ILO: Auto Industry to Shift More Jobs

GENEVA January 7, 2005; Bradley S. Klapper writing for the AP reported that China, India and Eastern Europe will take more jobs away from the Western world's car workers over the next 10 years, as the automotive industry moves its parts-making operations from industrialized countries, the U.N. labor agency said Friday.

Factories in Japan, the United States and Western Europe are becoming assemblers of finished cars from parts made in other countries, where labor costs are a fraction of those in the West, said the International Labor Organization in a 144-page study.

"The increasing importance of suppliers will benefit emerging markets, particularly Central and Eastern Europe, China and India, allowing them to increase their share of global components production," the report said.

Auto industry jobs will fall or stagnate in the big three auto-producing regions, but China's employment in the sector will more than double by 2015 and its workers producing auto parts will more than triple, the report said.

"The potential for companies in advanced countries to lower labor costs by outsourcing, coupled with the pressure to continuously reduce costs," means that the developing world is "where it is almost certain that employment in future years will increase the most," ILO said.

Many Western automobile producers "have begun to treat Chinese component costs as the global benchmark for their suppliers elsewhere," where auto-industry workers make anywhere from 60 cents to $1.30 an hour, ILO said.

Wages in the United States are up to 25 times higher and in Germany up to 30 times higher, the report said.

The North American automotive manufacturing labor market shrank by 140,000 jobs, or 2.6 percent, between 2000 and 2003, with 70 percent of the losses borne by auto parts workers, according to the report. Many of these jobs have already gone to China and India, breaking the trend of U.S. companies expanding or relocating to Mexico, ILO said.

German firms in the automobile sector created 271,000 jobs abroad and 71,800 domestically between 1991 and 2001, according to the report. But the growth of domestic jobs stopped in 2001 and the trend toward "outsourcing" will intensify in the coming years as German companies further develop "offshoring plans" to its neighbors to the east, according to the report.

North America's share of global component manufacturing revenues may decline 11 percent and Western Europe's 20 percent by 2010, while Asia's share is expected to almost triple and Central Europe will gain 31 percent, the report said.