Approximately 600,250 people were employed in the motor vehicle and parts manufacturing industry in May 2018, according to the U.S. Department of Labor. Many worked in firms that produced motor vehicle parts. Others worked in firms that assembled complete motor vehicles and in firms that produced truck trailers, motor homes, travel trailers, campers, and car, truck, and bus bodies.
Detroit remains the headquarters of the major U.S. automobile companies, but many of the manufacturing plants are located throughout the country. The majority of the industry’s employees work in the Great Lakes region, including Michigan, Ohio, and Indiana. In 2018, nearly 29 percent of motor vehicle manufacturing jobs and about 38 percent of motor vehicle parts manufacturing jobs were in Michigan. While aspects of motor-vehicle manufacturing take place in nearly every state in the country, most of the remaining workers are found in California, Kentucky, Alabama, Missouri, and Texas.
The U.S. Department of Labor reports that production workers employed by establishments that manufactured complete motor vehicles earned an average hourly salary of about $24 in 2018, or roughly $50,500 per year. In addition, many companies cover the cost of approved education courses in the industry. The major manufacturers also offer exemplary benefits packages to their employees. Benefits packages vary from business to business. Auto industry employees can expect health insurance and paid vacation from most employers. Other benefits may include dental and eye care, life and disability insurance, and a pension plan. Yearly bonuses or profit sharing can be added to salaries if the business does well.
The automotive industry was particularly hard hit by the economic recession that began in late 2007, with the Big Three auto manufacturers forced to slow production and cut jobs because of decreased consumer spending. This downturn forced two Big Three automakers, General Motors and Chrysler, to file for bankruptcy. In December 2008, U.S. auto sales dropped 37 percent from the previous year. In January 2009, the federal government loaned $24.9 billion of federal economic bailout money to U.S. auto manufacturers to slow any further decline, as many feared that would only lengthen and intensify the severity of the economic recession. In exchange for the loans, auto manufacturers promised to fast-track the development of more energy-efficient vehicles and to streamline their existing model offerings. For example, General Motors announced plans to sell its underperforming Saab, Saturn, and Hummer divisions, bringing its number of models down to 40. Spyker purchased Saab from GM in 2010, but a series of setbacks following the sale led to Saab’s bankruptcy in 2011. After efforts to sell the Saturn brand fell through, GM shut down production of the line in 2009. Hummer met a similar end in 2010.
Following the difficult years of the Great Recession, industry sales enjoyed seven years of unprecedented growth through 2016, according to the Auto Alliance. Following a slight decline in 2017, the industry sold 17.2 million vehicles in 2018. From a sales standpoint, this marked the fourth-best year in the automotive industry's history. Although sales of cars declined 12.8 percent in 2018, to 5.3 million units, truck sales increased 7.7 percent, reaching 11.9 million units. Light truck sales accounted for a record-setting 69.2 percent of the market in 2018.
While unit production had increased, some analysts noted an opposite trend for industry revenue. In July 2019, IBISWorld indicated that U.S. automotive manufacturing revenue totaled $113 billion, which reflected a decline of 3.6 percent over the previous five years. The researcher projected a more than 30 percent decline in automotive manufacturing in 2020 due to the coronavirus pandemic. Profitability in the industry was further hindered by automakers "restructuring away from industry-relevant vehicles."
Research and development (R&D) is one area in which job prospects are expected to remain strong. Major industry players are currently funding billions of dollars each year in R&D and are likely to continue doing so. Fierce competition forces automakers to produce cars packed with new technology, from amenities to safety features, one step above their rivals’ products. One major area of competition is in the development of hybrid electric vehicles (HEVs)—automobiles that combine an electric engine with internal combustion. Hybrids have better fuel economy and create lower pollution emissions than conventional vehicles. Honda and Toyota both have HEVs on the market, and American manufacturers have begun to introduce hybrid systems into their vehicles. R&D jobs will be mostly for engineers and scientists in the industry. Stricter air pollution laws are also spurring R&D to rethink how cars are powered.
Several major developments were unfolding as the industry approached the end of the decade. As SUVs and trucks exploded in popularity, Ford revealed plans to stop producing sedans such as the Fusion and Focus. One exception was the company's Ford Mustang muscle car. In 2018, Ford acquired Michigan Central Station, an 18-story office tower and train station in Detroit's Corktown neighborhood that would become a campus for developing and proving autonomous vehicles. In 2019, Ford and Volkswagen AG agreed to jointly develop medium-sized pickup trucks and commercial vans starting in 2022, and were exploring other potential partnerships focused on electric vehicles, autonomous vehicles, and mobility services. In 2019, General Motors was planning to introduce a ridesharing service powered by autonomous vehicles.
The increased use of digital systems in automobiles, both under the hood and inside the cabin, has also resulted in a higher demand for electrical engineers and technicians. Electronics represents nearly 25 percent of vehicle production costs. Current and future digital/electronic technologies that will affect employment and careers include power train and safety systems, vehicle control systems, driver assistance products, and information and entertainment systems.
The automotive industry is strongly affected by the health of the economy. A 10- to 20-percent change in employment from one year to the next is not unusual. Fuel prices have a major effect on automobile sales, and manufacturers struggle to adapt when prices are high. In general, there is less consumer demand for cars and trucks during economic recession, and manufacturers usually respond by firing or laying off workers.
U.S. automakers were in cost-cutting mode during the late 2010s. Approximately $11.5 billion in marketing, sales, and engineering reductions were planned at Ford between 2019 and 2022. Additionally, in late 2018 General Motors was preparing to eliminate as many as 14,000 jobs around the world and close eight manufacturing facilities, including five in North America, as part of a $6 billion cost-cutting initiative that also included salary reductions for 15 percent of employees in North America.
The automotive manufacturing faced many serious challenges with the 2020 coronavirus pandemic and the resulting economic downturn. These challenges appeared at all levels of the manufacturing process, from limited production of vehicle parts in China to declining worker capital due to illness or social distancing restrictions to a precipitous drop in new vehicle sales. It will take at least several years for the automotive manufacturing industry to rebound to pre-pandemic levels, according to a report by Deloitte. Demand for new vehicles will eventually increase, but consumers, in the meantime, have turned to digital tools for a variety of their everyday purchases, and that may extend to buying vehicles. Automotive manufacturers will be "faced with the task of meeting an evolving set of expectations when it comes to the way in which consumers will engage with the sector." Some auto manufacturing companies have weathered the pandemic fairly well due to stable financial positions. "However, light vehicle manufacturing capacity utilization in the Americas alone is expected to remain below 75 percent through 2027." This could lead to more distressed assets across the manufacturing industry, causing an increase in mergers and acquisitions for consolidation.