hill: automobile outlook · u.s.vehicleproduc&onremainssteady 10.8 8.7 5.8 7.8 8.7 10.4 11.1...
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![Page 1: Hill: Automobile Outlook · U.S.VehicleProduc&onremainssteady 10.8 8.7 5.8 7.8 8.7 10.4 11.1 11.7 11.9 11.9 11.8 11.7 0 2 4 6 8 10 12 14 2007 2008 2009 2010 2011 2012 2013 2014 2015](https://reader033.vdocuments.us/reader033/viewer/2022050521/5fa4ffdcf94205020b6e9676/html5/thumbnails/1.jpg)
Automo&ve Outlook 2015 FTA Revenue Es0ma0on & Tax Research Conference
September 29, 2015
Kim Hill Managing Director and President
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U.S. Sales growing slowly
16.1
13.2
10.4 11.6
12.8 14.5
15.6 16.5 17.2 17.5 17.7 17.8
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Million
Source: CAR, Automo/ve News, Words Automo/ve
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U.S. Vehicle Produc&on remains steady
10.8
8.7
5.8
7.8 8.7
10.4 11.1 11.7 11.9 11.9 11.8 11.7
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Million
Source: Wards, Auto News
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Employment &ed to produc&on
2013% 2014% 2015% 2016% 2017% 2018%
Vehicle%Produc6on% 11,100,000%% 11,600,000%% 12,000,000%% 12,300,000%% 12,100,000%% 12,100,000%%
Automo6ve%Employment% 686,100% 736,000% 760,000% 780,000% 760,000% 760,000%
500,000%
600,000%
700,000%
800,000%
%10,000,000%%
%10,500,000%%
%11,000,000%%
%11,500,000%%
%12,000,000%%
Employmen
t%
Prod
uc6o
n%
Source: Automo0ve News, Center for Automo0ve Research, BLS
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Detroit 3—losing hourly jobs
!304!!!287!! !279!!
!261!!!250!!
!213!!
!176!!
!140!!
!114!! !115!! !114!! !120!!!135!! !142!! !147!! !147!! !145!! !145!!
!105!! !100!! !98!! !95!! !90!! !85!!!74!!
!62!! !56!! !59!! !62!! !67!!!77!! !81!! !85!! !85!! !83!! !84!!
25.8%& 26.7%&
28.6%&30.6%&
33.8%&35.8%& 36.5%& 36.5%& 36.5%&
0!
50!
100!
150!
200!
250!
300!
350!
2001!
2002!
2003!
2004!
2005!
2006!
2007!
2008!
2009!
2010!
2011!
2012!
2013!
2014!
2015!
2016!
2017!
2018!
Employees!(Th
ousand
s)!
Hourly! Salaried! Salaried&Share&of&Employment&
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North American produc&on grows—in Mexico 2 million unit increase between 2012-‐2018
15.2 12.7
8.6
12.0 13.3
15.6 16.5 17.4 17.5 17.8 18.1 18.6
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Million
Source: Auto News, Wards
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What is Auto Manufacturing? Automo&ve Employment and Establishments in Michigan
Forging & Stamping
Machine Shops & Threaded Product
Coa&ng, Engraving & Heat Trea&ng
Ferrous Nonferrous
Tool/Die/Mold/ Jig/Fixture
Gasoline Engine/Parts
Powertrain
Electric Equipment Steering/Suspension
Brake Systems
Sea&ng/Interior Trim
Metal Stamping
Other Parts
Assembly
0
20,000
40,000
60,000
80,000
100,000
120,000
332 331 3335 3363 3361
Fabricated Metal Foundaries Metalworking Machinery Motor Vehicle Parts & Components
Motor Vehicle Manufacturing
Employmen
t
TOTAL Michigan Automo&ve Industry: 250,000 Employees 4,500 Establishments
Source: U.S. Department of Labor, Bureau of Labor Sta/s/cs, QCEW
Engineering Services
7
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Contribu&ons
• Na0onally, 6-‐8 mul0plier—en0re company/industry • Assembly plant—10 or higher • In-‐state, between 3-‐5 mul0plier (automo0ve states—14) • $500 billion compensa0on, $70 billion tax revenue, na0onally • Jobs supported throughout en0re economy—direct, indirect
and induced
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Effects of investment
• Suppliers—1st and lower 0ers add jobs, build facili0es • Sequencing facili0es • Supply chain and logis0cs configura0ons • Many service provider jobs—legal, finance, educa0on,
healthcare
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And, major contribu&ons across many sectors
• Manufacturing • Professional and Technical Services • Administra0on and Services • Wholesale Trade • Retail Trade • Transporta0on and Warehousing • Finance and Insurance • Management of Companies • Other Non-‐Manufacturing
Job crea&on in states across the country
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South Carolina woos Volvo • $500 million plant investment by Volvo • No unions—ac0vely prohibit (legal staff involvement) • Port of Charleston—overseas exports • Labor force and training
• Experience in High-‐tech manufacturing • Abrac0ve investment environment (business-‐friendly) • Has $50—$120 million bond-‐borrowing power (no legisla0ve approval needed) • Incen0ve package es0mated to be upwards of $200 million
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Missouri dances with Ford • Ford Motor Company has major plant in KC
• Company needed to upgrade plant for new product (Transit) and revamp current (F-‐150)
• Major investment needed, not much public support
• Ford began looking at other op0ons
• Gov. called legislature into special session
• Package of bills approved, crea0ng large fund to support investment by “major
transporta0on manufacturing companies” ($200 million)
• Ford immediately announced new product, later upgrade and new investment for F-‐150
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One assembly plant spends a lot of $$
Source: CAR report
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The North American automo&ve industry: Its all about the labor pool availability and capability
Almost 500 automaker facili&es, and over 7500 supplier facili&es in the United States
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Shie in manufacturing • No new plants in U.S. since 2009
– S.C. plant undersized—likely a CKD • Major MX investments-‐9 new announced • Ontario and Canada, mixed bag—currency exchange, higher wages,
tough union, distance • Reten0on of exis0ng facili0es becomes main priority in states
across the country and in Canada • Near-‐border states will see impact
– (southern +, northern -‐)
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What’s affec&ng sales mix
• Gas prices—not going up for a while – Pickups, SUVs are hot sellers • Ford sells 71,000+ F-‐series in August
– Small cars, electrics—not • VW
– Are you kidding me??? – Diesel stock just went down – No comparable in the industry
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What affects produc&on
• Supplier capacity – Carmakers went through major restructuring and the supply base went through massive
restructuring, as well – “It just takes one supplier not having the capacity and you can’t build a vehicle or a powertrain,” Joe
Hinrichs (Ford) says
• Supply chain interrupts – West coast ports impacted auto for six months – Especially Asian assemblers in U.S.
• New materials – Availability – Processing
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A short look forward • Mexico is a big play
– Major investment in vehicle produc0on facili0es – FCA moving small, less profitable vehicles there, large trucks etc., into
U.S. – Ford moving Focus out of MI, GM Sonic next?
• Alterna0ve fuel vehicles are tough sell – Without s0ff regula0ons, mandates – $2.50 gas
• China slowdown having posi0ve effect on U.S. industry – Commodi0es prices have fallen as China demand wanes—copper,
steel, oil, etc..
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What’s the future of the car? • A Kodak moment—the least important players are the manufacturers • Electronics becoming soul of the vehicle • Entry of IT in a big way
– Apple—cat’s out of the bag – Google—hires Krafcik – Uber—Tech center in Pibsburgh
• New Jeep pickup? • Who wants a new car anyway? Average income of new car buyer=
$80,000 • Average age new car buyer=51.7 years, average age of U.S.
popula0on=36.8 years
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• An average vehicle contains around 60 microprocessors to run electric content –more than 300 million lines of sorware code
• CISCO es0mates 90% of new value will be sorware-‐related
Growth in Electronics (>40%)
Advanced Drive Assistance System
Dedicated Short Range Communica0ons
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That darned consumer
• NADA predicts GDP through 2019 less than 3% • Gas below $2.50/gallon long term • Lights trucks at 56.8% in August 2015, up 8.6% from same
period a year ago • Top 3 vehicles-‐ F-‐series, Silverado, Ram (all trucks) • 4th vehicle, Accord sold 41,000 in August, F-‐series sold 71,000
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Factors that affect sales—a mixed bag
• Labor force par0cipa0on—historic low • However, full-‐0me employment drives up auto sales • Household wealth effect • Low interest rates • Increasing household financial burdens—Apple wants a piece of monthly
payments (phone lease plan) • Household budget outlays are shiring • Student debt burden—graduate with nega0ve equity • Motor vehicle price is rising—average price above $31,000
• Youth movement to ci0es—demand alterna0ve transporta0on
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Thank you
kimhill@hwa-‐analy0cs.com 734-‐355-‐1740