The auto industry, especially in North America and Europe, seems to have nothing but bad news these days. Whether the subject is government bailouts, downsizing, labor relations, job losses, bankruptcy, mergers, or the price of gasoline, it appears to be one depressing piece of news after the next. Some alarmists even suggest that North America will not even have a car industry to speak of in a few more years, and there have been lawmakers in the USA, especially on the Republican side of the Congress, who think it best to just let Detroit's Big Three (GM, Ford, and Chrysler) die a quiet death.
True free marketers believe that if Detroit can't survive, it's simply because foreign car makers make better cars, period. This paper will first look at the worldwide developing trends in the auto industry, and then pay closer attention to the effects of globalization, labor relations and job losses within the auto industry, particularly as it affects the North American auto industry. The future points to further contract concessions and large-scale buyout or early retirement offers in North America and Western Europe, subsequent weakened collective bargaining, further global consolidation of mass producers, and an even greater reliance on emerging markets for future sales.
[...] The three-shift operation at Windsor has been cut to two-shifts, another indicator of things to come in the auto industry. Chrysler has already eliminated more than 1.2 million units of capacity over 30 per cent since 2007, and will remove an additional 100,000 vehicles this year. It has cut 32,000 jobs, and plans to cut another 3,000 in 2009 (Van Alphen B1). Chrysler and GM Canada have asked the Canadian government for up to billion in aid, primarily loans, to help them through the worst auto market since the 1970's (Van Alphen B1). [...]
[...] In the largest emerging markets, the between the burgeoning demand of the past few years and the investment to meet it means that dozens of new factories are coming on stream at precisely the wrong moment” (The car industry 56). Nevertheless, although mature vehicle markets may be close to saturation, there is huge unsatisfied demand in the big emerging car markets of Brazil, Russia, India and China (Symonds 38). These countries offer the irresistible combination of “rapid economic growth, favourable demographics and social change, all coming to the carmakers' rescue and likely to account for nearly all their growth for the foreseeable future” (Symonds 38). [...]
[...] Now, that plus a global recession is having a domino affect on the auto industry in general. But, what's important to remember is that the underlying problems faced by the auto industry have been going on for a long time. The cost structures of the auto companies means that they are bleeding cash right now. Adding fuel to the fire is the issue of consumer choice and preference. The naked truth is that North American consumers simply prefer foreign cars, which also enjoy greater longevity and subsequently have higher resale value. [...]
[...] In conclusion, taking into account the vast restructuring and consolidation going on in the global auto industry, combined with the overcapacity and the need to trim costs and source production to lower-wage countries and emerging markets, the picture in terms of labor relations does not look stable. In fact, the future points to further contract concessions and large-scale buyout or early retirement offers in North America and Western Europe and subsequent weakened collective bargaining. Unions and their workers will be looking to stay alive and salvage what packages they have at this point. [...]
[...] A1. Krisher, Tom. (2009, February 25). UAW boss backs Ford plan. The Toronto Star. P. B1. Schifferes, Steve. (2008, February 22). Globalising the car industry. BBC News. http://news.bbc.co.uk/2/hi/business/6346325.stm. Retrieved March Symonds, Matthew. (2008, November 13). Cars in [...]
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