#458. The Real Job Multiplier of Manufacturing – Almost 10:1!

Posted on | The Agurban

The Real Job Multiplier of Manufacturing – Almost 10:1!

Last week we discussed the Magic Job Multiplier of Manufacturing. This week we are following that up with a study from the Center for Automotive Research on Ford Motor Company’s Michigan Assembly Plant in Wayne, Michigan. The results of this study further reiterate the importance and value of the job multiplier effect of manufacturing.

Ford Motor Company’s Michigan Assembly Plant (MAP) is a sign of things to come in the automotive industry and is a very important asset to the State of Michigan. In 2011, the plant produced more than 220,000 vehicles, and in 2012 it produced more than 300,000 vehicles. This year the plant is on track to produce more than 350,000 vehicles. Not only does this plant employ approximately 5,000 people building the latest fuel-efficient motor vehicles, it supports over 48,000 jobs nationally. Many of these jobs are located in firms that make and send parts directly to the assembly plant, and in many other small manufacturing-related firms. Additionally, much of the research & development and product development work that is necessary to design and produce parts for the vehicles being manufactured at Michigan Assembly is performed within the state at supplier technical facilities.

In the past two years, Ford Motor Company has invested over $770 million to convert the former truck plant into a plant that is presently making the Ford Focus (4-door, 5-door), Focus Electric, Focus ST, C-MAX Hybrid, C-MAX Energi (plug-in hybrid). The substantial number of people employed at the Michigan Assembly Plant as well as at the companies in the state that do business directly or indirectly with the plant and the significant amount of spending by the plant within the state show the impact and importance of vehicle manufacturing facilities to the state.

CAR’s research and analysis on MAP finds:
• Direct employment in Michigan is approximately 5,000
• Total employment (Direct, Intermediate, and Spin-off) is nearly 24,000 in Michigan and more than 48,000 nationally
• Wages and earnings in Michigan are nearly $1.8 billion and nearly $3.6 billion nationally
• Contribution to GDP is 3 billion in Michigan and more than $5.7 billion nationally
• The majority of engines installed in vehicles produced at the plant, as well as a large share of the stamped components, are sourced from Ford facilities in Michigan.
• The Michigan Assembly Plant is served by 179 independent Tier 1 suppliers from across the United States, with 80 of these firms located in Michigan.
• Tier 1 suppliers located within the state of Michigan accounted for the single largest share of the total purchase value, $1.1 billion, or 34 percent of the $3.2 billion total in annual parts purchases by the plant.
• CAR’s sampling of Tier 2 suppliers revealed that a majority of these firms are small businesses with a single location and employment of up to 100.

As Michigan considers policies to encourage economic development, particular focus should be placed on policies and programs which serve to strengthen the competitiveness of auto manufacturing facilities in the state. These facilities will continue to be major engines of economic growth and will require the talent and resources to maintain the competitive edge. It makes sense that the state and company work together to ensure the long-term viability of these plants and explore the opportunities to continue to localize the global supply chain.

We agree wholeheartedly with the final paragraph. Steps need to be taken in Michigan and all other states to shore up their manufacturing base.

You can find the full study here.