Coping with the Auto Industry's Problems: It’s Not Just...

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THE AVENUE OCTOBER 16, 2009

Coping with the Auto Industry's Problems: It’s Not Just Michigan

Last week’s Conference on Automotive Communities and Workforce Adjustment, sponsored by the Federal Reserve Bank of Chicago and held at the bank’s Detroit branch, understandably focused a lot on Detroit and southeastern Michigan. In my talk at that conference, though, I pointed out that the metropolitan areas that depend most heavily on the auto industry (including assembly and parts, foreign companies as well as the Detroit Three) aren’t just in Michigan, and most aren’t anywhere near the size of Detroit.

There are actually 62 metropolitan areas (shown on slide three of the attached PowerPoint file) where motor vehicle and parts manufacturing make up at least 1.12 percent of all jobs, which is at least double the nationwide percentage. That may not sound like very much, but remember that lots of other jobs, in car dealerships, dentists’ offices, restaurants, and a host of other local service companies, depend on the auto-related jobs. If a metro area with 1.12 percent of its employment in motor vehicles and parts lost all those jobs, it could lose more than 3 percent of all its jobs (maybe more in small metro areas and less in big ones). That’s a big hit. 

Some of these 62 highly auto-dependent metro areas are located in Michigan and nearby Great Lakes states. But others are in the south-central states (Kentucky, Tennessee, Alabama, Mississippi) and parts of the southeast (Virginia, the Carolinas, Georgia), and there are a few auto parts manufacturing centers located in the Western states.

Some of the 62 auto-dependent metro areas are more auto-dependent than metro Detroit, where 5.3 percent of all jobs were in motor vehicle and parts manufacturing as of the end of 2007. In Morristown, TN, that figure was 5.5 percent. It was 6.6 percent in Mansfield, OH, 7.0 percent in Battle Creek, MI, 8.1 percent in Columbus, IN, and an astounding 19.6 percent in Kokomo, IN, the nation’s most auto-dependent metro area. Just below Detroit, with 3 to just over 5 percent of their jobs in motor vehicles and parts, are 20 metro areas, virtually all with populations of less than a million.

In fact, Detroit is a bit unusual among the auto-dependent metro areas because it is both so big and so auto-dependent. The only other metro areas with populations of more than a million on our list of 62 are Nashville, Louisville, Columbus (OH), Indianapolis, and Buffalo.

Of course, not all the auto-dependent places are equally in need of assistance, or in need of the same kind of assistance. A few, such as Indianapolis, saw total employment grow almost continuously from the early 1980s until the start of the current recession. In those places, displaced workers need income support and perhaps assistance with retraining, but the metro areas probably don’t need economic development assistance to cope with the long-term impact that the loss of auto jobs has had on their overall regional economies. In others, such as many in the South, auto employment hasn’t been on a persistent downward path over the last decade. Those places may need economic and workforce development assistance, but not because they have been bleeding auto-related jobs. The remaining metro areas, mostly but not entirely clustered close to the Great Lakes, need the most serious federal and state assistance on the both the economic development and workforce fronts. They’re shown on slide nine.

So the next time you think of the problems of auto-based communities and laid-off autoworkers, think of Detroit and other Michigan metros. Definitely. But also think of such places as Buffalo, Kokomo, Mansfield, Janesville (WI), Elizabethtown (KY), and Clarksville (TN). Auto country is bigger than you may think, and its problems are more widespread.

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posted in: the avenue, metro policy, labor, technology, chicago, detroit, mansfield, bank, federal reserve bank of chicago, great, great lakes, michigan, tennessee

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