A Brief Note On The Automotive Industry And Its Upstream And Downstream Industry
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The automotive industry also contributes in the economic development. AT Kearney analysis (2013) states that four additional jobs in upstream and downstream industries have been created by every job in the core automobile industry. This multiplier effect can be figured out by understanding the interdependence between automobile industry and its upstream and downstream industry.
The more obvious advantages on this economic development appear in the economic progress in the region, especially in the industrial clusters. The clusters form as original equipment manufacturer (OEM) plants usually surrounded by component manufacturing facilities. Related industries can be built to support core auto industry, such as steel plants, glass manufacturers, used car dealerships, aftermarket shops, and transportation service providers. It also means the new infrastructures will be needed, for instance roads, railway and freight connectivity, housing, and stores. The auto industry also contributes in the reducing urbanization level since most of the industry located on suburban areas. Therefore, it will attract the economies development into the new areas. It is enhanced with the increasing mobility the automobile provides so people can get easier to move across geographic regions.
By increasing people’s mobility, comfort, and safety, automobiles increase the quality of life. The development is also enhanced with job and skill created by the industry. AT Kearney analysis (2013) states that “about 313,000 people were employed by OEMs in the United States in 2010, and another 1.1 million worked for adjacent industries”. The number of OEMs employees in the US increased to 645,326 people on 2014, but decreased to 414,000 on 2015 (Bloomberg) ...
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... and match with automakers requirements. At this point, automotive suppliers give value added to the core automotive industry in their value chain.
To face today’s challenge, automakers should respond customers demand properly. One priority to achieve that goal is by encouraging innovation to create new technologies. To get the best value and differentiation on their products, automakers need to emphasize R&D and engineering projects. The automakers also have to collaborate with suppliers to meet the goal. . Suppliers should meet the automakers’ requirements of raw material to actualize their new technologies. Therefore, suppliers should utilize their speed-to-market and higher scale by make partnership with innovative nontraditional automotive electronics and infotainment suppliers (The 2015 Auto Industry Trends) By that, consumers can have more cost-effective,