NEW YORK: While America’s automotive production sector is due to break its all-time motorized volume with an anticipated 17 million units, much of the content of these record automotive units will be loaded with foreign component parts. While this expedient reduces the overall cost of manufacturing, it also has reduced the wages of average entry-level auto workers, once among the highest paid in the hey-day of this dominant U.s. industrial sector.
The percentage of U.S. and Canadian content for both domestic and foreign car models, made in the U.S.A., has declined precipitously since 2010, with Mexico’s revitalized industrial sector being the prime beneficiary, pushing China into the import runner-up spot.
Last year, U.S. car imports posted a record $13.8 billion, equivalent to $12,600 of content in every automotive vehicle built in the U.S. That is up from $8.9 billion, and $10,536 per vehicle in 2008, the bottom of the two years encompassing the Great Recession.
While this increased import dependence on America’s Southern neighbor emphasizes the shift from China, it also has left the U.S. with a growing deficit in overall trade in U.S. cars and parts — $168.3 billion in 2013, compared with $156.2 billion in 2014. This has greatly decreased the need for U.S. employment, once the most highly sought-after production sector jobs. In 2014, employment of car parts makers averaged about $37,000, down 36 percent from the year 2000.
With weaker currencies, in relation to a stronger dollar, Mexico, in particular, is taking advantage of its broadened manufacturing sector, and its proximity to the U.S. by replacing not only component parts made in the U.S., but also moving the import epicenter from China. This also makes for shortened shipping periods and smaller inventory needs by car manufacturers.
Since Japan, South Korea and Germany have moved a greater percentage, as well as the total number of its manufacturing facilities to the U.S., those companies and fabricators with the lowest overall costs, have gained overall cost advantages, in addition to closer inter-relationships with dealers, as well as customers.
With the overall United States automotive sector actually surpassing its pre-recession volumes, this combination of domestic and foreign-brand names, concentrated primarily in the U.S. Southeast, has returned the once-embryonic U.S. transportation industry back to its once-unchallenged global leadership position.
Unfortunately, their previous status of employing the highest-paid workers in both union and non-union shops throughout America has now been replaced with this sector facing the reality of imports and fierce jobs competition. Consequently, the U.S. auto industry can no longer boast of its high-level professional jobs position that once made automotive employment at or near the top of the scale.
