Recently, I did some industry analysis on jobs and revenue. How many dollars of sales are required to “create or save” a job in a given industry. I only looked at a couple of industries and found that it ranged from $219,000 to $275,000 in sales for certain types of processed materials to employ a worker in that industry.
Obviously, this type of metric will vary wildly depending on how highly automated a particular industry is. The beverage industry is highly automated and doesn’t have a large employee staff to generate finished products. But interestingly, the companies that build machinery for the beverage industry have fairly high employment because it takes a combination of technically trained skilled workers to make the machinery that makes the beverage products.
The agricultural economy has grown dramatically with the introduction of machinery to assist in the process. Complex machines have been developed for many applications to increase productivity. The latest round of enhancements are tilling and planting equipment that uses Global Positioning Satellite information to keep the tractors in a straight line and computer plots of the land to maximize the planting area per acre. Pretty amazing stuff.
In the automotive area, there are some interesting statistics. In the ten year period from 1998 to 2008 the industry increased its gross output per employee by 33%. This is a huge statistic and represents the long term impact of automation on the manufacture of vehicles. The other interesting statistic is that the average internal price of a car today is the same as that ten years ago. Given that the US industry has pushed it’s quality to compete with the Japanese cars that were perceived as superior to US in quality, this is an amazing feat.
Of greater interest is the comparison of total vehicle shipments. The most cars and light trucks ever shipped by the US Auto makers was in the year 2000 when we shipped 17.8 million units according to Ward’s Auto which reports on the car industry. This feat was almost duplicated in 2005 when 17.4 mil units were shipped.
A relatively stable manufacturing base over the years, the US auto industry hit a disastrous slide in 2008 shipping an anemic 13.49 mil units followed by an even worse 2009 when we shipped 10.6 mil cars and trucks. This was the year in which the Chinese automakers topped the US manufacturing rate for the first time ever. A point that the Chinese press made with great vigor in spite of the fact that the majority of Chinese automakers are actually joint ventures with foreign companies, the single original Chinese auto maker being in great difficulties due to poor product quality.
The 2009 US auto showing is particularly dismal when you consider the “cash for clunkers” incentive which spent $1.4 billion taxpayer dollars to generate 200,000 additional unit sales. A small showing in the scheme of things even if the market was 10 million units.
Will the US auto market pick back up? Certainly, but not to the former highs of 2000 and 2005. 2009 shipments were off by 40% from the 2005 high, and that is too much of a gap to be easily recovered. Especially when unemployment continues to be running in the 10% range and higher.
Is there hope? Yes. Serious electric hybrids and battery manufacturing for the US automakers will create tens of thousands of jobs in the next couple of years. Demand for foreign hybrids has been running at over 400,000 units per year, and will likely increase once there are quality US made products available.
States that pay attention to the needs of the industries they provide locations for are States that will thrive with low unemployment and low deficits.