Sunday, August 16, 2009

Cash for Clunkers - What's in it for NH?

Park Nameplate Company - Dover, NH manufacturing plant

At first glance, it might seem like the "Cash for Clunkers" auto rebate program is a targeted effort to help the Big Three automakers and provide some relief to Detroit's economy.  Many in NH may think that the program will only benefit auto manufacturers in far away states, and doesn't have much to do with NH's economy.  I sure did at first, but  after some digging, I learned that's not the whole story.

For some background, you might want to check out how  Wikipedia describes the Cash for Clunkers program:
The Car Allowance Rebate System (CARS), colloquially known as "Cash for Clunkers," is a U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel efficient vehicle when trading in a less fuel efficient vehicle. The program was designed to provide stimulus to the economy by boosting auto sales, while putting safer, cleaner and more fuel-efficient vehicles on the roadways. Although the program officially started on July 1, 2009, the processing of claims did not begin until July 24.
The $3 billion program, which represents around 0.3% of total stimulus spending, has been criticized for being wasteful and for falling short of its goals.  Econobrowser blogger and UC San Diego Professor James Hamilton recently compared the program with a New Deal era initiative to slaughter livestock.  Meanwhile, Science Daily reported on a UC Davis study that estimates the cost of reducing carbon emissions under the program at $237 per ton.  Carbon emissions in europe are currently $20 per ton and in the US they're expected to cost around $28 under the proposed cap-and-trade legislation.

Controversy aside,  I wanted to learn more about automobile sector employment, especially in NH.   I found a good high level summary at the US Bureau of Labor Statistics.  The table below gives a good overview of automobile industry employment in the US.  Aside from the recent steep drop in employment overall, the first thing that caught my eye was that parts manufacturing employs more than twice as many workers as pure auto manufacturing.  The next surprise was that parts manufacturers,  parts retailers and wholesalers, and auto dealers together employ over 10 workers for every one motor vehicle manufacturing worker.

Another surprise (for me anyway) came from this research report by an industry group called The Center for Automotive Research (CAR).  The introduction says that in 2007 there were around 239,000 auto workers employed by the Detroit Three, while there were 113,000 workers employed in the US by foreign auto makers.  I didn't realize that there were that many "foreign" auto manufacturing jobs in the US.

For me, this all says that while Detroit's economy may be all about the auto industry, the auto industry is definitely not just a story about Detroit.  I wondered what that might mean in terms of New Hampshire's auto related employment as compared to auto employment in the nation as a whole.

Michael Cousineau at the Union Leader did a great report back in June about auto industry related employment in NH. (Automotive Industry Ripple Effect in New Hampshire - via the Urethane Blog since UL archives old articles).  In this report, Mr. Cousineau details auto industry employment in NH and profiles a couple of auto parts manufacturers, including Park Nameplate in Dover (pictured above).

Mr.  Cousineau's article says that in NH there are over 900 companies providing around 17,000 auto related jobs.  That compares with around 21,000 construction jobs and around 61,000 jobs in the hospitality sector in NH (source: NHES August 2009 report).  

Finally, to put this all together, I wanted to get a sense of NH's share of total auto sector jobs compared to the US overall.  To determine this, I first had to gather up some stats:
Total nonfarm employment in the US -> 132 million
Total nonfarm employment in NH  -> 633,000
Total auto employment in the US -> 2.653 million
Total auto employment in NH -> 17,000
Some quick math on the stats above reveals that in the US, there are around 49 non auto workers for each auto industry worker (132/2.653).  In NH, there are only 36 non auto workers for each auto worker (633,000/17,000) .  So it appears that a higher proportion of the jobs in NH are auto jobs as compared to the proportion in the US overall.   (another way to think of this is that NH has .48% of total US employment (633k/132m) and .64% of total US auto employment (17k/2.653m) 

The math may seem confusing, but as long as I did it right, it does answer my original question.  It turns out we have more than our share of auto jobs here in NH.

So in the end, whatever the costs and benefits of the Cash for Clunkers program, it seems reasonable to expect that NH will get at least its share of the economic stimulus generated by this program.

(Aside: Not to feed the crazy too much, but there was an interesting kerfuffle over the website and its rather overzealous terms of service.)

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