Leaders in Washington are
trying to bring domestic manufacturing jobs back
after a 40 year long cycle of decline. American auto companies,
along with American labor, are committing their
treasure and their talent to make electric vehicles all
across america. A lot of great stuff
happening here in michigan and we are competing. Rivian unveiling a new $5
billion battery and assembly plant base just outside of
Atlanta. There's a battle right now
and whether the companies want to admit it or the
states want to admit it, like Michigan, they are
battling for investments in automotive like they've
never had to do before. These changes could disrupt
huge swaths of the Midwestern economy. Tens of thousands of people
build parts for gasoline powered engines in states
like Michigan, Indiana and Ohio. What a thousand workers took
to construct in 1970. We can now construct with
about 235, 240 workers. At its height, nearly 20
million people worked in the manufacturing industry. Today, it's about 13
million workers could end up competing for a smaller
pool of jobs that require a different set of skills. The lines that run to drive
oil or gas or any of a number of other fluids
around an internal combustion engine aren't
going to be there. Don't have to be there. Researchers believe that
surging demand for EVs could force businesses to pivot
quickly. We find that this transition
is already affecting workforce morale deeply. In some places, it's
positive there's hope for the future. But in many
other places, or at the same time with some individuals,
there is a lot of concern. We've been working on
products that we will manufacture in the future
that will support not only electric vehicles but other
electric applications. Can the US auto industry
weather the electric vehicle transition without leaving
workers behind? And will this pivot be a
boon or bust for people in the Midwest? The first
thing to know is that electric vehicles and
traditional cars are built in slightly different ways. These jobs just are very
different. So internal combustion
engines, they have crank shafts, spark plugs,
radiators, and the electric vehicle has the battery. So electric vehicles have
fewer moving parts and require less equipment. So typically they require
less manufacturing to build. The estimates put it at
about 30% less. In general, the body and the
chassis, the wheels, the axles and that kind of
thing are probably still going to be very much
similar in an EV in an electric vehicle as they
are in a car today. But the lines that run to
drive oil or gas or any of another, a number of other
fluids around an internal combustion engine aren't
going to be there. Don't have to be there. While the processes differ,
both types of car are built by workers with lots of
specialized knowledge. The typical person who I
think is on a factory floor today probably has a at
least a two or three year degree on manufacturing
technology. That's a big turnaround
from my grandfather's day, where the average worker
had been to eighth grade. Tesla is far and away the
leading manufacturer of electric vehicles in the
United States. But when it comes to motor
vehicles, just three companies dominate the US
industry. Historically, the big three
were General Motors, Ford and Chrysler. Now this group is playing
catch up to Tesla's burgeoning empire battery
factories and chargers. Workers in the Rust Belt
are now caught in the middle of this corporate showdown. Oftentimes when you work for
an internal combustion engine, you're working on
spark plugs and you're working on certain
mechanics of the car. But when you transition to
an electric vehicle, you're looking at batteries and
it's a very different kind of job. So there's a lack
of understanding as to whether these jobs will dry
up or be transferrable, if there's workforce training
and what kinds of needs the company will have in the
future. And so there's this kind of fear, uncertainty
about those that are currently in school and how
can they even train themselves to be ready for
the next jobs that these these factories offer? Most of the specialized work
occurs at secondary factories called OEMs. And OEM is an original
equipment manufacturer. When people talk about OEM,
they think about the automaker. They are fed
parts from hundreds, if not thousands of different
suppliers, and they produce a vehicle for the consumer
with the diversification of the auto industry. The suppliers have really
become an integral part of a lot of this. We are a supplier, an
automotive part supplier to the OEM customer. NGK Spark Plugs is one of
the biggest parts suppliers in the US. Got a large manufacturing
operation in Brazil of course throughout Japan,
but also manufacturing in Southeast Asia, in France
and also right here in the United States, in West
Virginia. This company and many, many
others are changing with the times as governments and
car companies commit to EVs. When you go beyond where we
are today and we think about the future and the
components that are in an electric vehicle, you've
got different types of bearings and other types of
rolling elements for electric vehicle motors,
and that will apply to all forms of mobility, whether
it's an e-bike or whether it's a autonomous delivery
vehicle in the future. So we're diversified and we
expect to become even more diversified as this
transition occurs. The big players are changing
plans, too. With electric vehicles. Some companies, like
General Motors, are trying to pretty much get as much
in-house as possible because they believe that they can
have a capital advantage as well as diversify their
revenue streams by having a product that maybe they can
sell to another OEM or even another industry like
locomotive or planes or anything like that. Car manufacturing is one of
the most important trades in the United States. Roughly 2.7% of gross
domestic product was linked to the production and sale
of cars in the States in March of 2021. At its height in 1950, just
one city, Detroit, built one of every two cars produced
in the world. I mean, Detroit became the
Motor City because Henry Ford decided that he would
do the mile to mass produce that and pay a living wage
to blue collar workers to pretty much come up south
wherever and work. Also, unions were huge in
the Midwest and that helped the average worker. Up until the fifties and
sixties. Benefits and protections
for workers was hard to come by. It was because of the
UAW and its work with the auto owners that vacations
were put into place insurance, health
insurance, dental insurance, the opportunity to retire
with a reasonably good retirement package. All of that came about
because of the union working with management. But these clusters of good
jobs went away almost as quickly as they appeared. Us manufacturing reached an
all time high of 19.6 million workers in the
1970s. And if you're in the
Midwest, that year was probably 1973. Even more dramatic changes
began to unfold in 1994 with the North American Free
Trade Agreement, or NAFTA. And after will tear down
trade barriers between our three nations. In this agreement, Canada,
Mexico and the United States eliminated the taxes that
are charged on items that cross borders. With NAFTA in place, North
America remained the world leading producer of
passenger and commercial vehicles. Halfway across
the planet, Asian countries were developing
manufacturing empires of their own, with the
admission of China to the World Trade Organization in
2001, competition to make all kinds of durable goods,
including cars, heated up. Critics of these policies
say they hurt American workers. The fact is NAFTA has been a
disaster for the United States. While in office, President
Trump renegotiated NAFTA and launched a trade war with
China. These moves so far haven't
drawn much activity back to the Midwest. Reversing offshoring or
trying to chase more manufacturing jobs through
trade policy was likely to be a disappointing public
policy because everybody agrees that a large share
of factory job losses over the past 3040 years have
been due not to China stealing our jobs or Mexico
stealing our jobs, but rather the loss of jobs due
to manufacturing workers being more productive. Mostly, we think about it
as technology. If you went back to 100
years ago, we were using hand tightening wrenches. By the 1970s and 1980s, we
started seeing computers. So doing this is what makes
the economy grow. But even as the economy
grew, the good jobs kept disappearing. Union
membership in key industries like auto manufacturing
have declined dramatically through 2020. The competition for good
jobs is more intense than it was in the past. The contract workers have
been around for a long time, but there haven't been as
many of them until kind of the last 20 or 30 years. If they need a worker on
the line, they can find someone to do that work
through an agency rather than having to bring that
person onto the workforce, which saves them money. And at the same time,
though, that worker doesn't get the protections that
most union workers would get. As of June 2022, just over 1
million people had jobs in the auto manufacturing
sector. More than half worked in the parts trade,
which may be impacted by the green transition. Washington lawmakers hope
that they can make the pivot. The bill I'm about to sign,
it's not just about today. It's about tomorrow. It's
about delivering progress and prosperity to American
families. In August of 2022, President
Biden signed the Inflation Reduction Act, which
included a $10 Billion tax credit to build new
manufacturing centers for EVs, wind turbines and
solar panels. An additional $2 billion
would go toward retooling old factories. We might actually see entire
plants shut down or close or have to transition, whereas
the assembly plants, for example, might be able to
just transfer from one four workforce kind of set of
skills to another. The auto industry is laser
focused on the new deadlines put forth by leaders in
government around the world. The new factories will be
highly automated and workers may need more in-depth
training. The changes could disrupt local economies
throughout the American Midwest. The fate of these companies
is very intimately tied to the fate of the communities
and whether the jobs will be there. But there are other
ways that US companies can kind of compensate for this
this loss of employment. So one is through their
supply chains and the other is through domestic
production, increasing domestic production. President Biden is hoping
that some of these workers can pivot gracefully. His $52.7 billion
investment in semiconductors could draw more companies
to the states. Today is a day for builders. Today, America is
delivering. This new law will attempt to
wrest critical industries from the grips of eastern
countries. For example, semiconductors
were invented in the US. But today Asian companies
dominate the global market. Over half of the batteries
used in the US come from companies that are based in
South Korea, Japan and China. So there's this big
opportunity for the US to invest more in the
batteries so as to bring them into domestic
companies and therefore kind of offset the loss of
employment. These plans to bring
manufacturing back, while important, are for now
largely speculative. Yes, EVs are growing and are
coming, but it's not the profit driver at this
point. But companies far from the
Midwest are determined to make an impact. Tesla got
its start in California, and that state is planning to
ban the sale of gasoline cars by 2035. At the end of the day, it's
about actually making green. And these companies saw the
rise of Tesla that I think led the way for a lot of
companies rather than that traditional ESG. The most important question
that remains is how soon demand for EVs will
materialize. Sales have stretched to 9%
of the global car market, according to the
International Energy Agency. Unless we can make that
change and make it pretty quickly, there are going to
be bigger problems to deal with. And so I think we all
know we have to do it. There was an overwhelming
sentiment among autoworkers that they had earned the
right to build the next American car because they
had devoted their entire careers, their entire
professions, including their needs and their bodies, to
building these cars. And this coincides with
these feelings of uncertainty that they don't
know if they will actually be able to be a part of
this new revolution. I don't think that Midwest
customer is ready for an exclusively electric
vehicle household. We just simply don't have
the charging infrastructure, not only in the Midwest,
but really across the entire United States. So it's going to take a
little bit more time. The Midwest is becoming
more open minded. I do think we'll see a
gradual transition as long as the infrastructure is in
place and the cars are affordable.
