Auto Industry Isn’t Worthy of Celebration…Yet

Last week President Obama was in Detroit to rally enthusiasm and spur economic growth.

Three years after the auto industry was on the brink of devastation and the city was nearing the brink of no return, there is a broad consensus that the auto bailouts worked.

It’s true that not only are General Motors and Chrysler still in business, they paid back their loans ahead of schedule. They also have added shifts at manufacturing plants and are turning profits.

The industry employs 1.7 million people and supports an additional 6.3 million private-sector jobs. It generates about $500 billion every year in income and another $70 billion in personal income taxes.

Orders for autos and auto parts increased 11.5 percent in July, the best showing in eight years, according to Commerce Department data.

And, according to a new report from Urban Science, a Detroit-based retail consultant, the number of U.S. car dealerships increased this year for the first time in a decade.

All good news.

But what no one is talking about is employment in manufacturing and assembly are down considerably from 1990, 2000, and even 2007. Considerably.

The U.S. Bureau of Labor Statistics shows a 87 percent decrease in assembly jobs in the past 11 years. And an 83 percent decrease in manufacturing jobs.

To add salt to the wound, the numbers are down 43 and 41 percent, respectively, in the past four years.

So why are we celebrating instead of focusing on the fact that there is a 9.2 percent unemployment rate and our industry is nowhere near where it was even four years ago?

If we could get back to 2007 numbers, we’d have 2.5 million employed people in the public-sector and 9.1 million in the private-sector. This would generate $715 billion every year in income and another $100 billion in personal income taxes.

THAT would be worth celebrating.


  1. [...] we discussed last week, it was only five years ago that the domestic market had more than 16 million sales each [...]