Lead Up to the Crisis
The automotive industry crisis of 2008–2010 was a part of a global financial downturn. General Motors, Ford, and Chrysler, also referred to as the United States Big Three automakers, had limited access to offshore production, unlike their foreign equivalents. The New York Times wrote, “For the most part, the so-called auto transplants – foreign-owned car companies with major operations in the United States – have deep pockets and ample credit, and they are not facing potential bankruptcy like General Motors and Chrysler." Because of the rise in gas prices, fewer Americans were buying cars, thus disturbing the automotive industry. As the New York Times believed, the only reason foreign-own car companies were not struggling was because they were getting sales from the market in other countries. The foreigners had a greater pool of consumers than the Americans.
These American manufacturers had no other place to get money from, consequently creating a colossal problem for their businesses. With no source of income, the automakers were struggling to keep the company alive. The Big Three was first destabilized by the expensive automobile fuels linked to the 2003–2008 oil crisis. They also suffered from higher labor costs than their foreign counterparts. Through the figures, analysts were able to find that the number of cars sold in the United States was tied to home loans. Suddenly the number of home loans dried up, due to the mortgage crisis, and soon after vehicle sales declined dramatically. This all leads up to the automotive crisis, affecting the economy and the people of the United State...
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... these numbers, it was obvious the Big Three needed support. Ikensons’s whole argument pointed to the fact that the automotive industry in America needed assistance and that the companies deserved. The average annual wages for production workers at the Big Three was $67,480 and $81,940 for the skilled workers. The problem with the helpful companies is their legacy labor, this applying mostly to General Motors. For each active worker at General Motors, there were four retirees. At Chrysler, there were two retirees. At Ford, there was one retiree. This means the legacy labor cost burden for GM is significantly larger than its competitors. Even with the impact the United States economy suffered, the economy bounced back to a stable state.
Fixing the Automotive Crisis
TRANSITION: Once the economy was stable, the automotive industry experienced a well-deserved change.
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