The American automotive industry has led the American economy for many years. This industry has shaped our development, and influenced American culture and social mores. Now, ensnared by globalization and other dominant factors, it faces a difficult reality. The American automotive industry significantly impacted the lives of Americans. Detroit’s “Big Three” had the most significant roles in this. Chrysler, Ford, and General Motors were American symbols. They are credited for a significant percentage of all American jobs; they put numerous blue-collar families into the middle class, and helped America cultivate into the giant of the twentieth century. Unfortunately, the fabled automotive firms are not what they once were and are traveling down a precarious path. The viscosity of its situation has grown to a limitless problem. From a competitive foreign labor force, to an unreasonable foreign trade policy, problems have arisen on a vast spectrum. Out of the many problems that American carmakers have, three of them are the most prominent. The energy crisis, foreign trade policy, and finally, the perception gap are all the tribulations of the industry. If these three problems are deciphered, the American automotive industry may be able to exit out of volatility. The energy crisis began in 1973 when the Organization of Petroleum Exporting Countries (OPEC) cut off the supply of oil to the United States. This was carried on to the late seventies where another energy crisis began. In an effort to save energy the U.S. government began to set standards for fuel economy. This affected the auto industry in ways that the big three could not imagine. American car sales decreased due to fuel standards being suddenly changed. Subsequently, ...
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...stry. If this continues, this reputation will follow our industry and eventually destroy it. Mainstream media must learn to report accurate and feasible reports. Perhaps someday the American media will give GM and Ford the credit they deserve. And once they do, perception among the majority of the American public will rightfully change.
Toyota Prepares for Slow Start With New Pickup http://online.wsj.com/public/us
Norihiko Shirouzu, The Wall Street Journal, Sep 28, 2006
American Auto's Troubled Road http://hbswk.hbs.edu/item/5290.html
Garry Emmons, Harvard Business School, April 10, 2006
American auto industry seen at a crossroads http://www.msnbc.msn.com/id/10642724/
Roland Jones, MSNBC, May 9, 2006
Can't Stop Guzzling http://www.businessweek.com/investor/content/jul2006/pi20060719_167731.htm?chan=search
Peter Coy, Business week, July 20, 2006
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
Energy Crisis (1970’s) states that the crisis officially began when the “Organization of Arab Petroleum Exporting Countries (OAPEC) reduced their petroleum production and proclaimed an embargo on oil shipments to the United States and the Netherlands, the main supporters of Israel.” They did this because of the United States providing support to Israel during the Yom Kippur War (Energy Crisis (1970’s)). Although it “ended in late October, the embargo and limitations on oil production continued, sparking an international energy crisis” (Energy Crisis (1970’s)). The United States presumed that a boycott would damage the Persian Gulf financially, however, because of the rise in the price of oil, it actually helped them (Energy Crisis (1970’s)). The price of oil actually shot from $3 a barrel to $12 a barrel. (Energy Crisis (1970’s)). This produced tremendous lines at gas stations, exorbitant gas prices, and people were told not to put up Christmas lights. Other countries that were affected could only heat one room in the winter (Energy Crisis (1970’s)). The American auto manufactures were injured as well while they were turning out large vehicles, whereas Japanese manufacturers produced tiny fuel- efficient autos (Energy Crisis (1970’s)).
Purchasing a car is one of the biggest and most important decisions that someone will make during their lifetime. Over the past several years, the prices of a vehicle have increased significantly due to the rise of inflation. Economists compare averages of vehicles to calculate and determine the cost of every vehicle that ends up on the car lot. To determine the cost they interpret all the above information and include everything from the cost of making the vehicle to the time of selling it. In the long run, the demand for vehicles is inelastic because they become a necessity for many people. However, in the short run, the demand is elastic because the purchase of a new vehicle can be put off for a while.
In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists. If the government helped the ailing automotive industry, this industry would have to tighten their expenditures and plan for the future to prove to critics of the bailout that they would use the government funding to add value to the economy once again.
In the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...
Achieving world class business performance is a major challenge in today’s society. Manufacturing companies continue to face increased competition and globalization from its competitors. (1, p. 148). The automotive industry is one of the most volatile manufacturing industries that we have, which was evident in the 2008 – 2010 automotive industry crisis. (2) This global financial downturn served notice to the American automotive manufactures to raise the bar, in order to achieve word class business performance. General Motors, one of the country’s largest automotive manufactures, had to receive a government bailout to survive. During this time many with the corporation asked themselves, if we were a world class business, would we be facing this pending crisis. The answer was a resounding “NO”. General Motors has come out of bankruptcy and is focused on being a world-class business organization.
Shafer, Leah R. "Address on the Energy Crisis (15 July 1979)." Dictionary of American History. Ed. Stanley I. Kutler. 3rd ed. Vol. 9. New York: Charles Scribner's Sons, 2003. 492-94. U.S. History in Context. Web. 18 Apr. 2014.
The American auto industry is in a crisis, their vehicles are not in demand and they need government bailouts to keep their businesses afloat. American vehicles are not on demand because people want fuel-efficient, the car companies that are not at the point of bankruptcy, longer lasting vehicles, and hybrid cars. The American car companies are at a point of bankruptcy and people don’t want to buy cars from a company that may not be there in a couple of months. The foreign car companies are doing well and they much more dependable now that we are in an economic crisis. American cars are not fuel-efficient, not as long lasting, and don’t make many hybrids, so this affects their business negatively. I got some ideas that will make American car companies be on top of the industry again.
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
General motors in on the of the biggest auto makers in the United States. It holds about one percent of the United States employment. The company which sold over 219,000 vehicles in November of last year only was able to sell 155,000 cars and truck to the American Public declining 41 percent compared to last year. GM car sales of 58,786 were off 44 percent and truck sales of 96,091 were down 39 percent. The steep decline in vehicle sales was largely due to a significant drop in the market’s retail demand compared with last year, and continuing economic uncertainty that has affected consumer confidence. The market shares for General Motors have always been low, but recently it has plunged to a 20 percent starting from 1980. I have included a graph which shows the decline in all of auto industry.
This paper takes a look at the ways in which the ideas of Fordism and Taylorism helped the success of the U.S motor vehicle industry. The motor vehicle industry has changed the fundamental ideas on the process of manufacturing and probably more expressively on how humans work together to create value.
Spatz, J., & Nennenkamp, P. (2002, January). Globalization of the automotive industry-traditional locations under pressure. Retrieved January 14, 2012, from http://www.uni-kiel.de/ifw/pub/kap/2002/kap1093.pdf
(4) Abel, Ivan, Maali Ashamalla, and Robert Camp. Competitiveness of the US Automotive Industry: Past, Present, and Future. Rep. 2nd ed. Vol. 10. Indiana: American Society for Competitiveness, 2010. Print.
The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto