Posted by: John Tozzi on November 24, 2008
As I was reading about the auto industry bailout on the way into work this morning, a question occurred to me: How many small businesses depend on the US auto sector?
I don’t think I’ve seen a figure reported in any of the coverage. I just did a quick Census search, so this is very rough. But the answer is somewhere north of 50,000 companies whose fortunes are pretty directly tied to the Big Three.
That’s counting auto parts and tire manufacturers, parts wholesalers, and new car dealers, according to Census figures from the 2006 County Business Patterns survey. (One caveat: The Census counts “establishments” rather than companies, which means if the same company has two plants, they’re counted separately.)
Here’s a screenshot of my query results:
These 57,000 establishments employed 2.4 million workers in 2006, for an average of 43 employees each, with the average salary about $47,000. Now, some of these are suppliers to foreign automakers in the US, so they may not be as directly affected by the fates of Ford, GM, and Chrysler. Also realize that this doesn’t include those companies that sweep the floors at GM plants, etc. (It’s a lower estimate than some have put out there — one estimate said one in 10 US jobs depended on on the Big Three, but it turns out that’s only if you count car washes, etc.)
Those 50,000 companies should be at the heart of the discussion of any auto bailout. That’s why some people in Detroit want to put a different face on the bailout than three CEOs in private jets:
The carpool idea came out of meetings on Friday at Dura Automotive Systems Inc., an auto parts maker in suburban Rochester Hills. President and CEO Tim Leuliette said that during the weekend they contacted the automakers, suppliers, dealership groups and the United Auto Workers and the movement began building.
Industry representatives want Congress to see not just three CEOs in suits during the hearings, but the many people dependent on the automakers for their livelihoods, Leuliette said.
“Quite honestly, this is about America,” he said. “This is a process of people’s lives being affected, and sometimes they don’t know how to put a voice to those concerns.”
If you’re trying to wrap your head around how much is at stake in how this gets resolved, think of the Small 50,000. And if anyone has seen a more precise estimate of how many small companies depend on Detroit, please pass it along.