Saturday, July 16, 2005

Chasing Canada

Michigan faces challenges with its auto industry

By Associated Press

Comment on this story Send this story to a friend Get Home Delivery

First, the good news.

About half of the world's 150 largest auto suppliers have their North American headquarters in the Detroit area, and the state _ especially southeast Michigan _ has more assembly plants and research and development centers than any other state or province.

The continent's East-North-Central region _ Michigan, Ohio, Indiana, Wisconsin and Illinois _ will continue to make more than one third of all vehicles produced in North America through 2008, compared with Canada's 18.2 percent, according to a forecast from WardsAuto.com, which tracks industry trends.

The bad news _ at least for the Great Lakes region _ is that production continues to slide south, and there's no end in sight. Ward's predicts Alabama, Kentucky, Mississippi and Tennessee will see their combined production climb from 14.8 percent to 18.1 percent in the next few years, while Mexico's grows from 9.6 percent to 10.1 percent.

That's partly because the population is growing faster in the South, and manufacturers want to be close to where they're going to sell the most vehicles, according to a report by Kim Hill and Emilio Brahmst of The Center for Automotive Research in Ann Arbor. The South also has more foreign manufacturers than the North.

"As long as the transplant companies continue to take market share away from the traditional domestic manufacturers, and the population of the southern part of the country keeps growing, the movement of high-paying automotive jobs south is likely to continue," Hill and Brahmst said.

The trend is partly reflected in Michigan's vehicle production figures. Ten years ago, the state made 3.1 million vehicles, according to Ward's. Last year, the number dropped to 2.6 million, and Ward's forecasts it will decline to 2.4 million by 2008.

That decline, in turn, has hurt the state's manufacturing sector.

From 2000, when Michigan began sliding into a recession, to 2004, the state lost 84,500 transportation-equipment jobs _ nearly a fourth of that sector's total, according to the Michigan Economic Development Corp.

Another source, the Federal Reserve Bank of Chicago, said Michigan went from 94,300 motor vehicle assembly jobs in 2000 to 80,000 in 2003, a 15.2 percent decline. Employment in parts manufacturing for the same period fell from 226,200 to 180,100, a drop of 20.4 percent.