The Big Three have existed in Michigan for over 100 years now. Henry Ford's concept of the assembly line set up the standard that would be used across the nation for decades. The strikes at GM in 1937 led to the formation of the UAW. Chrysler has been innovating cars since 1925. These three companies have had an impact on the nation, but also their workers.
For my generation, it seems like it's only recently that the auto industry has been struggling, though it has been clear to older generations that the promise of a career in the auto industry would easily be broken. In April of 1976, there were 21,000 layoffs from the Big Three in Michigan. The unemployment rate in Michigan was 15.8 percent in 1980, and roughly 30 percent of UAW members were employed. In 1986, GM closed 11 plants and laid off 29,000.
After finding this history, I wondered what made this recession different than others. As of 2007, the automotive industry only received one percent of its research and development funds from the federal government, making them responsible for all new innovations and therefore staying competitive in the increasingly international market.
In Center for Automotive Research report in 2008, researchers found that, “International automaker employment made up 32.0 percent of total automaker employment of 354,599 in 2007. CAR predicts that the international automakers will comprise 39.5 percent of total automaker employment by 2011 and 42.8 percent by 2016.” Competition will only continue to increase.
When the recession hit in 2008, U.S. auto sales took an immediate drop. Fearing bankruptcy in 200, GM and Chrysler sought a $17 million bailout from the government. GM received $9.4 billion and Chrysler $4 billion, but in her quest for the bailout, Gov. Granholm claimed that Michigan auto industry supports "one in ten jobs in the U.S." While the there was a 38.9 percent drop in auto workers between 2005 and 2008, one in ten jobs is a hefty claim.
One in ten jobs would actually equate to 14 million jobs in the U.S. Grahom found this claim in A CAR report in 2003 which has confused many. CAR found that "new vehicle productoiion, sales and other jobs related to the use of automobiles are responsible for one out of every ten jobs in the U.S. economy.” By this, they mean that it affects jobs in transportation, traveling, advertising, etc. Granholm was, however, correct in assuming there would be great affects if more workers were to lose their jobs. CAR predicted that the a 100 percent loss in auto industry workers would result in 2.5 to 3 million jobs lost in the U.S. in 2009. This of course did not happen, but the short term affects would have been devastating to the state.
Between 2005 and 2011, there have been 34 plants shut down in the U.S. between the Big Three. This has lost 38,800 jobs in announced plant shutdowns and 17,000 salaried jobs. The forecasted employment for 2016 is 108,430 jobs.
It has been three years since the bailout and many are questioning whether the bailout even helped. The Detroit News reported in March 2011 that, “ ...GM last year posted its first annual profit, $6.2 billion, since 2004. Chrysler reported an operating profit for 2010 and Ford Motor Co., which didn't get a government handout, reported $6.6 billion in profits.” Because there was no set goal from the bailout, it's still hard to determine whether this is an actual improvement.
CAR estimated that 22, 300 jobs will be added to the auto industry in 2011, with 113,000 spin-off jobs. “It’s not partying like it’s 1999 anymore when we had 320,000 auto manufacturing jobs,” chief economist of CAR Sean McAlinden said. “We’ll never get back there again.”
Profit does not necessarily mean jobs for the auto industry. There was a loss of 3.9 million manufacturing jobs in the U.S. from 2000 to 2008, yet an increase in manufacturing output by 60 percent between 1997 and 2005.
From my research, I concluded that there were three reasons that the automotive industry can no longer be a staple for U.S workers:
- Growing technology
- Lack of government funding
- Lack of public policy