Introduction
As the nation was introduced into the current recession, the auto industry and its labor was likely hurt more than any other industry. Few years ago it was the homebuilding industry that was troubled the most and held the first place, but it gave that position over to the auto industry the following year. Why was this industry affected more than any other is very interesting and complex situation. There are several factors why there was such a huge negative impact on this industry, its performance, and the labor involved. Some of the major reasons are very high foreign competition, higher oil prices, and certainly the recession.
The Auto Industry
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...
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...stry such as service industry. This would soften the impact of recession on Michigan state economy and help in decreasing the current crime rate.
Works Cited
http://www.wsws.org/articles/2008/dec2008/auto-d04.shtml
http://mjperry.blogspot.com/2008/11/should-we-really-bail-out-7320-per-hour.html
https://www.mi.gov/mdch/0,1607,7-132-2941_4871_29359-15628--,00.html
http://www.mlive.com/news/detroit/index.ssf/2010/04/crime_stats_increase_in_downto.html
http://www.mlive.com/news/detroit/index.ssf/2009/07/detroit_homicide_rate_up_20_pe.html
http://www.mlive.com/news/detroit/index.ssf/2009/06/detroit_retakes_nations_top_ho.html
http://weblogs.baltimoresun.com/news/crime/blog/2009/06/detroit_underreports_murder_co.html
http://hamptonroads.com/2009/01/statistics-point-increase-crime-during-recessions
http://os.cqpress.com/citycrime/2009/CityCrimeRankings2009.htm
Two major car companies, General Motors (GM) and Chrysler, went bankrupt during the Great Recession. The Government had to make a choice; to get involved with helping them, which would help the economy, or let them fight for themselves. Both choices would leave some American citizens mad at the government. The Government decided to help them by establishing the Auto Bailout along with other programs like TARP. Although some think the Auto Bailout didn’t help small supplier companies, it was the right move for the government to take because it helped stop our economy from going further into a depression.
AutoZone has responded to changes in its' macro environment by placing stores in regions "that have large number of vehicles seven years old and older because of these cars' need for repairs and maintenance" (Wikinvest.com, 2012). Nationally, sales of new automobiles were at a 30-year low in 2009, but they have since rebounded slightly. Customers are still reluctant to buy new vehicles due to concern over high prices and general jitters about the economy. To combat this, many manufacturers have been offering discounts to lure consumers to purchase. As a result, AutoZone is facing a boon in the marketplace- "the cars and trucks in America's driveways have reached a record old age" (USAToday, 2012). In addition, there are more vehicles registered in the U.S. than previously.
Unemployment is rising and the entire global economy is falling. The story has become all too common. If there is a negative direction available to follow, we're definitely taking advantage of the opportunity. Americans became too accustomed to the period of inflation through the 1990s, and the ongoing recession is affecting most everyone. The Big Three automakers (GM, Ford and Chrysler) have made massive cuts to their workforces, and the entire national job market has been upended. My personal life has been greatly distorted due to these events, after Delphi (contracted by GM) outsourced most of their jobs and shut down 21 of their 29 plants in the US. In previous years, anyone would be capable of earning a comfortable wage by working for GM right out of high school. Now that these jobs have disappeared, union wages are no longer available. Unemployed individuals are desperate and working for minimum wage, and are therefore required to drastically change their standards of living. My dad is working seventy hours a week, and we're still barely able to pay rent. The so-called “American dream” has been transformed for many. It was once a goal to obtain what you need to be happy, but it is now just being able to manage to find a job capable of supporting your family. The downfall of the American economy could be accredited to many crises facing our country, such as the subprime mortgage crisis. A few years ago, we experienced an energy crisis in which oil prices soared, and this directly led to the current automotive industry crisis. One could argue that the automotive crisis and the downfall of the Big Three automakers has been solely responsible for bringing our...
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
Between January 2008 and February 2010, employment fell by 8.8 million, the largest decline in American history. The 2008 Recession, which officially lasted from December 2007 to June 2009, began with the bursting of an 8 trillion dollar housing bubble. Job losses during the recession meant that family incomes dropped, poverty rose, and people all over the country were suffering. Things like this don’t just happen. Policy changes incorporated with the economy are often a major factor. In this case, all roads lead to one major problem: Deregulation. Deregulation originating from the Carter and Regan Administrations, combined with a decrease in consumer spending, and the subprime mortgage bubble all led up to the major recession of 2008.
Jelier, Richard W. and Sands, Gary. Sustaining Michigan : metropolitan policies and strategies. East Lansing: Michigan State University Press, 2009. Book.
For decades, America has been the fastest growing economy country in the world, and Detroit was one of the most leading populous city in the United States. Back in 1930, Detroit was the fastest growing city, but now is the fastest shrinking city with more than 100, 000 abandoned homes (Heidi Ewing and Rachel Grady). Similarly, Bay Area economy was the envy of the nation with high employment rates and GDP growth like Detroit in the 1930s, and is currently suffering from losing jobs, residents, and status. Both Detroit and the Bay Area are single resource-based industries - where Detroit is manufacturing dominated, and Bay Area is high technology dominated. However, the Bay Area will not go bankrupt and become a ghost town in fifty years, because its high diversities in the economic opportunities are attracting people to stay and work here.
The city of Detroit, Michigan has always been known as the motor city for its car plants, a.k.a. “The Big Three” and Motown records, a.k.a. “Hitsville U.S.A.”. These are just some of the many things that made Detroit one of the thriving and driven cities within the United States. But as the saying goes, all good things must come to an end Detroit knows this hardship all too well. Detroit a city that once flowed with economic resources now struggles to compete with other major cities economically. Detroit is now known for crime, violence, a failing school system, and corrupt political figures. These and other negative effects on the city have caused major corporations to move to Detroit’s surrounding neighboring cities. Where did the city of Detroit go wrong? Can Detroit ever recover from such a heavy deficit? And if so, where would the city begin?
Economic- The home improvement industry is below their normal state with the present economic status. Consumers are putting their wants such as adding new appliances or redoing their bathroom on hold. Construction companies are also in a slump; with the building of new homes on a downward slope the large orders of construction companies are not being made
The economic recession was very difficult for NASCAR. Attendance at racing events deceased and sponsors left because of their own financial concerns. The biggest sponsorship hit came from the major U.S. automakers. Facing bankruptcy they could no longer afford to funnel in huge sponsorship dollars for NASCAR racing teams (Thomaselli, 2008). 75% of most racing team’s budget comes from sponsorship dollars. Over 70% of the teams drive a vehicle made a U.S. automaker which makes uncertainty around future competitiveness a concern. The recession had a big effect on NASCAR fans as well. Race cars fans could no longer afford the $91 ticket price for NASCAR events (Ferrell & Hartline, 2014). They are did not have as much discretionary spending to
Consumers were shifting their focus to cheaper, smaller, and more gas efficient Japanese and German imports; there were more than a million imports sold and registered by 1970. These Japanese and German competitors were starting to dominate the small-car segment of the auto industry. American car companies knew they had to respond to keep up with this growing car sector.
By 1954, GM had produced its 50 millionth vehicle in the US market and it controls 54% of the US auto market (“GM: History”, 2009. When the 1970s’s hit GM was forced to adapt to new regulations regarding fuel economy and emissions. This marked the peak of General Motors employment and is slow decline due to increasing competition from European and Asian companies entering the US market. Over the course of the 80’s and early 90’s GM acquires portions of Suzuki, 100% of Lotus and 50% of Saab. They also launch an entirely new auto line branded Saturn (Reuters Staff, 2009).
A vehicle is one of the biggest purchases a person will ever make. Over the years, the prices of an automobile have increased due to the rise of inflation. Due to a price index, the price of an automobile changes over a certain period of time. Economists compare averages of automobiles to calculate the cost of each vehicle that presents itself on a car lot. When all of the above is calculated within the purchase of an automobile, it affects every area of making the automobile to selling the automobile. All of these factors are impacted together for the automobile industry as a whole.
Climate change has been one of the most discussed issues in these modern days. It is prove on many researches that the increase in man-made green house gas emission can significantly affect the climate in the world, on every part of the globe. In the last few years, climate change has become the most researched subject in science. The reason is that because climate change can affect significantly to the earth and it has to be taken care of. In a business world, particularly in Automotive Industry, climate change is also one of the must discussed subject, and because of automobile is one of the factors that produce the most CO2 (Carbon dioxide), it become one issue that force automotive industry to change their product to reduce the amount of CO2 emission.
Starting in the 1920’s America began its shift towards a consumer culture as the economic growth of the nation began to depend more on the proliferation of consumer goods than of capital goods. Even at the outset of this trend, the automobile held a significant place in the new consumer economy. The automobile, which was once thought of as a rare luxury, was being sold by the millions. Assembly lines were becoming more efficient, thus allowing cars to be made more cheaply allowing the price of automobiles to drop. The growth of the automobile helped stimulate the economy through its dependence on other industries such as glass, rubber and steel, which were connected to the production of cars. These automobile related industries created new jobs, greater affluence and more spending power for millions of American consumers. Even at the beginning of America’s transformation into the consumer culture of today the automobile was at the forefront this conversion.