Today’s state of car manufacturing in America

Seeing as though it’s become increasingly easier to drink from the “glass-half-empty” cup, we thought that everyone could use some good news. Surprisingly, that good news is coming from the U.S. car manufacturing industry.

Manufacturing overall in the United States has done better than what many analysts thought the industry would, with polling conducted by news agency Reuters reported that forecasts had the sector growing at 0.6%.  However, as of July 2021, production at auto plants across the country soared by a massive 11.2%.

This means that the green shoots that economists had been hoping for are starting to grow very nicely indeed. That’s excellent news for a state like Missouri, which retains its top ten rating under the most prominent car manufacturing states in America.

So what does this say about local and domestic economic growth overall, and does this mean that regional economies and supplier chains around these industries will also benefit from a stimulated economic activity?

The auto industry and America’s GDP

The automotive industry in the United States is a critical element of economic growth in the country. The sector enjoys complex interconnections across many other industries from suppliers of primary resources, logistics, labor, retail, and more.

More than that, the industry also enjoys something of a cultural place within the greater framework of American society. The pain of GM’s failings after the credit crisis in 2008 was acutely felt by most Americans on an emotional level, as you could just about use the brand and “Detroit” interchangeably.

Success in the motor manufacturing industry means more than just more local jobs in and around plants and subsequently a more significant payday for all of the associated industries that supply and sustain the plants, their workers, and their tertiary suppliers too.  It means something to all of us on a national level.

In the United States, the auto industry is one of the most essential contributors to our GDP. If past reports are anything to go by, the sector contributes between 3 and 3.5 percent of the overall Gross Domestic Product. That’s not nothing.

Economic activity, employment, and car supply

In direct employment terms, there are currently over 1.7 million people employed that support the industry: designers, engineers, manufacturers, and parts suppliers, component manufacturers and suppliers, and more. Moreover, the industry is a massive consumer of goods and services from many other sectors too. These involve the mining and production of raw materials, construction, machinery, financial, advertising, healthcare, legal, information technology, and semiconductors.

When we factor into the soupçon of financial activity, the industry as a whole spends nearly $18 billion each year conducting research and product development campaigns. As much as 99% of all of those costs are funded by the industry.

To really drive the strength and significance of this sector home, it is also a massive consumer of products from other manufacturing sectors with 11.5% of manufacturing contribution straight to GDP. When we consider all of this, it’s hard to imagine the American economy without auto-manufacturing.

Something else to think about is that while we have a significant spike in manufacturing, the price of previously owned cars has increased thanks to a shortage of supply in the United Kingdom.

What does this all mean for Missouri?

From the time St. Louis Gasoline Engine Company built the very first gas engines here in 1897, the auto industry has been crucial to Missouri and Missouri. It was also integral to the overall economy of the United States. Just about one-third of all counties in Missouri have auto industry employment numbers that well exceed the national average.

Ford, General Motors, Smith Electric Vehicle, and Emerald Automotive have all chosen to locate here. Moreover, the numbers are looking good.

According to the Missouri Department of Economic Development:

• The Ford Plant in Claycomo began production as an assembly plant in 1957. In 2011, Ford announced a $1.1 billion investment in the facility. It would allow for adding a second manufacturing line for the F-150 pickup truck in 2012. Ford would bring in a new product, the Transit commercial van, in 2013. The investment did create 1,600 new jobs.
• General Motors’ Wentzville plant produces the Chevy Express and GMC Savana vans. The plant opened in 1983. It has been the Harbour Report North America “Most Productive Full-Size Van Plant” every year since 2003. In September 2011, General Motors announced a $380 million investment into its Wentzville plant. The investment added 1,660 jobs and a new Colorado pickup line.
• Smith Electric Vehicles began production of their Newton electric truck at their new Kansas City assembly facility in October 2009. In addition to being the company headquarters, the Kansas City plant is currently SEV’s only North American plant.
• In July 2011, British company Emerald Automotive would announce plans to build hybrid-electric vans. The decision would add 580 jobs to their new $175 million plant in Hazelwood.

Not out of the woods yet

So, good news all around, but we’re nowhere near out of the woods yet. The pandemic battered the American economy as could be expected. Corporate and bigger conglomerates weathered the storm relatively well and are seeing record growth now. However, the backbone of American rural communities — small to medium-sized businesses — is suffering the most.

But looking ahead, it does seem as if the industry is performing remarkably well under some very trying circumstances. That means that if there’s money to spend on new cars, it can’t all be bad overall. Now, how long this takes to filter through to the rest of the economy remains to be seen, but if there’s some good news around – we’ll certainly take it.

To put it another way, the auto industry as a whole in the United States is worth around $82.6 billion. 

* Being a local Missourian, remember that when you buy your next vehicle in the State, you’re supporting the State in more ways than you might have thought, with dealerships like Hancock County CDJR playing their role in the industry overall, remember to put them on your list.