Automakers are expected to hire more than twice as many workers in the last seven months of 2013 than they did in the first five, but we may be seeing the end of a larger cycle of auto industry job creation fueled by the robust rebound in the sector in the past three years.
For now companies are hiring to meet strong demand from U.S. consumers that is likely to send sales back to pre-recession levels by the end of next year if the current pace continues. Automakers and their suppliers will be creating about 17,000 jobs through the rest of the year, after a modest rate of 8,000 from January to May, according to the Ann Arbor, Mich.-based Center for Automotive Research.
But job creation by car companies and their suppliers is slowing.
The auto industry (excluding dealers and auto parts retail) created 167,500 jobs since June 2009, when the U.S. economy officially emerged from its last recession. That amounts to a monthly average of 3,489 new positions. CAR says the auto sector will create 35,000 new jobs this year, for a monthly average of 2,916. But for next year CAR estimates just 7,000 new positions, or about 583 jobs a month.
So what’s happening? “The past three years have seen overall sales grow about 10 percent annually,” Yen Chen, senior research economist at CAR, told IBTimes on Monday. “We’ve seen steady strong jobs growth since 2010, but employment is nowhere near recovery yet.”
Productivity is at an all-time high, says Chen, 39 percent higher than it was in 2000. And the past three years has seen overall sales grow about 10 percent annually, so much of the momentum on jobs creation has already taken place. The auto sector will be responsible for 681,000 well-paying U.S. manufacturing jobs by the end of the year.
But whether the industry can push employment numbers still higher will depend largely on whether it can reverse a trend that was happening before the last recession.
According to the Bureau of Labor Statistics, whose estimate of employment car manufacturing tends to be higher than CAR’s, the sector added jobs every year since 2009 but had been shedding jobs annually from 2003 to 2009 -- since before the sub-prime mortgage meltdown that upended the economy in 2008-09.
Job creation in the automotive sector is cooling, but most industry watchers expect it to continue its rebound from the crisis that sent General Motors Co. (NYSE:GM) and Chrysler LLC into Chapter 11 reorganization and seeking taxpayer-funded assistance.
By the end of the year, Americans are expected to purchase 500,000 to a million more vehicles in 2013 than they did last year, when they bought 14.5 million. That momentum is expected to continue into next year, when it’s possible the sector will be back at pre-recession sales levels.
From recent company press releases, here is a sample of recently announced hiring numbers, which include many positions that were vacated in past layoffs and are not considered newly created jobs:
- General Motors is hiring 4,000 computer engineers and software developers to work at sites in Arizona, Texas, Michigan and Georgia.
- Ford Motor Co. (NYSE:F) is hiring 3,000 people for white collar salaried positions this year.
- Honda Motor Co Ltd (TYO:7267) is filling 500 positions in its plants in Ohio, Indiana and Alabama.
- Chrylser Group LLC, a subsidiary of Fiat SpA (BIT:F), is hiring 3,500 for its factories in Indiana, Ohio and Michigan, to build transmissions for the popular Ram pickup and Jeep brand.