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Irrespective of the GM/Toyota deal, our tooling
industry is already in decline.
Census figures show that
13,000 fewer people are working in the industry in 1980
than in 1970.
It takes years to create tooling capacity.
In terms of manpower, four years of apprenticeship and
ten years of experience are necessary to create a skilled
Our industry requires complicated machinery,
including mills, presses, duplicators, cutting tools and
gigantic machining centers.
It requires the use of heavy
cranes, long bays, and complicated support facilities,
including foundries, engineering and design, and tool steels.
In years past, the loss of major customers, such as
Packard, Hudson, Studebaker, and others, has taken its
If the Toyota-General Motors joint venture further
reduces the market for tooling in the U. S., the industry
will be further diminished.
General Motors is probably the largest manufacturer in
the world, producing 55 percent of the automobiles produced in
the United States and controlling 42 percent of the U. S.
automobile market. If this type of a venture is permitted for General Motors, the other manufacturers will not be far
Approximately 25 percent of all U.S. tools are built for the
automotive industry and its suppliers.
If Ford, Chrysler,
International Harvester, Caterpillar and others follow the General Motors route, can be anticipated, the effect upon
our industry will be devastating.
That this is not an idle
concern is demonstrated by the fact that shortly after the GM-Toyota announcement, Ford cancelled 33 million tooling hours and announced joint venture plans with Toyo-Kogo. Ford
is apparently not protesting the GM-Toyota venture. American Motors, (French owned), already sources its tools primarily
from its parent in France. Chrysler is protesting the Toyota venture, but continues to use Japanese engines from Mitsubishi
in its automobiles.
The Volkswagen Pennsylvania plant is
tooled primarily from Germany. Where does this leave the American worker in our industry? I'll tell you.
him out in the cold and out of a job!
I want this Committee to note the fact that neither
General Motors nor Toyota have made any public commitment in
connection with their joint venture as
to what portion of the
tooling for the California plant will be from United States
In addition, General Motors has made no public statement concerning the extent to which the proposed increases in its tooling capacity are intended to replace the tooling and machining obtained from outside sources. Unless General Motors and Toyota are willing to make public commitments that the new
venture will not reduce competition for tooling and machining
in the United States, the proposed GM-Toyota joint venture
should be disapproved forthwith!
I also want this Committee to note that the Japanese
have claimed that the joint venture will create 3,000 new
jobs in the California assembly plant where the merger car
will be assembled.
What has not been explained is that this
will cost a net loss of 18,350 jobs, most of them in the
assembly of an automobile generally accounts for about 15-20%
of the total labor and manufacturing costs of an automobile.
The remainder is accounted for by the manufacture or purchase
of the parts which are being assembled, plus the tooling which is required for the manufacture and assembly of those parts.
The second factor is that the automobile manufactured
in a GM-Toyota joint venture will replace either immediately
or in the future, an equivalent automobile which is either
now produced or which would eventually be produced in this country by General Motors. The joint venture vehicle has been
a replacement for the Chevette.
All of the jobs
associated with the production of the Chevette, its successor,
or another vehicle which GM would have otherwise manufactured,
jobs at the Flint, Michigan engine plant; the Buffalo, New
York axle plant; the Warren, Michigan front suspension plant;
and the Saginaw, Michigan steering gear plant.
all of these jobs will be lost.
In addition, a large number of highly skilled jobs will
be lost in the contract tooling and machining industry which is
a major supplier to General Motors.
Other supplier industries
will also suffer.
The 1982 U. S. Industrial Outlook estimated
that there were 114,000 workers in the contract tooling and
machining industry in 1981, a figure considered to be vastly
understated by the National Tooling and Machining Association.
Of those 114,000 jobs, about 25% or 28,500 are related to direct
or indirect support of the U. S. automobile industry.
Motors accounts for 55% of the U. S. auto industry, so 15,675 of
the jobs in this industry are attributable to sales to General
Assuming that 15% of those jobs are related to the
manufacture of the Chevette, then 2,351 jobs in the contract
tooling industry will be lost as
a result of the merger.
Add to that another 2,000 or so jobs attributable to other
suppliers of General Motors, which may or may not be a
large enough number to take into account jobs created by
support industries to the direct suppliers of General
Motors, and the total jobs which could be lost is 18,351.
It is important to note that although we have used the
an example in order to be able to have some finite
numbers to work with, similar figures would apply whether the
proposed joint venture vehicle replaced another vehicle
currently in production or whether it was a new addition to
the product line.
In either case, most of the sales of the new vehicle
would come at the expense of U.S. sales and U.S. jobs related
to other U.S. vehicles priced just above or just below the
proposed joint venture vehicle.
The reason is that automobile
demand, like the demand for any product, is not totally elastic.
If the addition of a new vehicle would produce new sales
without affecting the sale of other domestic autos, our problems with unemployment in the auto industry would be over. All U.S.
auto manufacturers would need do would be to produce a large
number of new models, each targeted to a slightly different
market segment than current models.
Sales of U.ş. autos would
go up dramatically and unemployment in the auto industry would
Of course, such an assumption is absurd.
There is only
a potential market for so many cars in the U.S. in a given year,
and the addition of new products only means that the pie is