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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices The automobile industry in the United States consists of 14 major manufacturers: American-owned GM,
Ford, and Tesla, and 11 transplant manufacturers, i.e., manufacturing
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facilities that are ultimately owned by corporations headquartered abroad.33

Figure 2: 2017 Automobile Production in the United States, by Manufacturer 3,000

2,500

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Americm-Owned
Source: Wards Intelligence InfoBank. Data for Volvo, which began producing automobiles in
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Three major trends in automobile manufacturing are 1 continuing efforts to cut costs to remain globally competitive, 2 improving technological advancements in design and materials used to decrease vehicle weight lightweighting and enhance fuel efficiency, and 3 developing advanced technologies needed for increased vehicle connectivity, electrification and autonomous driving.
Manufacturers are increasingly cutting costs through automation and by relocating production to less expensive regions. The tariff reductions achieved in 1994 through the North American Free Trade Agreement NAFTA
incentivized offshoring of automobile and automobile parts production to 33 Wards Intelligence InfoBank. Volvo began production at its Charleston, South Carolina plant in October 2018 and is therefore not included in Figure 2.
34 See Section V, Part C.

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B. U.S. Automobile Producers Transition From Vertical Integration to Outsourcing Automobile Parts Production The automotive industry responded to declining profits and structural and technological changes in the late 1980s by switching from a vertically-integrated supply structure to a model that increasingly sourced automobile parts from independent suppliers serving multiple customers. This global shift was especially dramatic in the United States, where automobile producers were under tremendous pressure to become more efficient and reduce costs to compete with imports. Producers opted to purchase large modules and subassembly systems ready for
installation on their assembly lines, rather than assemble thousands of individual parts as before. In the United States, union wages were lower for component companies than for original equipment manufacturers OEMs.
Over time, U.S. automobile producers also shifted to negotiating large longterm contracts with a select group of tier-1 suppliers.35 As parts suppliers became separate entities from the automobile producers, the parts suppliers were forced to assume more responsibility for R&D and the design of innovative modules and systems and they began to maintain large inventories of various automobile parts.36 The percentage of parts that independent suppliers contribute to a vehicle has grown from 4050 percent in the early 1990s to over 70 percent today.37

35 A tier-1 supplier provides components directly to the OEM.
36 Thomas Klier and James Rubenstein, Who Really Made Your Car, The Federal Reserve Bank of Chicago, Chicago Fed Letter, No. 255a, Oct. 2008, https www.chicagofed.org//media/publications/

chicago-fed-letter/2008/cfloctober2008-255apdf.pdf.
37 Patrick McGee, Carmakers Face Threat from New Drivers of Profit, Financial Times, Aug. 8, 2017, https www.ft.com/content/40065b50-715e11e7-93ff-99f383b09ff9.

Mexico where input costs, particularly labor, were significantly cheaper.34

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the United States in 2018, is not yet available.