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NYT Cooks the Books On Europe's Auto Industry
The NYT is touting the layoffs in the U.S. auto industry as a virtue. (I'm waiting to see the same case about the banking sector.) It notes that auto industry employment in Europe is remaining steady at around 2.3 million, while it is falling to close to 700,000 in the U.S..
The article and accompanying chart imply that Europe is delaying an inevitable adjustment. The case is far from clear, in spite of the NYT's best effort to make the case. The chart shows that Europe produces about 18 million cars a year, while North America produces around 12 million. Those noting the asterisk will see that one-third of the cars in North America are produced in Canada or Mexico, meaning that only about 8 million cars are produced in the U.S.. This adjustment makes the gap in employment look less extreme.
Furthermore, the U.S. imports a large portion of the parts for the cars that are produced here. Much of the employment in the auto sector is in parts production. Without knowing the balance of trade in car parts, there is no easy way to know how Europe's auto employment relative to its output compares to the U.S..
--Dean Baker
COMMENTS (8)
"The NYT is touting the layoffs in the U.S. auto industry as a virtue. (I'm waiting to see the same case about the banking sector.)"
And I'm waiting to see the same case about the newspaper sector!
And when the last of these useless corporate print dinosaurs turns to dust, good riddance!
Posted by: some guy in a cube | May 26, 2009 10:14 PM
(off topic of this post)
An excellent reading on relative health care cost in USA and why doctors incentive and organization matter a lot:
The Cost Conundrum
What a Texas town can teach us about health care.
by Atul Gawande
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all
Posted by: Laurent GUERBY | May 28, 2009 10:18 AM
Yeah, the New Yorker piece in the comment above is good. Dean, could you comment on Gawande's argument that the method of payment doesn't matter?
Back to autos, does anyone know of some background reports on the global auto industry? Googling, all I can find are industry sponsored outfits.
What is total manufacturing capacity vs. total sales market? Where has new investment been done? Does the US really have over-capacity to serve its own market (including, as Dean noted, auto parts)? If so, how hard to retrofit to build, say, windmills or trains?
Reich said (in the Nation) that the future GM "business plan" includes tripling imports from elsewhere.
Posted by: anton | May 28, 2009 1:06 PM
When I read this article in the IHT (NYT international) I flipped and couldn’t wait for your reaction, I knew it would come. It seemed obvious that the numbers were cooked since productivity is higher in both France and Germany than in the US and they are the major auto manufacturing countries in Europe. I agree with everything you say but there is something that shocked me that you did not mention in your blog. It seems to me that a company that breaks even (ie no profits) and employs 100 people (therefore feeds them) is more socially useful than a company that employs 10 people and makes enough profit to sustain 10 stockholders. Somehow the entire given in all of these articles in the economic sections is that the economy is an end in itself. To me the beauty of the hammer is secondary to its ability to drive a nail.
Posted by: Anonymous | May 28, 2009 2:59 PM
Last post was mine, I didn't mean to ge anonymous
Posted by: Laurent Gaudin | May 28, 2009 3:01 PM
Anton - Ward's has all the data but it's subscription-only. I haven't found much free info.
"If so, how hard to retrofit to build, say, windmills or trains?"
There is both a big size and a big volume mismatch between autos and the other two. The assembly lines would have to be rebuilt from scratch but the buildings could be re-used. Some of the industrial robots could be re-used after re-programming.
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