Are Assembly Plants Competing With McDonald’s?
Blaming the high cost of labor, Subaru has decided not to assemble EVs in the U.S. Photo courtesy Subaru
Good news! U.S. manufacturers employed 12,922,000 people in October, according to the Bureau of Labor Statistics (BLS). That’s 4 percent more than in October 2021 and 13 percent more than in April 2020, the manufacturing employment low point of the COVID recession. The U.S. has now regained all the manufacturing jobs lost during the pandemic shutdowns and added an extra 137,000 jobs to boot. In fact, October’s manufacturing employment total is the highest since November 2008.
Better still, there’s room to improve! According to the BLS, there were 810,000 unfilled manufacturing jobs in the U.S. in September. With the unemployment rate at 3.7 percent—the record low is 3.5 percent—manufacturers face stiff competition to attract workers.
That is putting pressure on wages. According to the BLS, the average hourly wage for manufacturing workers was $25.35 in October 2022. That’s 5 percent more than the average in October 2021, and it marks the second straight year in which the hourly wage has increased by 5 percent. Between 2012 and 2020, the hourly wage increased by an average of 2 percent annually.
That is making at least one OEM a little nervous. In an interview with Automotive News, Subaru’s CEO Tomomi Nakamura said his company is looking to boost production of electric vehicles, but that it will not be investing in its assembly plant in Lafayette, IN, to do so. It was a somewhat surprising revelation, since it puts Subaru EVs at a competitive disadvantage in the U.S. market. For consumers to get the full federal tax credit of $7,500 for purchasing a new EV, the vehicle must be produced in the U.S.
Subaru’s only U.S. factory, the Lafayette plant produces the Legacy, Outback, Impreza and Ascent models. But, the plant will not assemble future EVs in large part because of labor constraints. Nakamura claimed that part-time workers at a McDonald’s restaurant near the Lafayette plant were making $20 to $25 per hour, and that “is in competition with what temporary workers make at (the) plant.” He went to say that if Subaru were to add an assembly line there for EV production, it would be “quite challenging for us to secure workers.”
Subaru’s plan is to build a new EV assembly plant in Japan by 2027 and then export the vehicles globally, including to the U.S. The company, said Nakamura, “cannot consider building an EV plant [in the U.S.] unless wages come down.”
Thankfully, other OEMs are less concerned. For example, BMW plans to invest $1.7 billion in its U.S. operations, including $1 billion to prepare for the production of electric vehicles at its flagship factory in Spartanburg, SC. And, Honda Motor Co. plans to invest $700 million to retool three plants in Ohio for EV production.
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Battery producers are coming, too. For example, Panasonic Energy Co. is building a $4 billion lithium-ion battery manufacturing plant in De Soto, KS. And, Sunlight Batteries USA is spending $40 million to build a new battery assembly plant in Mebane, NC. The new facility will be equipped with five lithium-ion battery assembly lines, including a fully automated one and one dedicated to large-scale energy storage systems. The facility is expected to create more than 200 jobs.
Can workers at McDonald’s really be making as much as assemblers? It seems hard to believe. According to the BLS, workers at “restaurants and other eating places” earned, on average, $13.20 per hour in May 2021. Personally, all things being equal, I’d rather build cars than flip burgers. But, there’s no denying that every business is competing for workers these days, and wages are rising. It’s something to keep an eye on.
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