Macroeconomic Impact on Domestic Automotive Part Manufacturing

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The United States has a long and distinguished history of automotive (auto) manufacturing. Automobile and auto-part (parts) manufacturing have historically moved hand-in-hand in the U.S. Although auto manufacturing is the second largest sector of U.S. manufacturing industries, the parts industry provides significantly more jobs. There are roughly 1.6 million jobs tied directly and indirectly to the parts industry (Wething, 2012).
In light of substantial globalization within the market, potential capital investment by parts manufacturers must be based upon a sound analysis of applicable macroeconomic determinants such as: the growth rate of Gross Domestic Product (GDP), the business cycle, fiscal and monetary policy, the respective effects of those policies on unemployment and interest rates, the influence of international trade, and demographics. The purpose of this analysis is to identify the relative impact of macroeconomic variables on the parts manufacturing industry, and particularly the effects on manufacturers considering capital expansion.
The following research of macroeconomic variables and subsequent recommendation provide the basis for an informed decision by manufacturers whether to pursue contemplated operational expansion.

The auto and parts industries are crucial sectors of the American manufacturing base. A typical year shows the auto industry contributes approximately 3-5% to our GDP. The parts industry individually accounted for 2.4% of the GDP in 1997, and 1.4% of the GDP in 2010 (Office of Transportation and Machinery, 2011). Additionally, the auto and parts industries are industries of consumption utilizing raw materials and products from other manufacturers. The numbers above fail to identify th...

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...a.edu: www.ibrc.indiana.edu/ibr/2010/spring/article2.html

Office of Transportation and Machinery. (2011). International Trade Administration. Retrieved June 10 2014, from U.S. Department of Commerce: trade.gov/static/2011Parts.pdf

U.S. Bureau of Labor Statistics. (2014, April). Automotive Industry: Employment, Earnings, and Hours. Retrieved June 3, 2014, from www.bls.gov: www.bls.gov/iag/tgs/iagauto.htm

U.S. Department Of The Treasury. (2014, January 10). Financial Stability. Retrieved June 8, 2014, from www.treasury.gov: www.treaasury.gov/initiatives/financial-stability/TARP-Programs/automotive-programs/Pages/default.aspx

Wething, R. E. (2012, January 31). Jobs in the U.S. auto parts industry are at risk due to subsidized and unfairly traded Chinese auto parts. Retrieved June 4, 2014, from www.epi.org: www.epi.org/publication/bp336-us-china-auto-parts-industry/

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