International Companies Are Growing America’s Auto Industry

September 11, 2019

Since 1980, the U.S. Department of Commerce has initiated nearly 20 investigations under Section 232. These investigations are intended to determine the effect of imports on U.S. national security, thus providing for the president to “adjust the imports of an article and its derivatives” as he determines to be necessary in order to mitigate perceived threats.

Commerce Secretary Wilbur Ross launched a Section 232 investigation in May 2018 to determine whether the imports of automobiles and auto parts pose a risk to U.S. national security. The Department’s investigation found that the U.S. defense industrial base relies on research & development (R&D) efforts taken by the U.S. auto industry.

In a May 2019 proclamation, President Trump released excerpts of the report’s findings and directed the U.S. Trade Representative to pursue negotiations for 180 days with the European Union, Japan and other countries as necessary. While the investigation was intended to explore the threat posed by automotive imports, the findings continually referenced a clear preference for “American-owned” companies. One excerpt of the report states:

“The contraction of the American-owned automotive industry, if continued, will significantly impede the United States’ ability to develop technologically advanced products that are essential to our ability to maintain technological superiority to meet defense requirements and cost effective global power projection.” 

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.

In addition to the auto industry’s continued support of veterans, auto companies also equip students with the skills and information needed to succeed in today’s workforce through robust workforce development programs. In 2010, Toyota began the Advanced Manufacturing Technician program with community and technical colleges in the local communities surrounding its 10 U.S. facilities. And today, Toyota’s Fedation for Advancing Manufacturing Education (FAME) program is becoming a national standard for the American workforce training model. Ivanka Trump and NAM Chief Executive Jay Timmons are releasing an announcement on the expansion of a skills training and apprenticeship program, which was first created by Toyota Motor North America.

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.