By DANIEL TAUB
Foreign automakers like Honda Motor Co. Ltd., Nissan Motor Co. Ltd. and Toyota Motor Corp. generate almost 1.3 million jobs nationwide and contribute more than $43 billion annually to the U.S. economy, according to a new study.
The number of U.S. jobs that foreign automakers produce as well as the amount of money they inject into the economy is increasing each year, and is far larger than previously thought, said researchers from the University of Michigan, which conducted the study.
The study was done at the request of the Association of International Automobile Manufacturers Inc., a trade group representing Japanese, European and Korean automakers.
“Frankly, we were surprised at how much greater the significance was than we thought,” said David S. Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan’s Transportation Research Institute. “It’s increasingly clear that the international auto sector is fully integrated into our economy. They are part of the team.”
According to the study, each domestic job in the foreign auto industry’s manufacturing and distributing sectors has a multiplier effect of 6.5. In other words, for each job in the industry, 5.5 other jobs are created.
Those jobs are at either contractors or other businesses that serve auto industry employees, such as restaurants, grocery stores and health maintenance organizations.
That multiplier effect is higher than the multiplier effect of other manufacturers, the study’s authors said, because the auto industry produces more jobs among subcontractors and because the auto industry tends to pay higher salaries than other manufacturers.
According to the study, the electronic computing equipment industry has a multiplier effect of 4.8; the household audio and video equipment industry has a multiplier effect of 5.7; and the telephone equipment industry has a multiplier effect of 5.5.
The average U.S. worker in the foreign car industry makes $44,200 a year, according to the study, while electronic computing equipment workers make an average of $42,900, household audio and video equipment workers make $39,600 and telephone equipment workers make $41,600.
Cole said University of Michigan researchers did not break out the specific multiplier of the individual U.S. headquarters of foreign car companies, such as those found in L.A. County.
But he said the salaries of jobs at headquarters tend to be higher than at manufacturing plants or dealerships, meaning more money from those jobs finds its way into other parts of the economy.
Nationwide, the study showed, foreign car companies injected $43.2 billion into the U.S. economy in 1996, the latest year for which figures were available. The spending which was in areas such as manufacturing purchases, employee salaries and advertising represented a 47 percent increase over 1992, when the companies spent $29.4 billion in the United States.