News 8
Why auto industry is key to economic recovery 
02:38 PM CDT on Thursday, July 2, 2009
>Through bailouts and bankruptcy, defenders of the failing U.S. auto industry say it supports one in ten American jobs.
There's some debate about that but few experts believe this recession will end, until cars start selling again. That's because the car business reaches into nearly every corner of the U.S. economy.
According to research by the Center for Automotive Research, cars are at the heart of dozens and dozens of related industries. "It's a big, interconnected economy and the car industry is right at the center of it,” said SMU economics professor Mike Davis.
It starts with raw materials, like steel, plastic, paint and textiles. All that stuff has to be stored in warehouses and transported on trucks to automotive parts suppliers.
"And then you have parts that are being made, not just in the U.S., but really coming from all over the world. And then you've got a chain supplying the suppliers,” Davis said.
Next comes the actual car makers who buy all those parts. And despite shedding more than 200,000 jobs in the last two years, they're still major employers. Some 2,500 people work at the GM plant in Arlington.
Those cars are then sold at dealerships. In North Texas, dealerships employ 24,000 people.
They're also the number one advertisers on TV, in newspapers and on radio. "Advertising is our number one expense and when things go bad, that's the first thing that gets cut,” said Drew Campbell of the New Car Dealers Association.
From here, Texas collects a 6.5 percent sales tax and a gas tax to build roads for cars to drive on. After that, the list of car-related businesses goes on and on: tires, repair, insurance, car rental, car wash, tolls.
Despite its diminished size, economists continue to believe the car industry is at the center of a healthy economy. "It's sort of a chicken and egg thing. The car industry will do better when the economy starts to do better. The economy will do better when the car industry starts to do better,” said Davis.
E-mail dschechter@wfaa.com.
