California Ranks 3rd in Auto-Related Business

Although few cars and trucks are manufactured in California, a growing concentration of importers, distributors, designers, marketers and parts makers has elevated the state to third place behind Michigan and Ohio in the economic importance of its auto industry, according to a just-released University of Michigan study.

Wages and benefits paid to the nearly 463,000 Californians working for auto industry-related businesses totaled $17.8 billion in 1998, the year from which the study’s data were drawn. Among other things, the state is a major supplier of vehicle electronic components.

The survey said Michigan’s automotive economy generated 1 million jobs and $44.7 billion in wages and benefits in 1998. Ohio had 630,800 auto-related jobs and $22.6 billion in wages and benefits.

Add the $68.5 billion spent at new-car dealerships in California in 1998 and the auto industry’s total economic impact in the state reached $86.3 billion, according to the report, prepared for the Alliance of Automobile Manufacturers and the Assn. of International Automobile Manufacturers.

Nationally, the report says, auto-related employment accounted for 6.6 million jobs and $242.8 billion in wages and benefits in 1998.

Because the report is based on 2-year-old data, it probably understates the size and strength of California’s auto industry today, analysts say.

Since 1998, Ford Motor Co. has begun relocating several major corporate units to Southern California and General Motors has opened an advanced design studio in North Hollywood.

“It’s important to note that a lot of the auto-related activity in California comes from import brands, and they are growing in terms of market share while the domestic car companies’ market share is shrinking,” said Bob Schnorbus, director of economic analysis at automotive consultant J.D. Power & Associates.

The industry-based report follows an effort earlier this year by the Los Angeles County Economic Development Corp. to get a handle on the scope of the area’s auto industry. That report, issued in January, said automotive businesses accounted for $60 billion in retail and wholesale sales in the five counties of the greater Los Angeles region in 1997 and employed 242,000 people--about the same as employment in the motion picture and construction industries, said George Huang, an associate economist with the economic development group.

Most of the state’s auto business is centered in Southern California.

All but one of the Asian car makers that sell vehicles in North America have located their U.S. headquarters in Los Angeles or Orange counties. There also are 20 automotive design studios in a corridor that stretches from La Jolla to Simi Valley.

California’s automotive-related jobs are more stable and less subject to production-driven layoffs and shutdowns than auto employment in manufacturing-intense states such as Michigan.