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U.S. States Whose Auto Industry Was Hit Hardest During COVID-19

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U.S. States Whose Auto Industry Was Hit Hardest During COVID-19

Amid recent concerns about inflation, rising prices for new and used vehicles have received significant attention. According to recent data from the Bureau of Labor Statistics, the price of vehicles increased by 11.8% for new cars and a whopping 37.3% for used cars from December 2020 to December 2021. Even in an environment of rising prices across the economy, the spike in vehicle prices stands out.

Many observers have pointed to ongoing challenges with the supply chain and a tight labor market as factors that are limiting supply and leading to an increase in prices. A shortage of semiconductor chips and other essential car components has hampered auto production, while backlogs at major ports are making it difficult to transport the vehicles and parts that are being produced. Manufacturers have been struggling to staff plants at full capacity with the tightness of the labor market, a situation worsened by the surge in cases from the Omicron variant. As a result of these factors, industry experts estimated that the industry could see a shortfall of about 8 million vehicles.

While many of these challenges are coming to a head now, the auto industry has struggled throughout the pandemic. At the beginning of the pandemic in early 2020, total U.S. auto exports experienced their biggest drop since the Great Recession with the onset of COVID shutdowns. As more drivers stayed home and manufacturers operated at more limited capacity, exports fell from approximately $10.5 billion in March 2020 to around $3.2 billion two months later. While monthly exports rebounded to more than $10.5 billion again by August, the industry has continued to struggle to exceed pre-pandemic levels since. In each of the first 11 months of 2021, export figures from U.S. automakers trailed the figures for the corresponding month in 2019, despite surging demand.

These ongoing struggles naturally pose greater challenges for states whose economies depend more heavily on car and auto part manufacturing. Michigan, the traditional home of the U.S. auto industry and home to giants like Ford and GM, accounted for nearly $16 billion in auto exports in 2020. South Carolina, which is home to major manufacturing facilities for BMW, Michelin, and a number of other auto parts companies, and California, which is a major center in the burgeoning electric vehicle market, are also large exporters.

While these major exporting states have been hard-hit as a result of the pandemic and could face more challenges in the near future, many other states have seen even greater declines. A total of 43 states had lower auto exports in 2020 than in 2019, but the size of the decline ranged from a 2.3% reduction all the way to a 51% decrease in exports. And the characteristics of a state’s auto industry did not spare any states from these difficulties: the states with large export losses experienced declines regardless of whether their industry concentrated in passenger vehicles, tractor trailers, motorcycles, or auto parts.

The data used in this analysis is from the U.S. Census Bureau’s Foreign Trade Data. To identify the U.S. states whose automotive industries were hit hardest by the COVID-19 pandemic, researchers at CoPilot calculated the percentage change in state automotive exports between 2019 and 2020. Researchers also calculated the percentage of total state exports accounted for by the automotive industry, as well as the automotive sector responsible for the most exports in 2020.

Here are the states whose auto industries were hit hardest during COVID.

State Rank Percentage change in auto exports (2019–2020) Total auto exports (2020) Total auto exports (2019) Auto exports as a share of total state exports Largest auto sector
Mississippi     1     -51.0% $577,561,521 $1,178,914,774 5.6% Passenger Vehicles (Internal Combustion)
Washington    2     -49.2% $570,863,349 $1,124,850,637 1.4% Road Tractors for Semi-trailers
Pennsylvania    3     -45.0% $1,136,532,516 $2,066,302,460 3.0% Motorcycles
Wyoming    4 –    36.0% $23,253,092 $36,316,995 2.0% Bodies for Road Tractors
Virginia    5     -35.6% $832,570,089 $1,293,755,497 5.1% Road Tractors for Semi-trailers
Arizona    6     -35.2% $387,614,930 $598,240,715 2.0% Motor Vehicles for Goods Transport
Tennessee    7     -34.5% $2,523,963,500 $3,851,343,633 9.0% Passenger Vehicles (Internal Combustion)
North Carolina    8     -33.2% $900,084,365 $1,348,192,451 3.2% Drive Axles
Ohio    9     -32.9% $5,933,273,841 $8,848,509,170 13.2% Passenger Vehicles (Internal Combustion)
Arkansas    10     -30.7% $153,882,650 $221,979,604 3.0% Suspension Shock Absorbers
Indiana    11     -30.5% $7,012,902,262 $10,089,583,845 19.8% Gear Boxes
Michigan    12     -29.9% $15,987,107,753 $22,813,060,777 36.0% Motor Vehicles for Goods Transport
Delaware    13     -27.3% $291,052,509 $400,590,517 7.4% Passenger Vehicles (Internal Combustion)
Maine    14     -24.2% $34,631,865 $45,680,861 1.5% Trailers & Semi-trailers
California    15     -23.3% $11,085,046,400 $14,454,461,847 7.1% Motor Vehicles (Electric Motor)
United States    –     -21.1% $105,560,728,656 $133,834,667,670 7.4% Passenger Vehicles (Internal Combustion)

For more information, a detailed methodology, and complete results, you can find the original report on CoPilot’s website: https://www.copilotsearch.com/posts/states-whose-auto-industries-were-hit-hardest-by-covid-19/

magnesium

Approaching Magnesium Deficiency Threatens to Disrupt the European Auto Industry

IndexBox has just published a new report: ‘World – Magnesium – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

Limiting industrial carbon dioxide emissions in China has halted work in two-thirds of Shaanxi’s fifty magnesium plants, while the rest of the factories will be required to halve production. As a result, in the next six months, the global market may face a deficit, hitting the European automotive industry particularly hard. The German Non-Ferrous Metals Association (WVM) calls on the German government to begin negotiations with China to increase magnesium supplies to Europe.

Key Trends and Insights

Over the next six months, a deficit is expected in the world magnesium market. China, the primary supplier of magnesium, is cutting production in order to reduce greenhouse emissions as part of a comprehensive program to reduce energy consumption. According to IndexBox estimates, China accounts for 87% of world production and 81% of the total exports, so a marked reduction in supply in the country will be a shock to the global market.

In the Shaanxi Province, a critical magnesium-producing region in China, 35 of the 50 magnesium plants have been shut down to date. The rest of the factories were forced to cut production in half to save energy. In September of this year, the Yulin Municipal Development and Reform Commission (Shaanxi Province) introduced restrictions that require businesses to suspend or reduce production intensity by 50-60%, depending on the level of energy consumption of the company and the amount of its carbon dioxide emissions.

The world market reacted to the introduction of restrictive measures in China with a jump in prices. European average magnesium prices surpassed the $4,500 per tonne mark in early September, a peak since 2008, while back in June, they were at $2,800 per tonne (according to IndexBox estimates).

The automotive industry, consuming 35% of magnesium produced worldwide, could suffer from the metal shortage. The European market is almost entirely dependent on Chinese supplies, which cover 95% of the total demand for the metal since there is no domestic production within the EU. It is expected that the current reserves of magnesium in Europe, and Germany in particular, a key importer of this metal, will be exhausted by November 2021.

A cross-industry group of associations issued an urgent call for action against the imminent risk of European production shutdowns due to a possible suspension of supply chains. This letter has been signed by European Aluminium, Eurometaux, Eurofer, ECCA, IMA, ESTAL, Metals Packaging EuropeCLEPA, EuroAlliages, EUWA, and the European Automobile Manufacturers’ Association (ACEA), representing the 15 major Europe-based automobile manufacturers including BMW, Toyota, Volkswagen, Honda, Hyundai and Ferrari. Earlier, the German Non-Ferrous Metals Association (WVM) has sent a similar letter to the German government calling for negotiations with China to increase magnesium supplies to the EU.

Global Magnesium Production

Global magnesium production dropped to 1M tonnes in 2020, with a decrease of -7.5% on the previous year. In value terms, magnesium production declined from $3B in 2019 to $2.8B in 2020 estimated in export prices.

China (900K tonnes) constituted the country with the largest volume of magnesium production, comprising approx. 87% of total volume. Moreover, magnesium production in China exceeded the figures recorded by the second-largest producer, Russia (60K tonnes), more than tenfold. The third position in this ranking was occupied by Brazil (20K tonnes), with a 1.9% share.

Global Magnesium Exports

Global magnesium exports fell to 385K tonnes in 2020, waning by -9.8% against the previous year. In value terms, magnesium exports shrank from $1.2B in 2019 to $1.1B in 2020.

China prevails in magnesium export structure, recording 311K tonnes, which was approx. 81% of total exports in 2020. The U.S. (11K tonnes), Turkey (9.4K tonnes), Germany (9.3K tonnes), the Czech Republic (6.7K tonnes), Russia (6.7K tonnes) and Taiwan (Chinese) (5.8K tonnes) took a little share of total exports.

In value terms, China ($759M) remains the largest magnesium supplier worldwide, comprising 72% of global exports. The second position in the ranking was occupied by Turkey ($39M), with a 3.7% share of global exports. It was followed by the U.S., with a 3.4% share.

In 2020, the value of supplies from China and the U.S. dropped by -15.6% y-o-y and -15.3% y-o-y, respectively. By contrast, Turkey increased exports in value terms twofold.

In 2020, the average magnesium export price amounted to $2,747 per tonne, waning by -3.8% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Turkey ($4,110 per tonne), while China ($2,442 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Russia, while the other global leaders experienced more modest paces of growth.

World’s Largest Magnesium Importers

The purchases of the twelve major importers of magnesium, namely Canada, Germany, the U.S., Japan, South Korea, India, Taiwan (Chinese), Norway, France, Austria, Romania and Russia, represented more than two-thirds of total import. Mexico (8.6K tonnes) held a minor share of total imports.

In value terms, the largest magnesium importing markets worldwide were the U.S. ($156M), Canada ($92M) and Germany ($89M), with a combined 38% share of global imports.

Source: IndexBox Platform