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Who Really Made Your Car?

Restructuring and Geographic Change in the Auto Industry

Thomas Klier and James Rubenstein

Publication Year: 2008

This book offers a comprehensive look at an industry whose role in motor vehicle production in the United States has been growing. Klier and Rubenstein make use of a unique database containing information on thousands of parts plants in the United States, Canada, and Mexico. This allows them to produce an analysis of the motor vehicle parts supplier industry at a level of detail not seen before. It also allows them to meet the two main goals they set out to achieve. The first is to present the key characteristics of the vast network of parts suppliers. The second goal of the book is to describe the changing geography of U.S. motor vehicle production at the local, regional, national, and international levels. In doing that, Klier and Rubenstein illustrate the challenges in store for motor vehicle parts production in the United States and especially in the Midwest.

Published by: W.E. Upjohn Institute

Front Matter

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Table of Contents

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pp. v-vii

Figures and Tables

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pp. viii-x

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pp. xi-xii

The work on this book started a number of years ago when we both recognized we were independently working on understanding the changing geography of the U.S. auto supplier industry. We subsequently undertook a series of joint projects, resulting in publications and conferences on the auto industry. This book represents the...

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Chapter 1. The Parts of Your Vehicle

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pp. 1-27

Motor vehicle producers are among the world’s most recognizable brands. Thanks to elaborate marketing, nameplates like Ford, Toyota, and Volkswagen are familiar to consumers around the world. Consumers are attracted to the ruggedness of Ford, the reliability of Toyota, or the style of Volkswagen. Yet the...

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Part 1. Detroit: Heart of the Auto Industry

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pp. 29

To assert that Detroit and the auto industry have long been synonymous may seem either unnecessary or anachronistic. For most of the twentieth century, the city’s central position in the auto industry was so obvious as to need no elucidation. As recently as the mid-twentieth century, two-thirds of the nation’s auto industry...

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Chapter 2. Rise and Fall of Vertical Integration in the Midwest

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pp. 31-53

Thousands of companies were established to build cars in the United States in the first years of the twentieth century. At the end of the first decade of the twenty-first century, there were only three American-owned carmakers—Chrysler LLC, Ford Motor Co., and General Motors Corp. By 1910 Ford...

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Chapter 3. Supplying the Power

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pp. 55-82

“Powertrain” is the term the motor vehicle industry uses to encompass the systems responsible for providing power. The two principal powertrain systems are the engine and drivetrain. Components attached to the engine and drivetrain, as well as others closely related to the provision of power, can also...

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Chapter 4. The Body Builders

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pp. 83-107

More than two-thirds of all exterior parts were made in the Midwest (Figure 4.1). Especially likely to be made in the Midwest were the bulkiest exterior modules, notably bodies and bumpers (Table 4.1). Even manufacturers of small exterior parts, such as grilles and hardware, were overwhelmingly...

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Chapter 5. Supplying the Suppliers

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pp. 109-131

The supply base of today’s carmakers is structured like a pyramid. On top of the pyramid is the carmaker. Below the carmakers are a small number of Tier 1 suppliers that sell parts directly to carmakers. Tier 1 suppliers in turn purchase materials from Tier 2 suppliers, who purchase from Tier 3 suppliers...

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Part 2. Carmaker-Supplier Networks: How Close Is Close Enough?

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pp. 133-134

Parts plants are like planets revolving around a star, the final assembly plant. Some parts plants are arrayed in very tight orbits within a few miles of an assembly plant, whereas others are in wide orbits thousands of miles away; most lie between these two extremes. This section of the book explores three key elements of the...

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Chapter 6. The Closely Linked Supply Chain

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pp. 135-158

U.S. assembly plants together receive 2 billion pounds worth of parts per day in 20,000 shipments, some from nearby and some from the other side of the planet (Cottrill 2000; Penske Logistics 2007). In an industry characterized by colocation, physical proximity is mutually reinforcing. Assemblers prefer...

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Chapter 7. Seat Supplier Right Next Door

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pp. 159-180

The previous chapter showed that three-fourths of parts plants are located within a one-day drive of the final assembly plants, but only a few were within a one-hour drive. Invariably, one of the handful of parts plants within the one-hour radius of the assembly plant is a seat supplier...

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Chapter 8. Delivering the Goods

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pp. 181-202

The task of connecting the complex chain that links parts makers with final assembly plants has been outsourced to logistics specialists. Transport management is not a core competence of either carmakers or parts suppliers. With widespread diffusion of just-in-time delivery, demand for pinpoint timing...

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Part 3. Shifting Fortunes along Auto Alley

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pp. 203-204

When GM, Ford, and Chrysler controlled more than 90 percent of the U.S. auto industry as “the Big Three,” southeastern Michigan was the center of auto manufacturing, research, and administration, and “Detroit” was a one-word term that encompassed the totality of the U.S. auto industry. At the peak of their dominance during...

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Chapter 9. Emergence of Auto Alley

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pp. 205-227

Auto Alley became the home of the U.S. auto industry primarily because of transport costs. The most critical transport factor for carmakers is the cost of shipping vehicles from final assembly plants to customers. Because assembled vehicles are bulky and fragile and tie up a lot of capital, it is imperative...

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Chapter 10. Abandoning Ohio: A Tale of Two Cities

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pp. 229-249

Ohio has long been the second-leading motor vehicle production state behind Michigan. The state has accounted for about 15 percent of total U.S. motor vehicle employment, parts plants, and final assembly plants. Unlike its Great Lakes neighbor to the north, Ohio increased (at least slightly) its share of the...

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Chapter 11. Chassis Suppliers Move South in Auto Alley

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pp. 251-274

The chassis makes a vehicle safe to drive and provides passengers with a comfortable ride. Because the undercarriage of the vehicle is largely invisible, motorists generally don’t know who has made the components, and they generally don’t care. Unlike the powertrain, chassis performance rarely influences...

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Chapter 12. Working for Suppliers

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pp. 275-298

The auto industry has been moving south in Auto Alley primarily because of labor considerations. Wage rates have been lower in the South than in the Midwest, and union membership has been lower. As the auto industry has moved southward, it has been transformed in a generation from a high-wage...

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Part 4. The Endangered U.S. Supplier

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pp. 299

On paper, the U.S. auto industry looks set to prosper in the twenty-first century. New vehicle sales in the United States remained at historically high levels through the 1990s and the first decade of the twenty-first century. Despite globalization of the industry, most vehicles sold in the United States in the early twenty-first century were...

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Chapter 13. The Rising Tide of Imports

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pp. 301-327

The national origin of the parts installed on vehicles assembled in the United States can be divided into three portions: parts made in the United States at factories owned by U.S.-based companies, parts made in the United States in foreign-owned factories, and parts imported from other countries. This...

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Chapter 14. The Driving Force: Electronics Suppliers

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pp. 329-354

A 1960 vehicle needed electrical power to operate little more than the lights, radio, heater motor, and wipers. The availability of ever cheaper and faster microprocessors has spawned a tremendous amount of control systems applications in the automotive industry in the last two decades. From engine...

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Chapter 15. Conclusion: Surviving the Car Wars

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pp. 355-369

We know much more about the identity and struggles of the companies whose names are on the vehicles. Much is written about the histories of the companies and their leaders, the features of their brands, and the distinctive assets and the challenges of each. But vehicles are made of thousands of parts...


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pp. 371-395

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The Authors

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pp. 397

Thomas Klier is a senior economist in the economic research department at the Federal Reserve Bank of Chicago. His research focuses on the effects of changes in manufacturing technology, the spatial distribution of economic activity, and regional economic development. Since joining the Chicago Fed in 1992, he has written widely...


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pp. 399-424

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About the Institute

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pp. 425

The W.E. Upjohn Institute for Employment Research is a nonprofit research organization devoted to finding and promoting solutions to employment- related problems at the national, state, and local levels. It is an activity of the W.E. Upjohn Unemployment Trustee Corporation, which was established in 1932 to administer...

E-ISBN-13: 9780880994347
E-ISBN-10: 0880994347
Print-ISBN-13: 9780880993333
Print-ISBN-10: 0880993332

Page Count: 419
Publication Year: 2008

Edition: First