Right to Work States Dominate Auto Production

Excluding the four states that banned forced unionism between 2012 and 2016, the share of all automotive production occurring in Right to Work states rose from 42% in 2006 to 55% in 2016.

South Carolina BMW Plant Employment Projected to Rise to 11,000

The extraordinary success of BMW’s factory located in Right to Work South Carolina, documented in detail this July in reports for the Associated Press (AP) and the New York Times, is illustrative of how states with laws prohibiting compulsory union dues and fees dominate U.S. auto production today.

As the July 11 AP news story noted, BMW’s South Carolina plant, located near Spartanburg in the state’s Upcountry region, now produces roughly 400,000 vehicles annually.

More than two-thirds of these U.S.-assembled vehicles are exported abroad to China, Germany, and other countries.

‘Good Cars Can Be Made at a Reasonable Cost in the U.S.’

Since the South Carolina plant opened in 1994, BMW has poured nearly $9 billion into its U.S. operations. According to the AP, this facility now produces BMW’s X3, X4, X5 and X6 models.

Production of the new X7 model is expected to begin in South Carolina later this year.

Over the course of the next three years, the company plans to invest an additional $600 million in Right to Work South Carolina and add 1,000 jobs, bringing BMW’s total employment in the Upcountry to 11,000.

Reflecting on the impact of BMW’s historic decision to open a U.S. factory late in 20th Century, Erik Gordon of the University of Michigan’s Ross School of Business has observed:

“The plant overcame qualms to show the world that good cars can be made at a reasonable cost in the U.S. That led to a renaissance in carmaking . . . .”

As of 2016, 72% of U.S. Auto Production Occurred In Right to Work States

BMW in Right to Work state of South Carolina

Compensation of BMW’s employees in Right to Work South Carolina is very attractive, especially given the state’s low cost of living.

Moreover, as an article by reporter Christopher Rauwala published in Automotive News Europe in 2014 noted, the BMW factory features “state-of-the-art automation” such as robots whose “flexible arms . . . help workers lock in plastic frames inside a door, relieving them of tasks that can cause wrist injuries.”

National Right to Work Committee Vice President Matthew Leen commented that the very flexible work rules that industry observers recognize as key to BMW’s success in South Carolina are endemic to states that prohibit forced union dues.

“Right to Work states represent the future of the U.S. auto industry,” said Mr. Leen.

“As recently as 2006, U.S. Commerce Department Bureau of Economic Analysis [BEA] data show that less than 28% of the total American output in automotive manufacturing took place in Right to Work states.

“By 2016, the most recent year for which such data are available, Right to Work states combined, then 26 in number, yielded 72% of U.S. production in this sector, in dollar terms.

“Most of the Right to Work growth can be accounted for by the fact that two of the four states that enacted Right to Work laws between 2012 and 2016 are Michigan and Indiana, respectively #1 and #2 in automotive output. But this is far from the whole story.

“Excluding the four states that enacted Right to Work laws between 2012 and 2016 from the U.S. total, and considering just the 22 states that had already banned forced unionism in 2006, the Right to Work share of automotive output grew from 42% to 55% over the next decade.”

Right to Work Output Rises Rapidly as Forced-Unionism Output Declines Significantly

“Real automotive manufacturing GDP in these 22 states grew by 33% from 2006 to 2016, but it fell by 11% in the 24 states that were still forced-unionism as of the end of 2016,” Mr. Leen continued.

“The overwhelming advantage Right to Work states have enjoyed over forced-unionism states in attracting automotive manufacturing investment ought to spur legislators to take action in Ohio, Illinois, and other struggling states where involuntary union dues and fees are still permitted.”

Mr. Leen vowed that the National Committee and its members would do everything possible to assist grassroots efforts to abolish compulsory unionism in the states that continue to lack Right to Work protections today.

(source: September 2018 National Right to Work Newsletter)