Study Measures Foreign Car Makers’ Boost to U.S. Jobs


Looking to sway public sentiment and Washington policymakers, foreign auto makers Monday released a study that found their growing U.S. operations support 1.3 million jobs and pump $50 billion into the nation’s economy each year.

The report by the University of Michigan said that the operations of Japanese, South Korean and European manufacturers is the fastest-growing segment of the U.S. auto industry, the nation’s biggest manufacturing sector.

The foreign auto makers accounted for 20% of U.S. auto production in 1996, up from 6.2% a decade ago. Their share should increase as they continue to shift more manufacturing operations to the United States. Since 1994, foreign producers have built more vehicles here than they have imported.

“We are in a world of vanishing boundaries,” said David Cole, executive director of the University of Michigan’s Office for the Study of Automotive Transportation, who oversaw the $250,000 project.


The foreign auto makers commissioned the study as part of a long-running effort to counter charges by the Big Three and their union members that the growth of transplant factories is eliminating U.S. auto jobs.

Attempting to avoid contentious issues, the study did not directly compare most operations of foreign and domestic auto makers. Rather, it focused on the economic contributions of Asian and European manufacturers in this country.

The report is similar but broader than one released by UCLA in late 1996 that found Asian auto makers generate 100,000 jobs and $4.4 billion annually for California’s economy.

The Michigan study did not break out figures for California but noted it was one of 11 states that benefited significantly from foreign auto investment because it has a Toyota plant and a high concentration of foreign-badged dealerships.

The employment and income estimates include workers hired directly in manufacturing plants, corporate headquarters and dealerships as well as spinoff jobs created as a result of those activities.

Nationwide, foreign auto makers employ 68,800 workers in manufacturing plants or white-collar support jobs, the report said. Each of these generates 5.5 jobs in spinoff activities, such as auto suppliers, for a total of 381,000 jobs.

U.S. dealerships of the foreign manufacturers employ 334,000 people and indirectly support 488,000 jobs in such areas as finance and repair, the study said.

The total jobs generated by U.S. operations of foreign auto makers comprise about 1% of private-sector U.S. jobs and account for 1.3% of total compensation, reflecting the auto sector’s higher pay scale.


Since 1982, foreign auto makers have invested $18.2 billion in 10 auto-assembly plants in the United States, while spending $23 billion on U.S.-made auto parts, according to AIAM, the foreign auto makers’ lobbying group.

Taken as a whole, the foreign-owned plants, largely built in the South, are more productive than those of the Big Three. The Michigan study said the foreign assembly plants have a 26% labor-productivity advantage over U.S. factories.