9/20/10
Debbie Maranger Menk Project Manager Center for Automo ve Research Ann Arbor, Michigan
The Center for Automo ve Research • An independent non-profit research organiza on • Don’t pick winners or losers • A corporate, public sector, and academic interface • Funded by: • Private companies and organiza ons (contract research) • Public en es (federal, state & local governments), and • Founda ons
2 • Focused on future trends
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What Affects Corporate Revenues Affects Jobs • Annual U.S. sales • Segment shi s • Increased compe on for segment market share • Products built at a plant • Restructuring • Miscellaneous
Over $100 Billion in Losses Since 2000 But we have profits now! U.S. Automo ve Capacity U liza on and Profits 1978 – Q2 2010
Source: Federal Reserve, U.S. DOC/BEA
2 9/20/10
Motor Vehicle & Parts Manufacturing Employment 1999 –May* 2010
50% change
61% change
51% change
46% change
*U.S. Total through Apr. 2010 Source: BLS, U.S. DOL, March 2010
Signs of Auto Sales Recovery in 1st Half 2010 • Posi ve Signs – Full Time Employment Increasing – UI Ini al Claims Decreasing – Retail Sales Rebounding – Wholesale Trade and Inventories Gradually Increasing – Consumer Confidence Index Improved to Summer ‘08 Level – New Vehicle Prices Stabilized and Used Vehicle Prices Jumped To the Highest Since ’03 • Monthly payment of a new car loan might be the same as a good quality used car. – Fleet Sales Returned to Pre-Recession Level
3 9/20/10
Signs of Auto Sales Recovery in 1st Half 2010 • Nega ve Signs – Unemployment Rate Remains High – Private Sector Employment Increasing But Slowly – Lower Than Expected Apr/May Auto Sales Retail Sales Lagging – Weakening Euro and PIGS Debt Crisis – Sluggish Q2 GDP Growth – Stock Market Struggling/Housing Sales Slow
Light Vehicle Sales and Produc on
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The Glory Years - a Plateau! Total U.S. Sales of Light Vehicles: 1992 - 2007
17.0 17.4 17.2 16.8 16.6 16.9 16.9 16.5 16.4 15.6 15.0 14.7 15.1 15.0 13.3 13.9 Millions
Year
Source: Auto News 9
Off A Cliff! Total U.S. Sales of Light Vehicles: 1992 - 2009
17.4 17.2 17.0 16.9 16.8 16.6 16.9 16.5 16.1 15.6 15.0 14.7 15.1 15.0 13.3 13.9 13.2
10.4 Millions
Year Source: Ward’s Automo ve Reports
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Back to Trend? CAR Long-Term US LV Sales Forecast
+ 17 M + 3.2 M
- 6.2 M - 13.5 M
Combined CSM & IHS N.A. Light Vehicle Production History & Forecast: 2007 - 2013
16.0
15.0 15.0 14.8 13.8 14.0 13.0 12.6 12.5 12.0 11.6 11.0 10.0 9.0 8.6 8.0 7.0 Light Vehicle Produc on in Millions 6.0 2007 2008 2009 2010 2011 2012 2013
Source: IHS Global Insight, CSM Worldwide
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But It Will Recover U.S. Vehicle Produc on & Automo ve Employment Forecasts
12,000,000 900,000
10,000,000 800,000 8,000,000
6,000,000 700,000 Produc on
4,000,000 Employment 600,000 2,000,000
0 500,000 2007 2008 2009 2010 2011 2012 Vehicle Produc on 10,485,161 8,455,959 5,574,026 6,957,931 8,039,721 9,129,232 Automo ve Employment 827,900 735,100 561,200 565,700 653,600 742,200
Source: IHS Global Insight; CAR Research
6,665,180 857,322
2,140,628 441,118 (32,1%)
2,987,254 444,864 (44.8%)
630,314 59,372 (9.5%)
1,107,543 202,018 (16.6%)
1,249,397 183,474 (18.8%) Updated 8/04/2010
Source: CAR calcula ons on Data From Automo ve News Percentage Change 14
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Source: Ward’s Automo ve Reports
A Monthly Sales Version
GM Employees Post-9/11 Get America Moving Hired Laid Off Nominal $ per Gallon Gasoline Light Truck Sales SAAR (Millions)
Source: EIA, Ward’s Automo ve, BEA
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Automo ve Industry Investment
Detroit Three Manufacturing Plants St. Tomas Assembly (Ford)
Total U.S. Detroit Three Ingersoll Assembly (GM) Employment (12.31.09): Oakville Assembly (Ford) 177,417 Brampton Assembly Windsor Engine Oshawa Assembly 1 & 2 (GM) Windsor Transmission (GM) Oshawa Metal Center (GM) Cambridge Engine (Toyota) Windsor Assembly Buffalo Stamping Lockport and Rochester Delphi Tonawanda Engine Twin Ci es Assembly Toledo North Assembly Ohio Assembly (Avon Lake) Kenosha Engine Lordstown Assembly Toledo Transmission And Metal Center Cleveland Engine & Cas ng Belvidere Assembly Twinsburg Stamping and Parma Components & Metal Chicago Stamping and Assembly Bal more Transmission Walton Hills Stamping Marion Metal Center Toledo Supplier Park & Toledo Machining Defiance GMPT Foundry Lima Engine Moraine Engine Plant 2 Fairfax Assembly & Stamping Sharonville Transmission Indianapolis Metal Center Bedford Foundry Kansas City Assembly 1 & 2 Fort Wayne Louisville Assembly Assembly Kentucky Truck Assembly Indiana Transmission Plant 1 & 2 Arlington Assembly Kokomo Transmission & Bowling Green Assembly Cas ngs/Kokomo Delphi GM Spring Hill Assembly & Stamping Wentzville Assembly & Stamping Shreveport Stamping & Assembly Spring Hill Engine
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Interna onal Automo ve Manufacturing Plants
Cambridge North & South Woodstock Assembly (Toyota) Assembly (Toyota) Total U.S. Interna onal Muncie Transmission East Liberty Assembly Buffalo Transmission OEMs Employment: Anna Engine (12.31.08) 107,488 Russell’s Point Marysville Assembly Cambridge Engine (Toyota) Transmission Georgetown 1 & 2 Assembly Georgetown Engine Buffalo Transmission Greensburg Assembly Lafaye e Engine Buffalo Transmission Buffalo Engine Lafaye e Assembly Normal Assembly Columbus Engine Volvo Powertrain Princeton East & West Assembly Cha anooga Assembly St. Louis Stamping Troy Cas ng Raleigh Transmission Smyrna Engine Jackson Foundry Mt. Holly Assembly Smyrna & Smyrna Truck Assembly Spartanburg Assembly Greenville Transmission Decherd Engine Long Beach Engine Gainesville Transmission Huntsville Engine Ladson Assembly
Tallapoosa Transmission Tupelo Assembly West Point Assembly West Point Transmission San Antonio Assembly Lincoln Engine Montgomery Assembly Canton Assembly Lincoln Assembly Montgomery Engine Tuscaloosa Assembly 1 & 2
Vehicle Assembly is Huge Driver of Economy
Typical Assembly Plant 2,000 Jobs
.56 Powertrain Plants or .56 Stamping Plants or 450 Jobs 650 Jobs 2,900 Parts & Component Jobs or a Total of 6,000 Manufacturing Jobs!
And another 7,000 Non-manufacturing jobs For a total of 13,000 jobs
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Source: ELM Database
Parts suppliers are top employer in 7 states, top 5 employer in 12 other states Top Employer
Top 5 Employer
(Ranked by Size Compared to Other Industries in State)
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Market Share
Source: CAR Research
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About 25% since 2008, or 2.9 mil. units Millions
Source: Company Restructuring Plans and CAR Research
Too Much Competition? New Market Structure? U.S. Market Share of N.A. Light Vehicle Sales: 2009-2014
2009 2014 2009 2014
19.2 17.0 2.2 2.7
15.7 17.3 2.9 2.6
15.5 16.8 2.5 3.2
9.5 6.4 1.8 1.8
10.9 11.0 1.9 1.3
8.0 8.4 0.5 0.7
4.5 4.3 0.7 0.7
3.6 3.6 0.2 0.3
Source: Ward’s Automotive YTD U.S./CAN/MEX sales through August; CSM Worldwide
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“Ford made more money in the first six months of this year than in the previous five years combined. G.M. is profitable and preparing for one of the biggest public stock offerings in American history. Even Chrysler, the automaker thought least likely to survive the recession, is hiring new workers.”
“Many of the excesses of the past — overproduc on, bloated vehicle lineups, expensive rebates — are gone. All three carmakers have shed workers, plants and brands.”
“Since 2000, the number of Big Three assembly plants in North America has dropped to 40, from 66, according to the consul ng firm Oliver Wyman. In turn, overall capacity has shrunk to about eight million vehicles a year, from 13.7 million.”
“The bankruptcies at G.M. and Chrysler slashed debt, jobs and labor costs, and revised union contracts have brought manufacturing expenses more in line with factories in this country operated by Toyota and other foreign automakers.
!
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Parity: Es mated GM-UAW/Toyota All In per Hour Labor Costs 2010 2. 1st Tier Skilled 3. Toyota- TMMK 4. Toyota TMMK 1. 1st Tier Production Trades Production** Skilled Trades** Wages $29 $33 $28 $30 Premiums 1 2 3 4 PTO 6 6 5 5 Total Wages $36 $41 $32 $39 Active Benefits* 15 15 11 11 FICA etc. 4 4 4 5 Legacy 2 2 0 0 Total $57 $62 $47 $55
Other Bonus 0 0 4 4
Average Hourly Labor $57 $62 $51 $59 Costs Employment Fraction x .77 x .23 x .87 x .13 Wage Components $43.89 $14.26 $44.37 $7.67
Sum of Labor Cost X 1.08 $58.15 Components *Pension, Insurance, Ac ve Health $56.16 **Toyota costs are for 4/07, recommend that total be increased by 8%.
CAR's Comments- February 25, 2009
Recessions and U.S. Automo ve Produc vity
1.2
1.0
0.8
0.6
0.4
Produc vity Index (2000 = 1) 0.2
0.0 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
Automo ve Produc vity Index consists of SIC 3711/3714 and NAICS 3361/3363. 2000 is the base year. Source: BLS, USDOL
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No Significant Difference? Harbour’s Overall Produc vity Es mates: (Strategic Opera ons) 1995-2008
50.0
45.0
40.0
35.0
30.0
25.0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 GM 46.0 44.6 46.5 45.6 43.0 40.5 39.3 36.7 35.2 34.3 33.2 32.4 32.3 31.6 Chrysler 43.0 40.5 45.5 44.3 43.6 44.8 44.3 40.6 37.4 35.9 33.7 32.9 30.4 30.2 Ford 37.9 37.6 34.7 34.8 36.2 39.9 40.9 40.0 38.6 37.0 35.8 35.1 33.9 32.4 Toyota 29.4 29.5 31.8 30.4 31.0 31.1 31.6 32.0 30.0 32.0 29.4 29.9 30.4 32.6
Source: Harbour Reports, 1996-2009
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Reinves ng in the Industry
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Announced U.S. & Canadian Investments: 2010 Almost $6.2 Billion
Program Amount States Products
Malibu, New V8 Engine, 4-Cylinder Ecotec, Tes ng of ba eries, Develop Lean IN, KS, MI, NY, OH, Combus on Engines, V8 Components, General Motors $1.9 billion ONT Precision Blocks for Ecotec, Malibu, Connec ng rods for Ecotec, Fuel Efficient 6- speed Transmissions Develop flexible combus on system for Chrysler $378 million IN, MI minivan pla orm, Transmission, Medium Sized Cars, New 8 speed Transmission Ford Explorer, N.A. Center Advanced Powertrain Technology, Engine Efficiency Ford $1.6 billion IL, MI, OH, ONT Research, HEV and Plug in Hybrid/Lithium ion ba ery, Lithium ion ba ery Packs, 6R140 Transmission for Ford Super Duty Ownership Stake in NUMMI, Camry, Legacy, CA, IN, MS Toyota $281 million and Outback, Corolla
Nissan $1.7 billion TN Leaf Electric Car, Lithium ion ba ery Model S EV, Think City Electric Car, CA, IN, OR Other $316 million Powertrain, Engine R&D
CA, IL, IN, KS, MI, MS, TOTAL $6.2 billion NY, OH, ONT, OR, TN
The US/CAN/ONT Government’s Auto Investment GM DIP: $50 billion DOE Loans: $25 billion GMAC: $20 billion Chrysler DIP: $12 billion TALF: $4.9 billion+ Supplier Assistance: $3.5 billion Cash for Clunkers: $2.9 billion Ba ery Ini a ve (Recovery Act): $2.4 billion Chrysler Finance: $2.0 billion Warranty Coverage: $0.64 billion Training (DOL): $0.01 billion TOTAL: $123.4 billion
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CAR es mates that the government interven on resul ng in successful bankruptcies at Chrysler and General Motors avoided $113.8 billion in addi onal personal income loss, government transfer payments and forgone social security and personal income tax receipts in the first two years, and more in succeeding years.
Department of Energy Advanced Technology Vehicles Manufacturing Loan Program ATVM / Sec on 136 Loans: $8.4 Billion of $25 Billion Awarded
Company Award Project Ford $5.9 Billion Transform factories across Illinois, Kentucky, Michigan, Missouri, and Ohio to produce more fuel efficient models Nissan $1.44 Billion Retool Tennessee factory to (reduced from $1.6 build advanced electric automobiles and build an Billion award) advanced ba ery manufacturing facility Fisker $528 Million Development of two lines of plug-in hybrids
Tesla $465 Million Manufacture electric drive trains and electric vehicles in California
Tenneco $24 Million Development of fuel efficient emission control components
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Recovery Act Awards for Electric Drive Vehicle Ba ery and Component Manufacturing Ini a ve
Amount States Program Companies Awarded Benefi ng Cell, Ba ery and Materials $1.2 billion MI, IN, OR, FL , TN, GA, A123, Dow Kokam, Compact Power, GM, JCI, Manufacturing Facili es PA Enerdel, Sa , Exide/Axion Electric Drive Component $465 million MI, IN, MD, ND, CO GM, Delphi, Allison Trans., Ford, Remy, UQM Manufacturing Facili es Technologies, Magna E-Car Advanced Vehicle Electrifica on $254 million AZ, CA, OR, WA, TN, Nissan/ETEC, Chrysler, SCAQMD, Navistar MI, KY, IN, IL Advanced Ba ery Supplier $235 million NC, SC, NV, NY, IL, OH, Celgard, Toda, Chemetall Foote, Honeywell, Manufacturing Facili es OR, LA, AR, CT BASF, EnerG2, Novolyte, FutureFuel, Pyrotek, H&T Waterbury Advanced Vehicle Electrifica on and $71 million MI, MO GM, Ford, Smith Electric Vehicles Transporta on Sector Electrifica on Advanced Electric Drive Vehicle $39 million MI, WV, SC, IN, CO, WVU, Purdue, Colorado State, MUST, WSU, Educa on Program GA, MO, MA, VA, CA MTU, UM, Na onal Fire Protec on Associa on, Reynolds CC, City College of San Francisco Electric Drive Subcomponent $32 million SC, VT, PA KEMET, SBE, Powerex Manufacturing Facili es Transporta on Sector Electrifica on $22 million OR Cascade Sierra
Advanced Lithium-Ion Ba ery $9.5 million OH TOXCO Recycling Facili es
Sun Valley, Idaho September 20, 2010
Debbie Maranger Menk Project Manager Center for Automotive Research Ann Arbor, Michigan [email protected]
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