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An evaluation of the automobile industry in the us and its competition

Based on information from the automobile manufacturers, Autofacts 1991 Yearbook Autofacts, Inc. Page 96 Share Cite Suggested Citation: How Far Can We Go?. The National Academies Press. Hourly employment reached a recession low in the first quarter of 1991 as factories closed to respond to low retail sales and inventory reductions by dealers. Apart from the cyclical slump in employment, the industry has lost more than 120,000 hourly jobs since 1978 see Figure 5-2. Based on MVMA 1991.

Indirect employment is also generated in industries connected to the assembly plants. The GAO 1988 reported that 4. Thus, estimates for vehicles per worker range from 6. Page 97 Share Cite Suggested Citation: Thus, the displacement of one U. It is impossible to predict precisely what the impact of these new operations will be. It appears probable, however, that they will rely in part on imported parts and components and will be more productive than their U.

Further inroads by Japanese brands, whether imported or locally assembled, will reduce U.

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Productivity gains will also reduce labor needs. FIGURE 5-3 Net vehicle output sales of new cars and used cars per worker in constant 1989 dollars and autos per worker. Employment is that in U. In its presentation at the committee's meeting on May 13-15, 1991 see Appendix Fthe UAW estimated that for every 200,000 to 250,000 vehicles imported, 30,000 jobs in assembly plants and supplier companies would be lost, or roughly 7 to 8 jobs per car.

On December 18, 1991, General Motors said that this would reduce hourly employment by 15,000 people in 1992 and each year through the mid-1990s Frame, 1991. Attrition, according to General Motors, cut hourly jobs by 25,000 in 1991.

Page 98 Share Cite Suggested Citation: In addition to having more cars to sell, Japanese manufacturers an evaluation of the automobile industry in the us and its competition a logical particularly considering the import quotas path of product evolution, capitalizing on the comparable advantage that was available to them as producers of small cars under the CAFE system see Chapter 9.

They moved upmarket into larger and more luxurious models by the late 1980s. The extension of Japanese product ranges into market sectors that provide the bulk of domestic industry profits—mid- and full-size cars and light trucks—has made the Japanese a greater threat to domestic industry profitability in the future than it has been over the past 10 years. For example, although the Honda Accord and Toyota Camry were initially introduced as compact cars, both have increased in size and luxury features and are currently classified as midsize cars.

The Japanese producers have also fragmented the U. Today, the American consumer can choose among approximately 290 nameplates of cars and light trucks, compared with 170 only 10 years ago. The Japanese, on the other hand, have very efficient, flexible plants capable of producing several models and of adjusting to changes in the marketplace Womack et al. This strategy has enhanced the threat they pose to the domestic manufacturers.

Product Development The Japanese automakers also have a more efficient product-development process than their U. Whereas it takes U. Moreover, the product-development effort requires 3 million person-hours in the United States, in comparison with only 1.

Japanese automakers thus have a significant competitive edge in product development with respect to development time and resource requirements. In 1976, the top-selling car model in the United States had sales of 621,140, whereas in 1989 the top-selling model, the Honda Accord, had sales of only 362,707. The top 10 models had total sales of 2. Page 99 Share Cite Suggested Citation: Short product cycles mean that vehicles can be adjusted to changes in the marketplace more frequently. Features that are more easily incorporated with major changes can be introduced more rapidly.

  • Although Henry Ford is often mistakenly thought to be the inventor of the automobile -- he was not -- he was nevertheless a great innovator;
  • In summary, it can therefore be said that Western companies only make use inadequately of their most important resource, the workers.

Tools and equipment that are model specific can be written off over the short life of the model. The annual production volume for the Japanese product cycle can be economically viable at levels as low as 50,000 units, compared with optimum production levels of 200,000 units for a U.

The four-to-one difference in production volume enables Japanese automakers to provide four times as many product offerings from a single plant as a U. The relationship between Japanese companies and their principal suppliers may also provide a competitive advantage for the largest companies in product development involving new technology.

As a result of these long-term relationships, joint product development is possible. In the United States, suppliers are involved jointly in only 14 percent of the engineering effort in new product development, whereas in Japan suppliers account for 51 percent of that engineering.

Toyota, for example, launched 14 new engines between 1978 and 1990, fully depreciating its engine facilities over six years. Engine and drivetrain life is at least 12 to 15 years for domestic companies; Ford, for example, did not launch a single new engine during the 1980s. In comparison, the Ford Taurus was introduced in 1985, was significantly updated in 1991, and is scheduled to be face-lifted in 1995 before being completely changed in 1999 based on presentations to the committee by Ford Motor Company.

Thus, the Accord had two major redesigns in an 8-year period 1982-1990whereas the Taurus is scheduled to have two major redesigns over a 14-year period.

Chrysler's first completely new automobile platform since 1982 will be launched in the fall of 1992. The Japanese product-development strategy of small-scale production and extensive product diversity also has implications for the introduction of new technology. It allows Japanese companies to experiment with new technology on small-volume products before committing more broadly to the technology on many product lines.

How The U.S. Automobile Industry Has Changed

Moreover, because it is easier and more cost-effective to incorporate new technologies at the time of a facelift or model change, the Japanese will retain the ability to adopt some technologies faster than their American competitors. The latter may provide a competitive advantage because it allows the manufacturer to augment its own technical skills with those of its supplier.

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