This article was originally published at EMSI’s US blog in December 2013.
In a global marketplace, industries can go wherever economic conditions are the friendliest — and the larger the industry, the more likely it seems to be to send at least some of its activity abroad. There’s no better example of the globalization of manufacturing than auto manufacturing. While cars have traditionally been made in the established industrial nations, like the U.S. and western Europe, recent economic turmoil has seemed destined to send infrastructure-heavy industries like auto manufacturing to friendlier lands.
For example, The Economist recently highlighted that France’s struggling auto industry was keeping its nose above water by partnering with southeast Asian manufacturers to produce vehicles. And everyone is familiar with the struggles of the American car companies. It’s not hard to assume that similar conditions exist in most countries. But at the same time, other sources — like this take from Forbes — are referring to the “resurgent” U.S. auto industry. Are our perceptions that auto manufacturing is in trouble the result of outdated data still lingering in our minds? We looked into EMSI’s five datasets to see what the current climate for auto manufacturing is like in Canada, France, Brazil, the U.S., and the UK. What we found was an interesting variety of information — and a reminder that with data, context is key.
The Last Years: Holding the Course
Looking at the data for the last three years, it’s easy to see why Forbes would refer to the American auto industry as resurgent. Of the five countries we looked at, the auto industry had the second-highest growth in terms of jobs added — 7.9%, edged out only by Brazil’s 9.2%. And, of course, the U.S. auto industry is bigger than Brazil’s, so while its percentage growth was lower, it added just over 20,000 jobs, roughly twice Brazil’s gain of 10,800.
The UK is also holding steady, with moderate growth. Its 2.3% increase in jobs translates to about 2,000 new jobs. Only Canada and France are truly stagnant; Canada has held almost exactly steady, with a difference of less than 50 between its 2010 and 2012 numbers, while France (as the Economist mentioned) has struggled, losing 3.4%, or 9,800 jobs.
The Bigger Picture: Understanding Historical Context
So, with most nations either steady or growing, why do we continue to think of auto manufacturing as troubled? Changing our historical frame makes it pretty clear; witness this chart of jobs in the same industries over the last decade instead of just the last three years.
Since EMSI’s historic data for Brazil extends only to 2010, the curve for Brazil’s auto industry begins at 2010 and goes up quickly. But look at those other four. Where the first chart showed moderately positive change, adding to the timeframe reveals that those increases are coming only after years of catastrophic decline. From 2004 to 2010, the U.S. auto industry shed a shocking 40% of its jobs, declining from 256,490 to only 152,750.
The situation was, proportionally, almost as catastrophic in Canada, down 29% and 15,000 jobs from 2004 to 2010, and France, which dropped 22% from 2004 to 2010 and has continued to decline more slowly since, losing a total of over 74,000 jobs. To get a sense of how the declining job numbers have affected the different workforces, and get a sense of their relative sizes, we charted the number of jobs in 2004, 2010, and 2012 against each other:
While it may be a result of the fact that we inevitably have to compare industry categories from different classification systems — meaning the criteria for inclusion may not be identical — it’s still surprising to see that France’s auto industry is comparable to that of the U.S. That’s especially interesting considering that France’s population is less than 20% of the U.S.’s. No wonder the survival of its auto industry is seen as essential to its economic health.
And, although we don’t have data on its workforce before 2010, it’s fascinating to see the growth of the auto industry in Brazil, which is now almost as large as that of the U.S. In fact, that’s been one of the leading stories of the global auto industry in the wake of the near-collapse of the U.S. “Big 3” — the arrival of domestic auto production in nations like Brazil and Mexico.
The Importance of Regional Perspective
Brazil’s auto industry is especially interesting considering that the Brazilian economy is heavily concentrated in a few parts of the country’s enormous surface area. But, of course, the geographic concentration of the auto industry has no better example than America’s famous Rust Belt. While the auto industry is always a major part of a nation’s overall economy, its direct effects tend to be felt in a small area.
In Brazil, for example, the auto industry is heavily concentrated in the state of Sao Paolo and its neighbors Parana and Minas Gerais, which account for all but 20,000 of the nation’s 128,000 auto industry jobs. And in the U.S., while other states lost a higher percentage of their workers (Missouri lost a shocking 71%), no state lost nearly as many auto workers as Michigan, which lost over 31,000 from 2004 to 2012. That’s almost half of the nation’s total decline of 83,000. and almost triple the loss of the next-hardest hit state, Michigan’s rust-belt neighbor Ohio, which shed 11,000. Meanwhile, certain other states, especially in the South, have been picking up the slack. Although Michigan and Ohio have seen moderate upticks over the last three years, they’re being outdone by Tennessee (up 27% since 2010), Kentucky (22%), and Illinois (a big 70%).
It’s a similar picture in Canada, where one province — Ontario — has almost all of the nation’s auto industry jobs, and sustained most of the losses as well. And in France, the region of Ile-de-France (home of Paris) has twice many auto industry jobs as any other region, even after also losing 12,000 jobs in the last decade. That’s far more than any other region has lost. The UK is also no exception; its auto industry is heavily concentrated in the West Midlands area, which accounts for 15,000 auto industry jobs and has lost almost half of its auto workforce since 2004.
Again, context is king. Even though the ripple effects of the declining (and rebounding) auto industry have been felt throughout each country’s economy, really understanding what has happened requires looking at specific regions. It also demands that we shortchange neither the importance of recent successes nor the lingering damage of the longer-term struggles they follow. Getting a sense of the economy requires seeing the data from as many perspectives as possible.
Top 3 Regions for Auto Manufacturing: 2010-2012
Source: EMSI 2013.2 Beta (France), EMSI 2013.3 Beta (Canada), EMSI 2013.4 QCEW (USA), EMSI 2013.1 (UK), EMSI 2013.3 Beta (Brazil)
-- Brazil --
State 2010 Jobs 2012 Jobs Change 2010-2012 % Change
Sao Paulo 68,818 73,521 4,703 7%
Minas Gerais 18,147 19,638 1,491 8%
Parana 11,981 13,756 1,775 15%
-- France --
Region 2010 Jobs 2012 Jobs Change 2010-2012 % Change
Ile-de-France 50,142 49,218 (924) (2%)
Nord-Pas-de-Calais 25,831 24,835 (996) (4%)
Rhone-Alpes 22,538 22,553 15 0%
-- UK --
Gov't Office Region 2010 Jobs 2012 Jobs Change 2010-2012 % Change
West Midlands 14,632 15,347 715 5%
North West 9,962 9,540 (422) (4%)
East of England 6,496 6,914 418 6%
-- Canada --
Province 2010 Jobs 2012 Jobs Change 2010-2012 % Change
Ontario 33,091 33,135 44 0%
Quebec 2,797 2,654 (143) (5%)
Manitoba 886 927 41 5%
-- USA --
State 2010 Jobs 2012 Jobs Change 2010-2012 % Change
Michigan 35,239 39,789 4,550 13%
Ohio 18,298 19,686 1,388 8%
Indiana 13,501 14,368 867 6%
Illustration by Mark Beauchamp.