kansas automotive manufacturing and services

Kansas Automotive Manufacturing and Services 2008

1

2008

Center for Economic Development and

Business Research

W. Frank Barton School of Business

Wichita State University

September 2008

Kansas Automotive Manufacturing and Services


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Kansas Automotive Manufacturing and Services – Summary of Findings

The Center for Economic Development and Business Research, W. Frank Barton School of

Business, Wichita State University was given the task of analyzing various industry clusters in

the state of Kansas. The objective is to review historical employment trends, identify strengths

and weaknesses within the industry cluster, identify future occupational needs of the cluster and

employers’ perceptions of the current workforce supply. Notable findings are listed below:

Motor vehicles and parts dealers contributed to more than 12 percent of all retail sales

tax revenues in the state of Kansas in 2007.

Wyandotte County employed the most automotive manufacturing workers employed in

2006 with approximately 3,250 employees.

Sedgwick County employed the most automotive service-based employees in 2006 with

more than 1,600 employed.

The automotive cluster in Kansas is expected to need 3,878 net new employees from

2004 to 2014.

The state of Kansas is slightly below the national average for automotive employment

concentration with an industry concentration of 0.99.

From 2004 to 2014 the automotive cluster is expected to need a variety of employees

from accountants and auditors to drafters and technicians.

Industry leaders perceive an abundant shortage in the white-collar professional group

within the automotive cluster.

Industry leaders perceive a need over the next 10-15 years for employees with

mechanical and technical skill sets, as well as computer skill sets.


3

Kansas Automotive Manufacturing and Services – Defined

The Automotive Manufacturing and Services Cluster refers to a variety of industries involved in

the physical transformation, production or development of a material into a new, tangible

product, both retail and wholesale trade and automotive repair and service. The cluster is

defined by the North American Industrial Classification System as sectors 3361, 3362, 3363,

441, 4231 and 8111.

Kansas’ Strengths

Motor Vehicle and Parts Dealers The motor vehicle and parts dealers sector employed more than any other sector in the cluster,

18,493 individuals in 2006. This is 46.6 percent of the entire cluster. According to the Kansas

Department of Revenue the motor vehicle and parts dealers sector contributed $241.7 million in

sales tax revenues in Kansas in 2007, or 12.6 percent of all retail sales tax revenues.

Key Locations The number of automotive manufacturing and service employees is largest in Sedgwick County,

Johnson County and Wyandotte County, respectively. Johnson County employees received the

highest annual average wage in automotive manufacturing and services. Sedgwick County had

the largest number of automotive manufacturing and service establishments in 2006.

Wyandotte County

employed the most

automotive manufacturing

personnel in 2006. This is

partially due to the General

Motors Corp. plant in the

Kansas City MSA.


4

What’s next for Automotive Manufacturing and Services?

Automotive manufacturing and services is an important industry in the Kansas economy.

Automotive manufacturing and service companies supplied 3.5 percent of all employees in the

Kansas economy in 2006. The average annual wage in the automotive manufacturing and

service cluster in the state of Kansas in 2006 was $30,0051.

Nationally, the automotive cluster is expected to increase in total employment from 2006 to

2016 by 6.8 percent. The manufacturing portion of the cluster is expected to decline by 14.3

percent indicating the strong growth in the service portion of the cluster, a growth expected to

reach 13.9 percent from 2006 to 2016. The automotive cluster in Kansas is expected to increase

from 2004 to 2014 by an estimated 9.7 percent, or a 3,878 position increase. However, the total

openings by 2014 are expected to surpass 13,545 positions due to employee turnover and

retirement.

The occupations with the largest concentration of positions in automotive manufacturing and

services in the state of Kansas in 2004 included automotive service technicians and mechanics,

retail salespersons, cleaners of vehicles and equipment and team assemblers. These occupations

require on-the-job training, work experience in related occupations and post-secondary

technical education.

Automotive Manufacturing and Service Employment Year-Over-Year Growth,

Kansas and U.S.

Source: County Business Patterns, U.S. Census Bureau, 2006.

1 The average annual wage for the automotive cluster is without that of the motor vehicle manufacturing sector due to suppressed data.

-3.6%

5.5%6.3%

-2.7%

1.2%

-1.6%

12.3%

1.5%

-1.0%-0.4%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2002 2003 2004 2005 2006

KS US


5

Kansas Automotive Cluster Statistics (2006)

Number of Establishments 3,683

Number of Jobs 39,678

Percent of All Kansas Jobs 3.5%

Average Annual Automotive Cluster Wage2 $30,005

Total Automotive Wages Paid $1.2 billion

Level Change in Total Wages Paid from 2001 $217.4 million

Percent Change in Total Wages Paid from 2001 22.3%

Employment Location Quotient 0.99


Kansas Automotive Cluster Industry Employment Levels

Rank Industry Sector Employed Percent of Cluster 1 Motor Vehicle and Parts Dealers 18,493 46.6%

2 Automotive Repair and Maintenance 8,107 20.4%

3 Motor Vehicle Manufacturing 3,750 9.5%

4 Motor Vehicle and Motor Vehicle Parts and Supplies Merchant Wholesalers 3,725 9.4%

5 Motor Vehicle Parts Manufacturing 2,995 7.5%

6 Motor Vehicle Body and Trailer Manufacturing 2,608 6.6%

Kansas Automotive Cluster 39,678 100.0% Source: County Business Patterns, U.S. Census Bureau, 2006.

Top Five Automotive Cluster Counties by Employment

Rank County Employed Percent of Cluster 1 Sedgwick, KS 6,106 15.4%

2 Johnson, KS 6,055 15.3%

3 Wyandotte, KS 6,015 15.2%

4 Shawnee, KS 2,364 6.0%

5 Reno, KS 1,501 3.8%

Balance of Kansas Automotive Cluster 17,637 44.5%

Kansas Automotive Cluster 39,678 100.0% Source: County Business Patterns, U.S. Census Bureau, 2006.

2 The average annual wage for the automotive cluster is without that of the motor vehicle manufacturing sector due to suppressed data.


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ages


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*Industry Concentration refers to the industry concentration in Kansas versus the industry concentration in the

U.S. A concentration is relative to the respective geographies total employment.

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Summary of Kansas Automotive Cluster Industry Sectors by Total Employment

Industry Sector Employment Industry

Concentration* Number of

Establishments Total Wages

Paid ($1,000's) Average Annual

Wage^

Motor Vehicle and Parts Dealers 18,493 1.00 1,569 $642,460 $34,741

Automotive Repair and Maintenance 8,107 0.96 1,780 $216,990 $26,766

Motor Vehicle Manufacturing 3,750 1.86 3 N/A N/A

Motor Vehicle and Motor Vehicle Parts and Supplies Merchant Wholesalers 3,725 1.06 243 $141,389 $37,957

Motor Vehicle Parts Manufacturing 2,995 0.49 45 $96,188 $32,116

Motor Vehicle Body and Trailer Manufacturing 2,608 1.76 43 $93,525 $35,861

Automotive Cluster Total 39,678 0.01 3,683 $1,190,552 $30,005 Source: County Business Patterns, U.S. Census Bureau, 2006.

N/A refers to suppressed data.

*Industry Concentration refers to the industry concentration in Kansas versus the industry concentration in the U.S. A value above 1 indicates a stronger concentration in Kansas than

that of the U.S. A value equal to 1 indicates the same level of concentration in Kansas versus the U.S. A value below 1 indicates a weaker concentration in Kansas versus that of the U.S.

^The average annual wage for the automotive cluster is without that of the motor vehicle manufacturing sector due to suppressed data.

Kansas Automotive Cluster Employment Distribution, 2006


9%

7%

8%

9%

47%

20%

Motor Vehicle Manufacturing

Motor Vehicle Body and Trailer Manufacturing

Motor Vehicle Parts Manufacturing

Motor Vehicle and Motor Vehicle Parts and Supplies Merchant Wholesalers

Motor Vehicle and Parts Dealers

Automotive Repair and Maintenance


9

5 Key Occupations

The Occupational Alignment used in this portion of the analysis is based on the Kansas Department of Labor’s Occupational Outlook and degree

completions obtained through the Kansas Board of Regents. An Index (in bold) was calculated based strictly on economic criteria. Equal weights

were given to four criteria including the Median Annual Wage, Base Year Employment (2004), Total Openings (2004 to 2014) and the Additional

Training Needed. Indices can range from 0 to 4. The larger the index value, the higher the economic impact the occupation has in Kansas.

Below are three charts listing various Automotive Manufacturing and Service Occupations. The first table illustrates employment needs at all

education levels. The second table illustrates employment needs for bachelor degree holders. The third table illustrates employment needs for

technical education, certificate programs and associate degree holders. It is important to keep in mind, occupations were ranked based on the

calculated index mentioned above and the occupational openings DO NOT include current shortages. Please see page 14 for definitions concerning

the tables below.

Occupational Alignment, Kansas Automotive Cluster, All Levels

Occupational Title Educational Attainment

Median Annual Wage (2004)

Base Year Employment

(2004)

Projected Year

Employment (2014)

Total Openings (2004 to 2014)

Total Completers

Training Leakage

Total Number Needed to Be

Trained

Additional Trained Workers Needed Index

1. General and Operations Managers

Bach + $69,243 640 733 214 183 31.1% 311 128 3.50

2. Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products

Moderate-term On-the-Job Training

$50,981 595 659 220 - - - - 3.00

3. First-Line Supervisors/Managers of Mechanics, Installers, and Repairers

Work Experience in a Related Occupation

$50,294 961 1,089 369 - - - - 3.00

4. Sales Managers Bach + $80,725 297 356 114 157 33.0% 170 13 2.75

5. Financial Managers Bach + $74,589 108 125 33 20 34.5% 50 29 2.75


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Occupational Alignment, Kansas Automotive Cluster, Bachelor’s Degree ONLY




(2004)

Projected Year

Employment (2014)


Total Completers

Training Leakage


Trained


1. Accountants and Auditors Bachelor's $48,755 180 215 69 64 33.4% 104 40 2.50

2. Industrial Engineers Bachelor's $62,962 89 106 39 40 47.5% 74 34 2.50

3. Mechanical Engineers Bachelor's $67,891 71 90 38 39 47.5% 73 33 2.50

4. Credit Analysts Bachelor's $43,451 77 79 14 9 34.5% 21 13 2.25

5. Business Operations Specialists, All Other Bachelor's $51,688 65 82 28 18 34.5% 43 26 2.25

Occupational Alignment, Kansas Automotive Cluster, Technical Education or Associate’s Degree




(2004)

Projected Year

Employment (2014)


Total Completers

Training Leakage


Trained


1. Bus and Truck Mechanics and Diesel Engine Specialists

Postsecondary vocational training $34,258 539 597 197 261 25.5% 265 4 2.50

2.

Drafters, All Other


3. Industrial Engineering Technicians

Associate degree $42,286 35 47 19 16 18.6% 23 7 2.25

4. Automotive Service Technicians and Mechanics

Postsecondary vocational training $33,800 4,850 5,423 1,860 2,710 29.0% 2,620 - 2.00

5.

Mechanical Drafters



11

Available Workforce as Perceived by Cluster Industry Leaders

Docking Institute of Public Affairs personnel interviewed leaders from automotive

manufacturing and service companies in the State of Kansas from May 26 to June 6, 2008. Ten

industry leaders were interviewed. The sample was not randomly drawn. Rather, the

employers with the largest workforces were targeted for interviewing. The responses shown in

this report are suggestive and not inferential – similar to that of a focus group.

Interviews were designed to assess industry leaders’ perceptions of strengths and weaknesses of

their cluster’s workforce quality and supply in Kansas, types of training on basic and industry-

specific skills most needed among new hires, and anticipated growth in cluster workforce needs

over the next 10 to 15 years.

Occupational Segmentation as Perceived by Industry Leaders

Additional Training Needs as Perceived by Industry Leaders

Clerical and Office Staff

13%

White-Collar Professionals

9%

Engineers, Designers, Others…

2%High-Skilled Blue-Collar

39%

Low- and Semi-Skilled Blue-Collar

37%

Automotive Industry Workers

3. Interpersonal Relationship Skills

4. Work Ethic/Responsibility

Thinking about your industry in the next 10-15 years, in what areas do

you think future employees will need additional training or

improvement?

1. Mechanical/Technical Skills

2. Computer Operation Skills


12

Supply of Workers by Skill Level

Ease of Hiring by Skill Level

0 1 2 3 4 5 6 7 8




High-Skilled Blue-Collar


Number of Respondents

Job

Cat

ego

rie

sAutomotive - Supply of Workers

Abundant Supply

Adequate Supply

Small Shortage

Large Shortage

0 2 4 6 8 10 12 14




High-Skilled Blue-Collar



Job

Cat

ego

rie

s

Automotive -Ease in Hiring Good Workers Compared to 5 Years Ago

Easier

About the Same

More Difficult


13

Preparation of New Hires

Skill Sets Needed

Training Needs Public Education Might Address

0 2 4 6 8 10 12 14

Leaving High School

Leaving CC/Tech School

Leaving College

With Advanced Degree


Edu

cati

on

Le

vels

Automotive -Preparation of New Hires Coming to Work with...

Very Prepared

Somewhat Prepared

Not Prepared

2. Communications Skills

3. Mathematics Skills

4. Team Work Skills

5. Material Handling Skills 5. Work Ethic/Responsibility

2. Team Work Skills 2. Communuications Skills

3. Hands-On Experience with Tools 3. Social Skills/Interaction Skills

4. Hands-On Experience with Engines 4. Hands-On Experience in General

1. Communications Skills 1. Management Skills

Thinking of skills or skill sets needed at the workplace, are there certain skills that ____________ seem to lack or that could be improved upon?

High School Graduates Community College or Technical School GraduatesFour Year, Advanced, and Specialized Degree

Holders

1. Work Ethic/Responsibility

1. Advanced Math Skills

2. Welding Skills

3. Knowledge of Specific Technologies

4. Work Ethics/Responsibility

When thinking about new AND current workers, do you have industry-

specific training needs that the public education system might

appropriately address?


14

Definition of Terms

Cluster – refers to the concentration of employment within a given industry or industry sector within

a given region.

Industry Concentration – refers to the concentration of employment within a given area

relative to the United States. Industry Concentrations were calculated by dividing a given area’s

percentage of employment within a given industry, relative to all employees, by the nation’s percentage of

employment within a given industry, relative to all employees in the nation. An industry concentration

above one implies a strong or high potential industry concentration within the given area; a low industry

concentration implies a weak or low potential industry concentration within the given area.

Educational Attainment – refers to the required level of education needed to obtain a

job in the respective occupational code.

Total Openings – refers to the total number of job openings from turnover and from

occupational growth in the respective occupational code.

Total Completers – refers to the expected number of instructional program completers

attributable to the respective occupation from 2004 to 2014. This analysis assumes a constant

annual rate of instructional program completers based 0n 2006 completer numbers obtained

through the Kansas Board of Regents.

Training Leakage – refers to the number of program completers that are not expected to

work in Kansas six-months after degree completion based on data provided by the Kansas Board

of Regents.

Total Number Needing to Be Trained – refers to the number of program

completers needed to fill all job openings from 2004 to 2014 in the respective occupation taking

into account the training leakage rate.

Additional Trained Workers Needed – is the difference between the Total Number

Needing to Be Trained and Total Completers.

Index – refers to the ranking criteria used in the occupational alignment. Equal weights were

given to four criteria including the Median Annual Wage, Base Year Employment (2004), Total

Openings (2004 to 2014) and the Additional Training Needed. Indices can range from 0 to 4.

The larger the index value, the higher the economic impact the occupation has in Kansas.

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