.
Thousands of Employees
U.S. Automotive Parts Industry Employment (NAICS 3362, 3363)
gained 8% between 1990 and 2005, but is down 17% from 2000 peak.
1,050
1,000
950
2nd Order Polynomial Trend Line
900
850
2
y = -3.5645x + 67.418x + 655.03
R2 = 0.8193
800
Source: USDOL/BLS/Current Employment Statistics
750
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Foreign-Affiliated Auto Companies
There are now ten foreign-affiliated motor vehicle companies producing vehicles in the United
States. To varying degrees these companies encouraged their traditional supplier firms to co-
locate new facilities in the United States to supply their new operations. There are also new
firms on the horizon, including Kia, with plans to open U.S. plants in the future. However, the
jobs created by these investments have not kept pace with the overall industry decline.
According to industry data and our estimates, the foreign-affiliated assemblers and their
associated parts companies now employ 63,000 U.S. workers. This number has shown a steady
increase (up 52 % since 1995), but is far below the number of jobs already lost by the industry.
thousands of employees
U.S. Employment of All Workers in Foreign-Affiliated Automotive
Assemblers has increased by 52% since 1995
65
60
55
Dip reportedly caused by change in JAMA's methodology
50
45
Source: Japan Automobile Manufacturers Assn and USDOC/OAAI estimates.
2005 data is not yet available, but probably increased by att least 2,000 workers.
40
1995 1996 1997 1998
1999 2000 2001 2002 2003 2004
Conclusion
Employment in the U.S. automotive industry is only slightly healthier than that of most other
domestic industries. BLS data show that total manufacturing employment, less the auto sector,
declined by 21% between 1990 and 2005, and by 18% since 2000. The auto industry gained 4%
between 1990 and 2005, but fell 16% after 2000. Industry employment is headed downward and
is not likely to recover for several years, if ever. Some declines are undoubtedly the result of
improved worker efficiency and productivity, but most losses are the product of the declining
fortunes of America’s two largest motor vehicle producers and the supplier base that relies on
them for business. Foreign-affiliated automotive companies have invested billions of dollars in
new production facilities in the United States and have announced plans for more factories to
come. However, the new jobs they create have, and will provide only partial relief for the severe
impact that the entire U.S. automotive workforce is absorbing. In fact, in the next 6 years, GM
and Ford will lay off nearly as many workers as all the foreign affiliates have hired so far.
Prepared: ITA/MAS/MFG/OAAI/03-30-06

Labels: Auto Part