LINDSAY CHAPPELL

The auto boom -- without new jobs

Lindsay Chappell is the Mid-South bureau chief for Automotive News.Lindsay Chappell is the Mid-South bureau chief for Automotive News.
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NASHVILLE -- Bill Strauss has some very good news for the American auto industry. Or he has some very bad news. You can take your pick.

Strauss, a Federal Reserve Board senior economist and economic adviser for 30 years, has spent the past few years examining what's going on in auto manufacturing. He concludes, in a nutshell, that the United States is now sitting pretty.

The big factors that economists pay attention to, and the rest of us tend to glaze over -- wage trends, energy costs, capital costs, worker efficiency and currency values -- are all glowing green with opportunity.

"We're now on the leading edge in global competitiveness," Strauss said recently, as he prepared to travel to Atlanta to share his impressions with the Georgia Automobile Manufacturers Association. "We are better off than we were a decade ago. The auto industry is strong and it's going to get stronger in the next few years."

That's the good news.

The bad news is that "strong auto industry" is no longer synonymous with "jobs." That has become an antiquated notion, Strauss warns.

Auto manufacturing and its multiple arms are now far more efficient than the work was 20 years ago, or 10 years ago, thanks to automation, lean management, more sophisticated supply lines and computerized logistics, and workers simply are no longer needed to the degree they were to supply the market.

He proffers this uncomfortable statistic: Since the lowest point of the 2008-10 economic crash, industry output has increased by 83 percent. But employment has only come back by 23 percent, according to his measurements.

In other words, since the crash of 2009, automotive companies have learned to make do with fewer people. Granted, thousands of people are being hired these days -- but not to the same levels that jobs were eliminated when trouble hit, Strauss forecasts.

The industry is full of examples of this phenomenon, using long-ago comparisons. In the 1960s, the big Bethlehem Steel mill in Chicago employed upwards of 25,000 people. Today, owned by ArcelorMittal, the automotive steel supplier has only about a fifth the number of workers, yet turns out roughly the same volume of product.

That trend is still in progress.

"The common perception is that we can create all those jobs again." Strauss says. "That's not happening. Maybe the one thing we can do is make sure that people who do get jobs in the industry get all the technical training they're going to need."

You can reach Lindsay Chappell at lchappell@crain.com.

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