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Career Handbook - Motor Vehicle and Parts Manufacturing Introduction
Motor Vehicle and Parts Manufacturing
Introduction

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Introduction

Key Points of Interest:
  • Nearly a quarter of all the industry's jobs are located in Michigan.
  • Average earnings are very high compared with those in other industries.
  • Employment is highly sensitive to cyclical swings in the economy.
  • Employment is expected to grow in firms that manufacture motor vehicle parts, bodies, and trailers, but to decline in firms that make complete vehicles.

The motor vehicle is an intricate series of systems, subsystems, and components assembled into a final product. Each manufactured part or component is integrated into the vehicle—none is developed to exist separately. Vehicles are constantly changing as new technology or reengineered components are incorporated, and as new and updated models are designed in response to changing consumer preferences. Motor vehicle and parts manufacturers must continually evolve to maximize efficiency and maintain continuing streams of commercially viable products in a highly competitive market.

Motor vehicles—passenger cars, sport utility vehicles, pickup trucks and vans, heavy-duty trucks, buses, and other special purpose motor vehicles ranging from limousines to garbage trucks—play a central role in our society. Most U.S. residents rely on them daily to travel to work or school, shop, or visit family and friends. Businesses depend on motor vehicles to transport people and goods. The United States is the world's largest marketplace for motor vehicles due to the size and affluence of its population. According to the U.S. Department of Transportation, more than 230 million motor vehicles—nearly 138 million automobiles, 92 million trucks, and 750,000 buses—were registered in the United States in 2001. The number of light trucks has shown especially steady growth since the mid- to late 1980s.

The vehicles we drive are only a small part of the story in motor vehicle and parts manufacturing. In 2002, about 9,600 establishments manufactured motor vehicles and parts; these ranged from small parts plants with only a few workers to huge assembly plants that employ thousands. Table 1 shows that about 7 out of 10 establishments in the industry manufactured motor vehicle parts—including electrical and electronic equipment, gasoline engines and parts, brake systems, seating and interior trim, steering and suspension components, transmission and power train parts, air-conditioners, and motor vehicle stampings, such as fenders, tops, body parts, trim, and molding. Manufacturing parts requires less assembly, and the establishments that manufacture only parts are not as vertically integrated as those that make complete vehicles. Other establishments specialized in manufacturing truck trailers, motor homes, travel trailers, campers, and car, truck, and bus bodies placed on separately purchased chassis.
 

Table 1. Percent distribution of establishments in motor vehicle and parts manufacturing by detailed industry sector, 2002
Industry sector Establishments
   
Total 100.0
   
Motor vehicle parts manufacturing 70.1
Motor vehicle body and trailer manufacturing 24.9
Motor vehicle manufacturing 4.9

The motor vehicle and parts manufacturing industry in the United States has become increasingly integrated into the international economy. In fact, "domestic" vehicles often are produced using the components, manufacturing plants, and distribution methods of other nations around the world, as U.S. and foreign manufacturers of motor vehicles benefit from competitive cooperation in the design, production, and distribution of vehicles and parts. Collaboration in manufacturing practices has dramatically increased productivity and improved efficiency. These cooperative practices have also resulted in manufacturers from the United States, Europe, and the Pacific Rim locating production plants in the countries in which they plan to sell their vehicles, to reduce distribution time and costs. Foreign motor vehicle and parts makers with production sites in the United States are known as "transplants," and account for a growing share of U.S. production and employment.

Globalization of the industry has boosted competition among U.S. motor vehicle manufacturers, prompting innovations in product design and in the manufacturing process. One result of these product innovations is a proliferation of rapidly designed and produced new models aimed at niches in the market. Firms also must be fast and flexible in implementing new production techniques. Smaller production runs and mass customization result from attempts to reduce waste in the production cycle, develop more adaptive production facilities, and allow customer demand to drive changes in design and marketing. Customer-driven markets force manufacturers to replace traditional assembly lines with modern systems using computers, robots, and interchangeable workers and tools. Customized plants put resources in the right place at the right time, allowing manufacturers to change production inputs quickly and accurately.

Competition has led manufacturers to adopt innovative approaches to research and development, often in response to evolving consumer and regulatory demands. For example, demand for vehicles that can run on alternative fuels derived from batteries or solar power will put pressure on manufacturers to develop a great deal of new technology, a challenge that likely will necessitate cooperation among both domestic and foreign manufacturers.

Motor vehicle and parts manufacturers have a major influence on other industries in the economy. They are major consumers of steel, rubber, plastics, glass, and other basic materials, thus creating jobs in industries that produce those materials. The production of motor vehicles also spurs employment growth in other industries, including automobile and other motor vehicle dealers, automotive repair and maintenance shops, gasoline stations, highway construction companies, and automotive parts, accessories, and tire stores.
 


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Data Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2004-05 Edition