Automotive Manufacturing

Approximately 557,020 people were employed in the motor vehicle and parts manufacturing industry in May 2018, according to the U.S. Department of Labor. Many worked in firms that produced motor vehicle parts. Others worked in firms that assembled complete motor vehicles and in firms that produced truck trailers, motor homes, travel trailers, campers, and car, truck, and bus bodies.

Detroit remains the headquarters of the major U.S. automobile companies, but many of the manufacturing plants are located throughout the country. The majority of the industry’s employees work in the Great Lakes region, including Michigan and Ohio, and Indiana. In 2024, about 15 percent of motor vehicle manufacturing jobs and approximately 20 percent of motor vehicle parts manufacturing jobs were in Michigan. While aspects of motor-vehicle manufacturing take place in nearly every state in the country, most of the remaining workers are found in California, Kentucky, Alabama, Missouri, and Texas.

The U.S. Department of Labor reports that production workers employed by establishments that manufactured complete motor vehicles earned an average hourly salary of about $30 in 2023, or roughly $62,400 per year. In addition, many companies cover the cost of approved education courses in the industry. The major manufacturers also offer exemplary benefits packages to their employees. Benefits packages vary from business to business. Auto industry employees can expect health insurance and paid vacation from most employers. Other benefits may include dental and eye care, life and disability insurance, and a pension plan. Yearly bonuses or profit sharing can be added to salaries if the business does well.

Pay and benefits for unionized autoworkers improved significantly in late 2023 when, for the first time in history, the United Auto Workers simultaneously launched a strike against all Big Three automakers on September 15, 2023, after failing to reach a new four-year contract. The strike, which lasted approximately six weeks, negatively impacted both production and dealer inventories in the short term. However, it resulted in major pay increases for UAW workers, ranging from 25 percent to as much as 168 percent for temporary employees. The new contract included a major uptick in benefits, including retirement contributions. In a November 2023 article, NPR explained that car prices would increase because of the new agreement. For example, Ford estimated that its costs to produce a vehicle would rise by approximately $900.

Following the negative impact of the coronavirus (COVID-19) pandemic at the beginning of the decade, which created numerous challenges, including supply chain disruptions, the automotive industry faced other challenges as the decade progressed. In addition to the labor disputes of 2023, inflation and rising interest rates meant that vehicles were less affordable and more expensive to finance. Collectively, factors such as these pushed down growth. In a June 2024 analysis, IBISWorld estimated that industry revenue totaled $363.9 billion. This reflected a decrease of 0.1 percent from 2023 and 0.5 percent over the previous five years.

Research and development (R&D) is one area in which job prospects are expected to remain strong. Major industry players are currently funding billions of dollars each year in R&D and are likely to continue doing so. Fierce competition forces automakers to produce cars packed with new technology, from amenities to safety features, one step above their rivals’ products. One major area of competition is in the development of hybrid electric vehicles (HEVs)—automobiles that combine an electric engine with internal combustion—and electric-only vehicles. Hybrids have better fuel economy and create lower pollution emissions than conventional vehicles. Honda and Toyota both have HEVs on the market, and American manufacturers have begun to introduce hybrid systems into their vehicles. Companies such as Tesla and Rivian have found success by focusing on electric-only vehicles and innovating new designs, models, and battery systems. R&D jobs will be mostly for engineers and scientists in the industry. Stricter air pollution laws are also spurring R&D to rethink how cars are powered.

The increased use of digital systems in automobiles, both under the hood and inside the cabin, has also resulted in a higher demand for electrical engineers and technicians. In a December 2023 report, Statista estimated that electronics would represent approximately 50 percent of a new car's costs by 2030, up from 35 percent in 2010 and 10 percent in 1980. Current and future digital/electronic technologies that will affect employment and careers include power train and safety systems, vehicle control systems, driver assistance products, and information and entertainment systems.

The automotive industry is strongly affected by the health of the economy. A 10- to 20-percent change in employment from one year to the next is not unusual. Fuel prices have a major effect on automobile sales, and manufacturers struggle to adapt when prices are high. This can also influence the market for electric vehicles. In general, there is less consumer demand for cars and trucks during economic recession, and manufacturers usually respond by firing or laying off workers.

The Big Three’s share of U.S. automotive production reached a pivotal point in 2023. For the very first time, foreign-owned automakers produced more vehicles on American soil than their domestic counterparts. According to a July 2024 article in the Detroit News, General Motors, Ford, and Stellantis collectively made 4.6 million vehicles in 2023, down about 150,000 units from the previous year. By comparison, Toyota and Mercedes-Benz increased their collective production by around 500,000 units, making a total of 4.9 million vehicles. This trend suggests that foreign companies will likely have a significant impact on industry employment in the coming years.