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Center for Business and Economic Research

Center for Business and Economic Research Culverhouse College of Commerce and Business Administration. Objectives of this Study. Quantify Alabama’s automotive industry employment by occupation. Project employment by occupation to 2025. Identify relevant industry trends.

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Center for Business and Economic Research

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  1. Center for Business and Economic Research Culverhouse College of Commerce and Business Administration

  2. Objectives of this Study • Quantify Alabama’s automotive industry employment by occupation. • Project employment by occupation to 2025. • Identify relevant industry trends. • Examine automotive industry workforce educational needs.

  3. Methodology for Projecting Total Industry Employment • CBER’s Alabama Econometric Model was used to forecast employment by major sector to 2025, using ADIR data as the basis. • These projections include Motor Vehicle Manufacturing, which is largely OEMs. • Many parts suppliers are in other industries including plastics and rubber, fabricated metals, and electrical components. • UAH survey data on total automotive employment for 2003 were used to expand the ADIR-based projections to an industry total.

  4. Alabama Automotive Industry Employment, 2000 to 2010 • At the end of 2003, Alabama’s automotive industry employed 31,197. (UAH, Office for Economic Development) • Based on current announcements, employment should reach 42,115 in 2005, adding over 10,900 jobs in 2004 and 2005. • About 2,100 new jobs are expected from 2005 to 2010.

  5. Alabama Automotive Industry Employment, 2010 to 2025 • As the automotive industry in Alabama matures, it will be subject to the effects of cyclical economic downturns. • Employment could decline by around 1,800 during the 2010 to 2015 and 2020 to 2025 periods, but add 3,820 jobs between 2015 and 2020.

  6. Alabama Automotive Industry Employment Trends • Productivity gains from technological innovation and automation could adversely affect employment of production workers. • As the industry matures, automotive supplier jobs are expected to grow faster than OEM jobs. • Our projection of 13,200 jobs created between 2003 and 2025 is conservative, as new firms will likely enter the market and existing firms will expand.

  7. Alabama Automotive Industry Employment by Occupation • 2002 BLS data for motor vehicle and parts manufacturers were used to allocate Alabama auto manufacturing employment to occupations using national shares. • Nationally, production workers account for 63.9 percent of automotive employment, while engineering and technical occupations amount to 7.9 percent. • 6.1 percent of industry employment is in installation, maintenance, and repair.

  8. Alabama Automotive Industry Employment by Occupation Occupation 2003 2025 Total 31,200 44,420 Production workers 19,900 28,400 Team assemblers 5,000 7,000 Other assemblers and fabricators 2,300 3,300 Machine-tool cutting-related jobs 1,750 2,500 Welding/soldering/brazing 1,470 2,100 Miscellaneous production workers 1,650 2,350 Professional engineering and technical 2,300 3,500 Installation, maintenance, and repair 1,900 2,700

  9. Alabama Automotive Industry Occupational Trends • Our projections hold industry employment share by occupation constant through 2025 as Alabama’s industry is young. • BLS trends indicate fewer assemblers and fabricators, millwrights, and tool and die makers nationally between 2002 and 2012. There should be more engineers and technicians, maintenance-related workers, welders, and painting workers. • These trends could apply to the industry in Alabama later in the projection period.

  10. Automotive Industry Trends • Technology is continually evolving as manufacturing practices change. • Trend is to more robots and programmable devices. • The “lean agile” paradigm requires employees and equipment to adapt quickly to new processes. • Global competition puts pressure for cost-cutting and productivity gains.

  11. Automotive Industry Educational Trends • The automotive workforce is expected to engage in lifelong learning. • As Alabama’s workforce is established, the importance of retraining incumbent workers will grow. • New workers will need to be trained for newly created jobs or to replace workers who leave or retire. • Loss of skilled workers to retirement is a major industry concern nationally, but won’t affect Alabama for a while.

  12. Automotive Industry Educational Trends • The “lean agile” industry focus places more importance on thinking skills of employees and their ability to undergo continual training. • Two-year colleges, as key players in workforce training, need to insure that all trainees have basic problem-solving and math skills in order to graduate. • Reducing the “cycle time” required to train or retrain workers helps OEMs and suppliers cut costs.

  13. Automotive Industry Educational Trends • Stronger long-term job growth at suppliers relative to OEMs will increase the need for training and retraining by two-year colleges. • By 2025, automotive industry employment in jobs requiring post-secondary training is expected to increase, while employment of assembly line workers will decline. • Increasing complexity of technology will give an edge for employment in technical fields to workers with an Associate degree.

  14. Partnerships Key to Alabama Automotive Industry Success • Ongoing dialog between OEMs and suppliers identifies changing manufacturing demands. • Computer monitoring and reporting by OEMs to suppliers about parts performance helps fix problems quickly. • Ongoing dialog between educational institutions, suppliers, and OEMs is important to identify changing needs for training and retraining. • Coordination of programs among two-year colleges and other institutions will efficiently fill training needs.

  15. Educational Needs of the Automotive Industry • Assuming that about 18 percent of production workers require a high school education only, we estimate that there will be around 22,000 production workers in Alabama in 2005 with some post-secondary training. • The production workforce in 2005 will include about 2,000 welders, 3,700 machine tool operators, and 1,300 workers engaged in inspecting, testing, sorting, and sampling.

  16. Alabama Automotive Industry Selected Production Jobs 2005 Occupation Projected Workers Machine tool-related operators 3,660 Welding/soldering/brazing workers 1,980 Inspectors/testers/sorters/samplers 1,300 Miscellaneous rubber and plastics 970 Tool and die makers 800 Machinists 670 Painting workers 550 Forming machine operators 550

  17. Educational Needs of the Automotive Industry • In 2005 Alabama’s automotive manufacturing industry will employ about 800 engineering technicians, 500 engineers, and 2,570 installation, maintenance, and repair workers, most with post-secondary education. • Job growth in each occupational category between 2005 and 2025 is expected to be modest, based on the current industry structure and announcements.

  18. Future Employment Dimensions Will Hyundai follow in the footsteps of Mercedes, Honda, and Toyota by expanding their plant in a few years?

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