Fuel Efficiency Is Powering Job Growth In The U.S. Automotive Sector

by Roland Hwang, via NRDC’s Switchboard

A review of the latest government jobs data reveals an indisputable fact: the U.S. auto industry is making a remarkable recovery. While not the only reason as our new report demonstrates, there is also little doubt that higher fuel efficiency is playing a critical role in the auto industry’s revitalization.

Since June 2009, when the auto industry hit bottom, the U.S. auto industry has grown by 236,600 jobs.  Manufacturing of motor vehicles and parts has grown by 165,100 jobs, or 26.4 percent, easily outpacing the recovery of the economy as a whole (see Chart 1 below).  Recovery is so strong in three largest auto states, Michigan, Ohio, and Indiana, that auto jobs directly accounts for an astounding 38 percent of the total jobs added in those states, or 66,300 jobs, since the auto industry hit bottom in June 2009 (see Chart 2 below).

Vehicle sales are up greatly year-over-year (see chart 3 below), and it is sales of fuel efficient vehicles that are driving overall sales growth as consumers rank fuel efficiency as their top priority in seeking a new vehicle.  In fact, the first half of 2012 set an all-time fuel efficiency record for new passenger vehicles sold in the U.S. at 23.8 mpg (see chart 4 below).

But unlike other periods of high fuel prices, consumers aren’t forced to purchase smaller vehicles to get higher fuel economy. Mainstream passenger sedans are getting to be more efficient than ever before as automakers compete to claim the “most efficient” title for that segment, and consumers and autoworkers win every time.

The fuel economy imperative is powering investments and job growth in the three largest auto states, Michigan, Ohio, and Indiana (see chart 4 below).  As mentioned above, 66,300 jobs have been added since the auto industry hit bottom in June 2009.

Automakers and suppliers are adding shifts to keep up with demand for the popular Chevy Cruze in Ohio and gearing up to build hot-selling hybrids in Indiana. Meanwhile, Michiganders are building Chevy Volts and Sonics while the state becomes a hotbed of electric vehicle and battery technology innovation.

In addition, there are many more indirect jobs the industry also supports that are creating opportunities for workers, companies and communities. Auto industry economists estimate that there are about four additional jobs created for each auto manufacturing job added, a calculation that is well-dramatized by a Bloomberg News report about how building the new fuel-efficient Dodge Dart is revitalizing a city in Illinois. When first, second and third shifts are added to produce vehicles or parts at a manufacturing plant, the benefits reverberate throughout the local community in jobs, local tax revenues, and indirect economic activity.

The Obama Administration’s new National Program, to be released as early as next week, sets carbon pollution fuel efficiency standards for automakers to reach the equivalent of 54.5 mpg by 2025. Broadly supported by the auto industry, environmentalists, and other stakeholders, the National Program provides the regulatory certainty automakers and their suppliers need in order to make investments toward the even greater fuel efficiency necessary for the U.S. auto industry to be globally competitive.

The dividends from the investments to meet the first round of 2012 to 206 standards are already being seen in the form of jobs created, factories reopened and expanded, and communities reinvigorated. I invite you to read our latest report, “How Fuel Efficiency is Driving Growth in the U.S. Auto Industry” to find out more and visit our website for the latest data and stories.

CHART 1: 236,600 Auto Jobs Added Since June 2009

CHART 2: Auto Job Growth Strongest in Michigan, Ohio and Indiana

CHART 3: Auto Sales On the Rise

CHART 4: First Half of 2012 Sets U.S. Fuel Efficiency Record

Roland Hwang is the Transportation Program Director for NRDC’s energy program. This piece was originally published at the National Resources Defense Council’s Switchboard blog and was reprinted with permission.

4 Responses to Fuel Efficiency Is Powering Job Growth In The U.S. Automotive Sector

  1. Tami Kennedy says:

    Placing a value on $4.00 a gallon gasoline. That value should not continue to support subsidized profits for the oil industry.

  2. Paul Klinkman says:

    As I remember, the Hummer had to be pried from GM’s cold, dead hands. The government had to wait until GM knew exactly how many days the company had until bankruptcy. The government got something like 98% of the common stock. Then the government had to fire the old company’s head honcho.

    Good to see the new leadership understanding profitability.

  3. A.J. says:

    I take the good news where I can get it, but sales-weighted fuel economy would seem subject to substantial variability depending on economic conditions and fuel prices. Today, some people are also going from fat SUVs to sedans, and that can be quite an improvement, included in those figures. The question is whether the trend will last, and accelerate as it needs to (including for the city fuel economy that seems to have improved more modestly among popular sedans). We’ll certainly see some improvement over the next decade or so, but whether it’ll meet the administration’s goals after the mid-course review remains to be seen.

  4. Gerald Einem says:

    My wife and I turned in our Lexus for a more fuel efficient GM Chevy Cruse Eco.We’re saveing money and fuel. Besides the Cruze is assembled in Ohio a swing state with above average employment mumbers.We can make a difference!