Ohio's Automobile Industry
Ford Motor Company's $12.6 billion loss in 2006, coming on the heels of General Motor's $10.6 billion loss in 2005, leaves little doubt that the domestic automobile industry is indeed going through hard times. Part of the problem is their vehicle mix, but foreign manufacturers' advantages in labor costs and currency values are also factors.
With seven final assembly plants and nearly 400 tier 1 suppliers, Ohio is at the heart of the industry, ranking second only to Michigan in terms of employment in the motor vehicle industry. Ohio employs more than 150,000 in transportation equipment manufacturing (NAICS 336); the industry's share of total employment is more than double that of the U.S.
|Level||% of 336||Level||% of 336|
|Transportation equipment manufacturing||336||150,895||100.0||1,769,833||100.0||2.1|
|Motor vehicle manufacturing||3361||29,702||19.7||249,055||14.1||2.9|
|Motor vehicle body and trailer manufacturing||3362||8,373||5.5||169,845||9.6||1.2|
|Motor vehicle parts manufacturing||3363||94,671||62.7||679,143||38.4||3.4|
|Aerospace product and parts manufacturing||3364||14,889||9.9||453,136||25.6||0.8|
|Railroad rolling stock manufacturing||3365||389||0.3||27,254||1.5||0.3|
|Ship and boat building||3366||816||0.5||151,907||8.6||0.1|
|Other transportation equipment manufacturing||3369||2,054||1.4||39,495||2.2||1.3|
*Note: The location quotient is the simple ratio of an industry's share of employment between two locations.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
What do domestic auto producers' struggles mean for Ohio? To examine this, we'll look at parts and final assembly manufacturers.
About two-thirds of all employment in transportation equipment manufacturing is in parts. Ohio's 400 tier-1 suppliers specialize in metal stamping (22 percent of U.S. employment in the industry), air conditioning (20 percent of U.S. employment), and brakes systems (18 percent of U.S. employment).
During the 1990s, parts suppliers experienced unprecedented growth, as original equipment manufacturers (such as GM, Ford, Toyota, etc.) looked to streamline activities and buy parts from stand-alone suppliers rather than build them in-house. Recently, however, lower production from the Big Three, increased commodity prices, and heightened foreign competition have put pressure on parts suppliers. Locally, suppliers such as Delphi (12,441 jobs in Ohio) and Dana (1,801 jobs in the state) have felt the impact and are currently in Chapter 11 bankruptcy. Delphi plans to close six out of eight Ohio plants.
Nevertheless, the future of parts suppliers in Ohio may be less bleak than it seems. Many parts suppliers are tied to the fate of nearby assembly plants, and Ohio's assembly plants look to be well positioned (more on that later). In addition, Ohio's proximity to plants near its borders, such as Toyota's Georgetown, Ky, plant, enables parts suppliers to open up in Ohio and deliver their products just outside its borders. Indeed, Ohio's proximity to the I-65/I-75 automotive corridor makes it a prime location for auto parts suppliers, as documented in a Chicago Fed Study.
Final Assembly Plants
Ohio is home to seven final assembly plants. Like parts manufacturing, employment in motor vehicle manufacturing has fallen significantly over the past several years - 28 percent in Ohio since 2000. However, some of this decline has resulted from productivity increases. In fact, total motor vehicle production in Ohio has declined only modestly over this time.
Ohio Automotive Assembly Plants
|Plant||Currently producing||Recently produced||Employees|
|Avon Lake||Ford Econoline||Ford Escape, Mercury Mariner, Mercury Villager, Nissan Quest||2,730|
|East Liberty||Honda Civic Sedan/GX, Honda Element, Honda CR-V||Honda Accord||2,500|
|Lordstown||Chevrolet Cobalt, Pontiac Pursuit, Pontiac G4||Chevrolet Cavalier, Pontiac Sunfire||4,233|
|Marysville||Honda Accord, Acura RDX, Acura TL||Acura CL||5,300|
|Moraine||Buick Rainier, Chevrolet TrailBlazer, GMC Envoy, Isuzu Ascender, Saab 9-7X||Oldsmobile Bravada||3,050|
|Toledo (Parkway)**||None||Jeep Wrangler/Unlimited, Jeep Cherokee||0|
|Toledo North||Dodge Nitro, Jeep Liberty||2,969|
|Toledo South***||(Supplier Park) Jeep Wrangler/Unlimited||333|
* Plant closed in December 2005 and production moved to Avon Lake.
** Plant closed in June 2006 and production moved to Toledo South.
*** Plant opened and production started in August 2006.
Sources: Ward's Auto, manufacturers' Web sites.
The state has certainly felt the effects of domestic manufacturers' restructurings. In 2005, Ford consolidated its Lorain and Avon Lake plants; it also plans to close its Maumee stamping plant and its Batavia transmission plant. In addition, some shifts at area assemblers, such as Moraine's third shift, have recently been eliminated.
Nonetheless, Ohio's final assembly plants seem well positioned because of recent investments and their portfolio of models produced. In December 2006, Ford announced that it will invest $60 million in its Avon Lake plant so it can continue producing Econolines. In addition, GM invested more than $500 million several years ago in its Lordstown plant to get ready for the Cobalt, which will be produced through 2009. And although it closed its Toledo Parkway plant, DaimlerChrysler opened the new Toledo Supplier Park nearby. Moreover, Ohio plants produce some of the most popular cars in America, including the Accord, Cobalt, Econoline, Liberty, and Trailblazer.
Ohio Motor Vehicle Production
|Toledo South (Supplier Park)||-||-||-||-||-||40,050|
Source: Ward's Auto.
We should note that model changeovers can have a significant effect on production at the plant level. However, the state's overall motor vehicle production has been surprisingly steady over the last six years, during which Honda was Ohio's biggest producer, followed by GM, DaimlerChrysler, and Ford.
For greater detail on Ohio's motor vehicle industry, see the Ohio Department of Development's full report.