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Economic Perspectives, Vol. 29, 3rd, No. 3, August 2005
Determinants of Supplier Plant Location: Evidence from the Auto Industry
The auto industry in the United States directly employs over 1 million workers, and is so large that gross motor vehicle output alone represents more than 3 percent of the U.S. economy. In discussing its fortunes, however, we often focus on the assembly segment of the industry. Assembly-related activities represent only the most visible part of this industry, the tip of the iceberg, if you will. Below the waterline lies the entire supply structure that ultimately feeds into the assembly line, at the end of which rolls off a car or light truck. That part of the industry, which encompasses everything from inputs such as steel coils to the subassembly of entire vehicle interiors, is larger, both by count of plants and employment, than the assembly part of the industry. Yet our understanding of the auto supplier industry is quite limited, mostly due to the noisiness of the publicly available data for that sector.
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