Detroit – The auto industry’s startling implosion gained steam on Wednesday as word leaked out that Ford Motor Co. would join General Motors Corp. in axing as many as 30,000 jobs in North America over the next five years.
Many of the cuts will probably be made in assembly operations located far from the industry’s traditional stronghold in states surrounding the Great Lakes.
But economists warned that the industrial Midwest will hardly escape damage.
Thomas Klier, a senior economist with the Federal Reserve Bank of Chicago, said that the dramatic decline in the fortunes of Ford and GM over the last several years has already created devastating ripple effects among auto parts suppliers around the region, which employ three times as many workers as the automakers.
And as long as the Big Three continue to lose market share to foreign rivals at an alarming rate, the pain in the Midwest is likely to continue.
“The key driver is what happens to the Big Three,” Klier said. “If you can call a bottom to their market share losses, then you can see the end of the industry’s employment losses.”
Since 2001, the Chicago Fed calculates the industry has lost almost 100,000 jobs in Michigan, Indiana and Ohio, with 60,000 lost from auto parts companies.
For analysts and economists, the most troubling aspect of this skid is that it has happened in a relatively robust auto selling market.
Strong consumer spending combined with cheap financing and incentives have held North American auto volume steady at nearly 17 million units a year for several years running.
Yet since 1995, GM, Ford and Daimler Chrysler’s U.S. market share has slid from 73 percent to 58 percent while the share owned by Toyota, Honda and Nissan has grown from 18 percent to 28 percent.
That, of course, is bad news for the automakers but it has also taken a major toll on the auto parts industry, which is heavily concentrated in the Midwest. Klier estimates that the region is home to 61 percent of all the auto supply plants located in the United States, including giant, but troubled, suppliers like Delphi Corp. and Visteon Corp.
