Comparing Location Decisions of Domestic and Foreign Auto Supplier Plants

25 Pages Posted: 3 Jan 2005

See all articles by Thomas Klier

Thomas Klier

Federal Reserve Bank of Chicago

Daniel P. McMillen

University of Illinois at Chicago - Center for Urban Real Estate

Paul Ma

University of Minnesota

Date Written: November 2004

Abstract

Plant locations in the U.S. auto industry have been moving southward for some time now. This paper utilizes a comprehensive dataset of the U.S. auto industry and focuses on plant location decisions of auto supplier plants that were opened less than 15 years ago in the U.S. We find that agglomeration continues to matter: suppliers want to be close to each other as well as to their assembly plant customers. We also find evidence of differences in location factors for domestic and foreign suppliers. Foreign suppliers exhibit a stronger preference to be near highways, other foreign suppliers and foreign assembly plants. That helps explain the different location patterns observed for these two groups within the auto region.

Keywords: Auto supplier industry, plant locations, agglomeration

JEL Classification: R12, R30, L62

Suggested Citation

Klier, Thomas and McMillen, Daniel P. and Ma, Paul, Comparing Location Decisions of Domestic and Foreign Auto Supplier Plants (November 2004). Available at SSRN: https://ssrn.com/abstract=639245 or http://dx.doi.org/10.2139/ssrn.639245

Thomas Klier (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Daniel P. McMillen

University of Illinois at Chicago - Center for Urban Real Estate ( email )

601 South Morgan Street
MC 144
Chicago, IL 60607-7121
United States

Paul Ma

University of Minnesota ( email )

19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://www.paulma.org

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