Conflicting Viewpoints: Is "Green" Manufacturing Saving the Auto Industry?

By Jacob Brown | August 15, 2012
It was once said in the depths of the recession last decade that manufacturing jobs were gone from American soil, never to return. That might have been jumping the gun a bit, though. Since 2009—the U.S. economy's recent lowpoint—the auto industry has added 236,000 jobs, 165,100 of which are manufacturing- and parts-related. Exactly why it is growing depends on who you ask. Every indication points to that number increasing even more over the next few years as an overburdened European economy is proving too expensive for automakers to manufacture their cars. The Japanese yen is too expensive versus the dollar, too, so it's making more and more sense for automakers to come stateside for production.
Or, is the manufacturing movement motivated by green technology? Is the industry growing only because cleaner technologies are creating more jobs making the batteries and supplies involved?
A recent study called Driving Growth: How Fuel Efficiency is Driving Job Growth in the U.S. Auto Industry contends that it is. Published by the Natural Resources Defense Council, National Wildlife Federation, and the Michigan League of Conservation Voters Education Fund, the study claims that technologies like batteries and advanced drivetrains that feature things like eight- and nine-speed transmissions or direct fuel injection engines are bringing jobs back to the U.S. It even goes so far as to quote UAW president Bob King in a testimony speech to the EPA that, "[T]he technology needed to improve efficiency and reduce pollution represents additional content on each vehicle. That additional content must be engineered and produced by additional employees," suggesting that green technology is furthering the industry's growth.
At its peak in the early part of this century, new vehicle sales hit nearly 17 million cars in the U.S. At their lowest point, sales were 10.4 million new vehicles in 2009, highlighting the collapse of the credit markets, the fall of housing sales, a recession, and the government bailout of General Motors and Chrysler. This year, it's estimated that car sales will pick up to around 14.5 million, a nearly 40 percent increase.
Since June 2009 through July 2012, Driving Growth says the total auto industry has picked up some 14.5 percent in new jobs, which isn't proportional to the number it lost and doesn't quite match the increased demand. According to the U.S. Bureau of Labor Statistics, there were nearly 2 million dealership employees before the recession; today, there are 1.5 million, which is still significantly more than the 1.3 million the industry saw at its trough. Manufacturing employees total just under 900,000 in the U.S. today, down from 1.05 million in 2008. It's safe to say the industry is on its way back. But green technology being the primary driver? Hardly.
Automakers have to plan their products around government legislation for decades, which brings the green industry into play. But correlation does not equal causation. There is a buying public now starting to open up its wallets, which as we know, is buying vehicles of the same size it always has. Hybrid and plug-in sales have stayed relatively flat for the past five years, too.
There are dozens of statistics brought up in the Driving Growth report that state automakers are going out of their way to make green products, such as the 2013 Honda Accord that will be tentatively rated at 38 mpg on the highway or moving Honda Civic Hybrid production from Japan to Indiana. Both are circumstantial; the Accord needs to reach that number to be on par with the class-leading Nissan Altima, and the Civic is coming across the pond because Honda discontinued selling the Civic sedan in Japan in favor of more regionally tailored designs. Also, there's that whole yen fluctuation problem. Other examples like hybrid-car batteries being made domestically and Chrysler developing a nine-speed automatic transmission with German firm ZF are just about business sense and staying competitive. Driving Growth explicitly states fuel efficiency is driving growth in sales and jobs, but we're going to contend that after 2009, there was nowhere for them to go but up.  Let's give it a few more years, when the new CAFE regulations kick in around 2016, to further evaluate it. Pending there's no further Great Recessions, we'll be willing to bet the market won't flock to hybrids and electric cars much more than it does today, unless there's  some sort of heightened incentive that makes them more affordable. Sources: Driving Growth, U.S. Bureau of Labor Statistics