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October 2007, Vol. 130, No. 10
The rise and decline of auto parts manufacturing in the Midwest
Benjamin Collins, Thomas McDonald, and Jay A. Mousa
The Midwest region has a long reputation as a hub for the automobile industry in the United States.1 Although the "Big Three" (General Motors, Ford, and Chrysler) of the auto manufacturing sector garner a great deal of media attention, employment in the complementary auto parts manufacturing sector is roughly three times as large.2
The Midwest is the clear leader in the auto parts manufacturing industry, with more than half of the Nation’s auto parts workers employed in the five States (Ohio, Michigan, Indiana, Illinois, and Wisconsin) of the region.3 The region also has the industry’s highest wages: since 1992, Midwest auto parts producers’ average weekly wages have been at least 30 percent higher than those of their non-Midwest counterparts.4 The country’s three States with the largest number of auto parts production jobs—Michigan, Ohio, and Indiana—are also located in the Midwest.
Between 1992 and 2006, the Midwest’s auto parts manufacturing industry lost more than 52,200 jobs, or 12.7 percent, of its employment.5 This loss was not the result of an ongoing decline; rather it was the sum of three distinct periods. During the first period, 1992 to 1995, both employment and wages experienced a healthy expansion, growing faster than total employment in the private sector, both in the Midwest and nationally.6 The second period, from 1995 to 2000, was largely flat, with the industry experiencing modest employment and wage growth at a pace below that of the Nation as a whole. The third period, 2000 to 2006, represented an unabated decline for the industry in the Midwest, with both employment and wages suffering steep declines, erasing the gains from the previous two periods. (See chart 1.)
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1 For the purposes of this article "Midwest region" is the East North Central Division as specified by the U.S. Census Bureau: Ohio, Michigan, Indiana, Illinois, and Wisconsin. The geographic areas referred to as "regions" in this article are defined as "divisions" by the Census Bureau.
2 The auto manufacturing sector is classified in the North American Industry Classification System (NAICS) as 3361; auto parts manufacturing is classified as NAICS 3363.
For an example of a media account, see "Behind Ford’s Scary $12.7 billion loss," Fortune Magazine, January 26, 2007. On the Internet at http://money.cnn.com/2007/01/26/news/companies/pluggedin_taylor_ford.fortune/index.htm (visited May 8, 2007).
The 3 to 1 ratio held true throughout the study period of this article. According to the BLS Quarterly Census of Employment and Wages (QCEW), in 1992, there were 130,446 auto manufacturing jobs and 414,474 auto parts manufacturing jobs. In 2006, there were 108,316 auto manufacturing jobs in the Midwest and 360,267 auto parts jobs.
3 The "more than half" statement held true throughout the study, with 59 percent of the Nation’s auto parts producers in the Midwest in 1992 and 54 percent in 2006.
4 "Non-Midwest" or "outside of the Midwest" refers to the 45 non-Midwest States and the District of Columbia.
5 1992 was chosen as the beginning year for the study because of the availability of industry-specific data.
6 Total private employment in this article refers to covered employment from the QCEW program, excluding government employment.
Related BLS programs
Quarterly Census of Employment and Wages
Auto industry jobs in the 1980's: a decade of transition.—Feb. 1992.
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