International Companies Are Growing America’s Auto Industry

May 29, 2018

Since 1980, the U.S. Commerce Department has conducted sixteen Section 232 investigations under the Trade Expansion Act of 1962. The purpose of these investigations is intended to determine the effect of imports on national security, thus paving the way for the president to “adjust the imports of an article and its derivatives” as he or she determines to be necessary.

On Wednesday, Commerce Secretary Wilbur Ross announced that he would be launching a new Section 232 investigation on the importation of automobiles and auto parts to determine whether these imports pose a risk to U.S. national security. The investigation threatens a steep 25 percent tariff on the international auto industry.

I don’t see how a Toyota Prius or BMW X3 are a threat to U.S. national security...But what is clear is the incredible impact that global automakers are having in places like Indiana, Ohio, Michigan, Texas, and South Carolina. Not only have these manufacturers far outpaced the overall industry in terms of U.S. job growth in the past five years, they spent nearly $30 billion on U.S.-based research and development, and offer an average of more than $70,000 in wages and benefits to their U.S. workers.

OFII President and CEO Nancy McLernon

In fact, the Bureau of Economic Analysis (BEA) reports that job creation by international auto manufacturers in the United States has increased by 79 percent in the last five years, compared to a 35 percent increase from the overall U.S. auto industry. International companies in the automotive industry support nearly 518,000 jobs in the United States. More than 411,000 of these U.S. jobs are in the manufacturing sector.

U.S. exports by international companies in the automotive sector have also grown by a staggering 200 percent in the past five years, reaching $68 billion in 2015.

International companies in the U.S. auto industry don’t just create jobs and open markets, they help grow a more skilled U.S. workforce through state-of-the-art training programs. For example, Toyota has “imported” a hands-on automotive technician training program called T-TEN that partners with local community colleges, vocational schools and Toyota and Lexus dealerships to provide the certification and accreditation needed to jumpstart a career in the auto technician field.

Mercedes-Benz – which employs thousands of U.S. workers and has invested more than $5 billion in its Vance, Alabama plant – created the Mechatronics training program in partnership with Shelton State Community College and AIDT. Combining mechanical, electrical, computer, and control engineering training, the Mechatronics program at Shelton State prepares students for advanced manufacturing jobs, including potential full-time positions at Mercedes-Benz.

Global automakers and suppliers are also committed to supporting our veterans. Jaguar Land Rover North America launched the Land Rover Veterans Careers Program to connect “skilled and experienced Transitioning Service Members and Veterans with positions across the Jaguar Land Rover retail network.” Mercedes-Benz also was the first luxury automotive manufacturer to partner with the U.S. Department of Labor and Department of Veterans Affairs to offer a Registered Apprenticeship Program.  This apprenticeship program prepares veterans and returning servicemembers for in-demand technician careers at authorized Mercedes-Benz dealerships.

Outside of the jobs they create, international auto manufacturers and auto part suppliers reinvest nearly $5.5 billion of their earnings back into U.S.-based research and development activities. This reinvestment fuels new products, technologies and processes.

By hampering investment from international companies in the U.S. automotive sector, we limit their ability to broaden America’s economy and open new markets for products made in the United States. International companies in the U.S. auto industry do not threaten national security, but rather allow for other countries to have a stake in America’s success and thus improve U.S. competitiveness.