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May 2006, No. 226

Evolving relations between carmakers and their parts suppliers have resulted in local, regional and international shifts in the location of production. An upcoming Chicago Fed conference in Detroit will examine these ongoing structural changes, which are affecting the prospects for the U.S. auto industry's continued concentration in the Midwest.

Last Updated: 04/13/2006

The U.S. Auto Supplier Industry in Transition

Thomas H. Klier, James Rubenstein

Motor vehicle production involves two types of firms: makers of parts (suppliers) and assemblers of finished vehicles (carmakers). The latter are better known to consumers because they market the vehicles with their brand names. However, suppliers employ three and a half times more people and add about 60% of the value of a finished vehicle.