By Robert R. Ebert, Ph. D.
Buckhorn Professor of Economics
June 2004
The health of the economy statewide and in Northeast Ohio remains dependent to a significant degree on a strong and healthy motor vehicle industry. Manufacturing still accounts for almost one-fifth of Ohio employment, and the auto/truck segment is a key component. The estimated statewide payroll in motor vehicle, parts and related industries is almost $6.8 billion.
This article addresses two fundamental questions related to the Ohio and Northeast Ohio economies. First: is Ohio important to the motor vehicle industry? Second: is the motor vehicle industry important to Ohio?
Motor Vehicle Output in Ohio
Table 1 shows that Ohio built almost 15% of the light cars and trucks manufactured in the United States in 2002 (the last year for which complete, comparable data are available). That ranks Ohio as number two in the country for overall motor vehicle production. Michigan, with 1.8 million autos and 1.1 million light trucks is first in cars and first overall but second to Missouri in truck production (Missouri built 1.3 million trucks in 2002). Ohio is third in truck production behind Missouri and Michigan, and second to Michigan in auto output (Ward’s 2003).
The relative position of Ohio as a manufacturer of motor vehicles has slipped moderately during the past decade. Figures 1 and 2 show that there was not a significant change in motor vehicle output in Ohio from 1994 to 2002. The state’s share of auto output increased as all car output declined in the U.S. in that period from 6.6 million units in 1994 to 5.0 million units in 2002. U.S. light truck output, however, increased substantially over that time span from 5.6 million in 1994 to 7.3 million in 2002 while Ohio output of light trucks declined. Nevertheless, as the number two state in motor vehicle production with 15% of U.S. output, Ohio must be considered a powerful player in the industry.
Cars, Trucks and the Ohio Economy
In 2001, the last year for which Census Bureau data are available, there were 4.9 million persons employed in the State of Ohio. Of those, 19%, or 936,161, were employed in manufacturing. An estimated 142,594 persons were employed in various aspects of motor vehicle and related equipment and parts manufacturing or nearly 3% of the total state employment and over 15% of manufacturing employment. The relative importance of motor vehicle and parts manufacturing to Ohio is about twice that for the U.S. as a whole where 7.4% of manufacturing employment is related to car and truck production (Ward’s 2003, 71-72).
Table 2 summarizes employment and payrolls in several key North American Industry Classification System (NAICS) four-digit codes for the Ohio motor industry. For NAICS code 3361 (Motor Vehicle Manufacturing), the Census Bureau withheld payroll data. However, an estimate of payrolls in that category, extrapolated from the average per worker pay (which includes all compensation) in NAICS code 3363 in Table 2, is almost $1.6 billion. Therefore a rough estimate of the payroll in Ohio for industries related to motor vehicle and parts manufacturing would be almost $6.8 billion.
Table 3 (page 4) gives location and employment data for plants in Ohio operated by six major vehicle producers in the state, DaimlerChrysler, Ford, General Motors, Honda, Navistar, and PACCAR (Kenworth Truck). These six firms employ a total of 53,800 persons in 29 plant locations in Ohio.
The Motor Vehicle Industry in Northeast Ohio
The plants operated by the principal vehicle manufacturers in the ten-county region of Northeast Ohio are denoted in Table 3 with asterisks. A total of nearly 20,000 persons are employed in the region by DaimlerChrysler, Ford, and General Motors alone. That number does not include persons working for independent parts suppliers and Delphi-Packard in Warren (which employs an estimated 4,000 persons) (Detroit News). Census Bureau reporting in County Business Patterns sometimes only gives employment estimates in broad numerical categories for Northeast Ohio. (No motor vehicle or parts manufacturing establishments were indicated for Geauga and Mahoning counties.)
Motor vehicle assembly in Northeast Ohio is concentrated in two counties – Lorain and Trumbull. Ford Motor Company has the Lorain Assembly Plant which produces the Ford Club Wagon and Econoline full-sized vans and the Ohio Assembly Plant in Avon Lake which assembles the Ford Escape (Ford Media). The General Motors Lordstown Assembly Plant whose principal products are the Chevrolet Cavalier and Pontiac Sunfire is located in Trumbull County. The remainder of the major auto firms’ plants in Northeast Ohio manufacture parts ranging from engines to metal stampings.
Trends
Figure 1 shows the trend in car, truck, and total motor vehicle production in Ohio since 1994. Over that period of time there has been remarkably little overall fluctuation in total motor vehicle output in the state. The only notable statistical variation is in trucks which saw a decline of almost 6% in the 1994 to 1998 period. The relatively stable total output of motor vehicles in Ohio during that time period mirrored output in the United States as a whole. In 1994, 12.2 million cars and trucks were built in the U.S. (AAMA, 1995). In 1998 that figure was 12.0 million and in 2002 it was 12.3 million (Ward’s, 1999 and 2003).
Figure 2 shows employment trends in motor vehicle and parts manufacturing over the past decade since 1994 (the first year for which employment data is reported on a basis consistent with subsequent years by the Bureau of the Census). In 2001 (the last year for which employment data are available for the whole state) employment was slightly under that of 1994, but 5.7% below that of 1998. All manufacturing employment in Ohio declined from 1,048,371 in 1994 to 936,161 in 2001, a decline of 10.7%. However, estimated motor vehicle industry employment declined only 1% in the same period (Ward’s 2003). Data used here are based on Ward’s Communication estimates of motor vehicle manufacturing employment which is based on the Census Bureau data reported in broad categories. (A rough calculation, taken from data in Table 3, of employment in 2004 in motor vehicle assembly and directly related operations gives an estimate of 31,263 persons or a figure comparable with the Ward’s Communication estimate for 2001.)
Although employment and output in the motor vehicle industry in Ohio have been relatively stable for a decade, there are dynamic elements that reflect manufacturing trends in the industry. For example, Navistar (builder of International Trucks) employed 5,200 people in Ohio in 1998 but now employs only about 1,550. A weak market for heavy trucks from 2000 to 2003 and an evolution from manual labor to more high-skilled technical positions in production account for the changes at Navistar (Fowler).
Dynamic changes also are occurring at Ford Motor Company’s facilities in Northeast Ohio where a “bad news, good news” scenario is taking place. The “bad news” is that Ford’s Lorain Assembly Plant which makes the full-sized Ford vans may be closing in December 2005 according to a memo to employees from the plant manager. Production of the vans is expected to be moved to the Ohio Assembly Plant in Avon Lake which makes the bodies for the full-sized vans and also assembles the Ford Escape. A final decision on the Lorain Plant had not been made as of the writing of this article. It is expected that between job transfers to the Ohio Assembly Plant and retirements, the number of layoffs from the Lorain Plant closing will be minimal (Jensen).
The “good news” from Ford occurred May 11, 2004, when the Cleveland Engine Plant No. 1 in Brook Park re-opened after having been closed in December 2000. Ford invested $350 million in new flexible manufacturing equipment and tooling at the plant to produce the new Duratec V-6 engine for the Ford Five Hundred, Mercury Montego, and Ford Freestyle models being introduced in 2005. Engine Plant 1 now employs 800 people, the same number as before it was closed in 2000 (Ford Media, May 11, 2004).
Conclusion
This article began by asking two questions: Is Ohio important to the motor vehicle industry; and is the motor vehicle industry important for Ohio? The ranking of Ohio as the number two state in car and truck production and the importance to manufacturing employment of the industry indicates the answer to both questions is a clear “yes.”
The motor vehicle industry is not a growth sector for the Ohio or Northeast Ohio. Output has been relatively stable and employment has been slowly declining over the last five years. However, the fact the industry is not growing in absolute numbers does not mean it is unimportant. Manufacturing still accounts for almost a fifth of Ohio employment and the motor vehicle industry is a key component of that employment. Therefore, the health of the Ohio and Northeast Ohio economy continues to be dependent to a significant degree on a strong and healthy motor vehicle industry.
Works Cited
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HYPERLINK http://media.gm.com/regions/na/index.html. Accessed May 6, 2004.
“Facilities.” Ford Motor Company. HYPERLINK http://media.ford.com. Accessed May 6, 2004.
“Manufacturing, Chrysler Group Facilities Fact Sheets.” DaimlerChrysler Corporation.
HYPERLINK http://media.daimlerchrysler.com/gms_fraine. Accessed May 6, 2004.
“Our Facilities.” Honda in America Manufacturing.
HYPERLINK http://www.ohio.honda.com/manufacturing/facilities. Accessed May 6, 2004.
“Major Employers.” Chillicothe-Ross Chamber of Commerce.
HYPERLINK http://ci.chillicothe.oh.us
economic_development/demographics.htm. Accessed May 11, 2004.
Fowler, Melissa. “Navistar Looking for Local Rebound.” Dayton Business Journal. April
4, 2003. HYPERLINK http://dayton.bizjournals.com/dayton/stories/2003/03/31/daily41.html?t=printable. Accessed May 11, 2004.
Ward’s Motor Vehicle Facts and Figures, 1999, 2001, and 2003 editions. Southfield,
Michigan: Ward’s Communication.
U.S. Census Bureau. County Business Patterns 2001, Ohio. Washington, D.C., 2003. Table 2 and 6.
American Automobile Manufacturing Association (AAMA). Motor Vehicle Facts and Figures, 1995 and 1997 editions. Detroit, Michigan: American Automobile Manufacturing Association.
“Delphi Packard to layoff 214 workers.” The Detroit News. October 25, 2003.
HYPERLINK http://www.detnews.com/2003/autoinsider/0310/27/autos. Accessed May 11, 2004.
Fowler, Melissa. “Navistar looking for local rebound.” Dayton Business Journal. April
4, 2003. HYPERLINK http://dayton.bizjournals.com/dayton/stories/2003/03/3/daily41.html.
Accessed May 11, 2004.
Jensen, Christopher. “Lorain Plant may close December ’05.” The Plain Dealer. April
24, 2004. C-1.
“Ford Cleveland Engine Plant No. 1 Powers Up for ‘Year of The Car’ After Being
Closed Three Years.” Ford Corporate Home Newsroom. May 11, 2004.
HYPERLINK http://media.ford.com. Accessed May 12, 2004.
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