‘Onshoring’ Fuel Efficiency Manufacturing

With a bumper crop of fuel-efficient vehicles driving sales and jobs growth, automakers and their suppliers are looking ahead to a brighter future after the dark days of the recession. Since June 2009 when the industry hit bottom, the American auto industry has grown 24 percent, adding 150,000 jobs in motor vehicle and parts manufacturing.

And as demand grows for fuel-efficient cars, so does the business case to ‘onshore’ the production of fuel-efficiency components. Thanks in large part to the first round of stronger fuel efficiency standards that began this year, this onshoring is already happening.

Hybrid production exemplifies this trend. With U.S. hybrid sales booming (up 63 percent this year), Toyota and Honda are bringing production to the U.S. Honda plans to bring all global Civic Hybrid manufacturing to its Greensburg, Indiana manufacturing plant from Japan. Toyota has also announced it would bring production of its Highlander Hybrid from Japan to its Princeton, Indiana plant and the Prius to the U.S. by 2015.

With greater hybrid production comes even more jobs related to building the key components. Already Ford has moved battery pack assembly to the Rawsonville Plant in Ypsilanti, Michigan, and electric drive transaxles to the Van Dyke Transmission Plant in Sterling Heights, Michigan.

But hybrids and hybrid components are just the start of the story. With standards set to be finalized – which will double today’s efficiency to 54.5 mpg by 2025 – automakers

will need to make more fuel-efficient vehicles and buy more fuel-efficient components. The high volumes needed to meet stronger standards means that a large proportion of these components will be made in America.

Setting strong fuel efficiency standards means that manufacturers throughout the auto supply chain gain certainty for what innovative and efficiency-boosting products they should invest in. Regardless of one’s place on the political spectrum, we can all agree that changing the terms of the debate from ‘out’ to ‘on’ is a positive development for our country.


Roland Hwang is Transportation Program Director of the Natural Resources Defense Council