Carmakers’ rebound drives job growth in U.S. economy

LOS ANGELES — Taxpayers bailed out much of the U.S. auto industry. now the carmakers might be what saves the nation’s economy from falling back into recession.

After a massive restructuring and several high-profile bankruptcies, a leaner, more aggressive auto industry is making a comeback, hiring workers and ramping up manufacturing plants. from a trough two years ago, Ford Motor Co., General Motors Co., Chrysler Group and other auto companies have added almost 90,000 manufacturing jobs, a 14 percent increase, according to federal employment data.

Job growth in Michigan, which was devastated by the downturn, is even more robust. That’s why Michigan’s jobless rate stood at 10.9 percent in July, well below the 12 percent rate of California.

And it’s not just the Big three American manufacturers that are thriving. Nissan, Volkswagen and other foreign-based firms are expanding in the United States, putting billions of dollars into building and refurbishing plants. California start-ups Tesla Motors in Palo Alto, Fisker Automotive in Anaheim and Coda Automotive in Los Angeles are hiring and spending hundreds of millions of dollars designing and launching electric and hybrid vehicles.

Dealers are having a banner year, making more money per sale than they have in years and hiring back some workers let go during the recession.

"I have been adding dozens of employees for sales and sales support," said Mike Bowsher, who owns Chevrolet and Buick dealerships in Atlanta, Nashville and Orlando. "The economy is crazy, but our retail business is still growing and getting better."

The Commerce Department said Wednesday that orders for autos and auto parts jumped 11.5 percent in July, the most in eight years. An earlier government report showed the auto industry was the strongest segment of the manufacturing economy last month.

The expansion is important to the economy. Including factories, suppliers and dealers, the U.S. auto industry employs about 1.7 million workers and supports an additional 6.3 million private-sector jobs, according to the Center for Automotive Research. The center said those positions represent more than $500 billion in annual compensation and more than $70 billion in personal tax revenue.

"Autos are certainly picking up. as we get into next year, this all depends on the state of the consumer," said Gary Schlossberg, senior economist Wells Capital Management.

Auto sales peaked at about 17 million in 2000 and held near that level until 2007 before crashing to just 10.4 million two years later. they were heading back into the 13 million range — helped by a wave of new models, low interest rates and improving consumer confidence — only to be upended by the Japanese earthquake in March.

Shutdowns at Japanese-owned factories in Japan and the United States created inventory shortages that led to sharply higher car prices, lower demand and hundreds of thousands of lost sales for dealers. but with those disruptions now behind them, the industry is looking for sales to improve over the rest of the year.

The health of the U.S. economy is so dependent on autos that economists such as UCLA’s David Shulman are watching car sales to assess whether the nation’s recovery will accelerate or stall.

Although most analysts are predicting growth, some said the auto industry and the overall economy still face hurdles.

Big gyrations in the stock market make consumers nervous, said Shulman, the UCLA economist. Volatility tends to have an outsized effect on high-end customers, and that could undermine the luxury car market, which typically has strong sales toward the end of the year.

A weak U.S. labor market also makes shoppers wary of big-ticket items.

But no matter how the next few months go, Shulman said, the automobile industry is healthy enough so that for once, "it won’t be what puts the economy into a recession."

AUTOS REV UP

• Ford, General Motors, Chrysler and other auto companies have added 90,000 manufacturing jobs in two years.

• Dealers are making more money per sale than they have in years.

• U.S. auto industry employs 1.7 million workers and supports an additional 6.3 million private-sector jobs.

Carmakers’ rebound drives job growth in U.S. economy