9/20/10 Debbie Maranger Menk Project Manager Center for Automo2ve Research Ann Arbor, Michigan The Center for Automo3ve Research • An independent non-profit research organiza3on • Don’t pick winners or losers • A corporate, public sector, and academic interface • Funded by: • Private companies and organiza3ons (contract research) • Public en33es (federal, state & local governments), and • Founda3ons 2 • Focused on future trends 1 9/20/10 What Affects Corporate Revenues Affects Jobs • Annual U.S. sales • Segment shiUs • Increased compe33on 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. Automo3ve Capacity U3liza3on 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 • Posi3ve Signs – Full Time Employment Increasing – UI Ini3al 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 • Nega3ve 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 Produc2on 4 9/20/10 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 AutomoLve Reports 5 9/20/10 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 Produc3on in Millions 6.0 2007 2008 2009 2010 2011 2012 2013 Source: IHS Global Insight, CSM Worldwide 6 9/20/10 But It Will Recover U.S. Vehicle Produc2on & Automo2ve Employment Forecasts 12,000,000 900,000 10,000,000 800,000 8,000,000 6,000,000 700,000 Producon 4,000,000 Employment 600,000 2,000,000 0 500,000 2007 2008 2009 2010 2011 2012 Vehicle Produc2on 10,485,161 8,455,959 5,574,026 6,957,931 8,039,721 9,129,232 Automo2ve 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 calculaLons on Data From AutomoLve News Percentage Change 14 7 9/20/10 Source: Ward’s AutomoLve 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 AutomoLve, BEA 8 9/20/10 Automo2ve 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 Ci3es Assembly Toledo North Assembly Ohio Assembly (Avon Lake) Kenosha Engine Lordstown Assembly Toledo Transmission And Metal Center Cleveland Engine & Cas3ng Belvidere Assembly Twinsburg Stamping and Parma Components & Metal Chicago Stamping and Assembly Bal3more 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 Cas3ngs/Kokomo Delphi GM Spring Hill Assembly & Stamping Wentzville Assembly & Stamping Shreveport Stamping & Assembly Spring Hill Engine 9 9/20/10 Interna2onal Automo2ve Manufacturing Plants Cambridge North & South Woodstock Assembly (Toyota) Assembly (Toyota) Total U.S. Interna2onal 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 Lafayee Engine Buffalo Transmission Buffalo Engine Lafayee Assembly Normal Assembly Columbus Engine Volvo Powertrain Princeton East & West Assembly Chaoanooga Assembly St. Louis Stamping Troy Cas3ng 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 10 9/20/10 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) 11 9/20/10 Market Share Source: CAR Research 12 9/20/10 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 13 9/20/10 “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 — overproduc2on, 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 consul3ng 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. ! 14 9/20/10 Parity: Es3mated 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, Ac0ve 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. Automo2ve Produc2vity 1.2 1.0 0.8 0.6 0.4 Produc2vity Index (2000 = 1) 0.2 0.0 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 Automo3ve Produc3vity Index consists of SIC 3711/3714 and NAICS 3361/3363. 2000 is the base year. Source: BLS, USDOL 15 9/20/10 No Significant Difference? Harbour’s Overall Producvity Esmates: (Strategic Opera2ons) 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 31 Reinves2ng in the Industry 16 9/20/10 Announced U.S.