What a difference two years make. In 2008 and 2009 the US auto industry was a disaster. "Companies were near bankruptcy, sales and market share were down, and job losses were inevitable," says Bruce Belzowski, assistant research scientist in the University of Michigan's Transportation Research Institute.

Since then, companies have restructured, brought in new management, reduced their footprint in terms of number of plants, and right-sized their number of employees. But also the way the US government set up the bankruptcies for Chrysler and General Motors (GM) made it possible for these companies to restructure so that they could break even, producing 11 million vehicles a year. "GM and Ford are profitable and Chrysler is near profitability," says Mr Belzowski.

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More important is the evolution of the US automotive industry. Today pick-up trucks, SUVs and mini vans get better fuel economy, and small vehicles have more content than ever before. Not only are manufacturers downsizing the vehicles, they are looking at different power trains as well. “We’ve never seen the percentage of demand so high,” says Jenny Lin, senior economist at Ford Motor Company. 

Widespread shift

Locations across the country are feeling the benefits of this resurgence. While the industry once was concentrated in Michigan and the Midwest, it now spans across the US. Indeed, figures form greenfield investment monitor fDiMarkets confirm that industry is on the move. In 2010 there were 96 US locations receiving some level of automotive sector investment (projects, capital investment, and job creation). In 2010 this figure advanced to 132 locations. 

Indiana was the largest recipient for both years, with 19 investments in 2010 and 12 in 2011. Michigan followed with 11 in 2010 and nine in 2011. Next was Kentucky with 10 in 2010 and eight in 2011. Ohio, Tennessee, North Carolina, and California saw the most dramatic leap for 2011 with 10, 11, and 10 investments, respectively, up from six, three and four in 2010.

Prime movers

Auto manufacturers from all over the world are positioning themselves to take advantage of the US's automotive comeback. Toyota, for example, finally began production in November at its $1.3bn plant in Blue Springs, Mississippi, after a delay of more than a year.

In May, Volkswagen (VW) opened its $1bn automotive production facility in Chattanooga, Tennessee, where it employs more than 2300 people and is expected to create 10,000 additional jobs among suppliers and services in the region. The Chattanooga Chamber of Commerce is also assisting VW in attracting a supplier base. So far, more than 20 have located in the region. Eight of those have set up shop in a supplier park developed by VW and situated very close to its factory.

Honda is also investing $50m to expand its transmission plant in Russells Point, Ohio, to increase capacity for the casting of aluminium transmission cases. The 7000-square-metre expansion will house high-pressure, die-casting operations to support the addition of a third transmission assembly line that began construction in December 2010. A new assembly line, part of a 18,500-square-metre plant expansion, will increase the its capabilities to manufacture Honda's latest transmission technologies. This latest project brings the company’s total new capital investment in its Ohio operations to more than $400m.

In October, Porsche opened a consulting subsidiary in Atlanta. This site is Porsche Consulting’s third foreign subsidiary, alongside the affiliates in Milan and São Paulo, Brazil. "Word-of-mouth referrals have generated fees of $20m with US clients for Porsche Consulting over the past five years,” says Norman Firchau, president and CEO of Porsche Consulting. "This record literally calls for a local presence here." In 2013, Porsche Cars North America will be geographically consolidating its operations in Atlanta. Both Porsche Financial Services and Porsche Business Services, which are currently located in Lisle, Illinois, will relocate to Atlanta.

Tax schemes

Tax incentives are playing some part in expanding auto manufacturing in the US and retaining related jobs. In October, lawmakers in Toledo, Ohio voted to grant Chrysler a 'job creation tax credit' that cuts the amount of taxes the automaker would have to pay on any future profits by 40%. Chrysler has expressed interest in building an $8m expansion to its Toledo Assembly complex, a move that would involve $357m being spent new equipment and the possible creation of 1105 new jobs.

In Missouri, auto manufacturers and suppliers that bring next-generation production lines to the state can take advantage of the Missouri Manufacturing Jobs Act. Enacted in 2010, the act makes it possible for companies to keep a portion of employees’ income tax withholdings for up to 10 years. This helped Ford decide to bring a new vehicle line to its plant in Claycomo, Missouri, rather than going elsewhere.

Consequently, Ford is investing at least $400m in this facility to upgrade the plant and accommodate the production of a new vehicle, while also retaining the full-time employment of at least 3750 workers.

Training the masses

Innovation is the ultimate driver moving the US auto industry forward. Here south-east Michigan remains a key centre for automotive research, with the University of Michigan and its Master of Engineering in Automotive Engineering qualification helping to redefine vehicles and the future of transportation.

Other universities are also fueling the sector. The Ohio State University Centre for Automotive Research, which is aligned with the university’s College of Mechanical Engineering, is focusing on vehicle propulsion systems. "We are involved in major research in electric, plug-in and fuel cell vehicles advanced engines," says Don Butler, the centre's assistant director for research projects and administrative manager. The research centre bridges the gap between fundamental research and the production process. The industry funds 40% of the centre, while the government funds the remaining 60%.

The Clemson University International Centre for Automotive Research offers a masters degree as well as America’s first PhD programme in automotive engineering. "There is no programme as integrated as this one," says Clemson’s director of renewable energy Nicholas C Rigas. For one, the campus is located in Greenville, South Carolina, only 10 minutes from BMW’s US headquarters in Spartanburg. Along with Michelin, it is a partner with Clemson's automotive research centre. "BMW does not have an R&D arm in the US, so this offers them a cheap alternative,” says Mr Rigas.

Not connected with a university but of no less importance is the Southwest Research Institute in San Antonio, Texas. "Our single-client project work is confidential with the sponsoring client and typically ranges from simple engine or vehicle testing as an overflow to their internal laboratories, to complex component design, simulations and performance and emissions development efforts on specific platforms,” says Robert Burrahm, assistant director in the business development, engine, emissions and vehicle research division at the Southwest Research Institute.

The institute is best known for its multi-client consortia programmes. These programmes develop new technologies to the pre-competitive stage. "All programme members receive royalty-free use of intellectual property and are free to use these technologies in their products," says Mr Burrahm. Helping to make its clients more competitive is the institute’s continuous development of new technology, which is transferred to its clients. “Our consortia allow this technology transfer at very low cost to our customers,” Mr Burrahm adds.

Home help

Some auto makers, however, need to just fill a skills gap at their plants. This is the case with VW at its operations in Chattanooga. The region had no history in auto manufacturing, so the Volkswagen Group of America partnered with Chattanooga State Community College to create the Volkswagen Academy. The academy and VW collaborate to design and implement educational programmes that are specific and germane to VW’s production environment. To build the workforce further, in mid-2011 the academy and Tennessee Technological University introduced a new bachelor of science degree in industrial engineering to train VW workers, its suppliers and other manufacturers.

Such schemes are leading the US's automotive industry out of the doldrums it found itself in only two years ago, and into a new era in which the country's car-making skills are more diverse and widespread geographically. The US's economy may still be in a precarious position, but its motor industry is showing a resilience that many doubted it possessed in the dark days of the financial crisis.