Automobile Industry

The American auto worker has become directly affected because of the changing consumer climate. Along with the promised higher safety of Japanese cars as opposed to American made cars in the 1970s, NAFTA has also changed this climate. The outsourcing of jobs to countries that can sustain cheap labor, along with the higher amount of Japanese car purchases, has begun to shrink the working class job market. This also has a direct effect on the American economy as a whole. There aren’t a whole lot of triumphs lately for the American auto industry. The continued loss of funds, the slashing of pension funds, and the laying of American auto workers has dramatically changed the way Americans feel about the industry as a whole. The American public has shown little sympathy and much disregard for the health of the American auto industry. This could partly have to do with the attractiveness of the cars, the safety ratings, affordability, or the gas mileage of the automobiles. That has had a direct effect on the way the industry campaigns and advertises. It has also, along with NAFTA, forced these companies to seek cheaper labor. This is all a vicious cycle that has put the entire American automobile industry as a whole, in jeopardy. Even the geographical location of the main source of their factories has changed its name. It’s been changed to the “Rust Belt”.
The first topic to tackle about this is the loss of jobs to overseas cheap labor or outsourcing. This is a problem because of the damage it does to the domestic workforce. The article about this topic says, “In the late 1970s, Japanese auto manufacturers benefited from significant cost advantages over their U.S. competitors. By the early 1980s, U.S. auto manufacturers had significantly narrowed the cost gap. But even with competitive prices, the Japanese firms continued to gain market share. The Japanese firms had established a quality gap. In response, the U.S. firms implemented quality improvement programs” (Richardson 339). This illustrates one of the tremendous flaws with the American auto industry. With the influx and invasion of the Japanese auto market into the United States, there is a serious cost problem and quality control problem. There have been ways to combat this in the past, but since those areas have already been explored and new ways being introduced now, there is less capacity for sympathy for the American auto worker. Massive drops in American strength in this and foreign markets have caused more drastic steps to be taken.
Not to insinuate that laziness and underestimation of competition hasn’t crippled some of the companies’ chances for catch up, but the response of the public has done them in as well. In an article on quality control this article states, “A study by the Japan Automobile Manufacturers Association of parts imported from American suppliers and parts made in Japan showed that the defect rates for U.S. imports was 0.35 percent to 2.6 percent, compared to 0 percent to 0.01 percent for Japanese suppliers in Japan (Mitsubishi Research Institute, 1987)” (Cusumano 565). Quality control has been a major problem since the 1970s in American auto making. When the consumer safety book by Nader came out and addressed the safety of cars, there was an even bigger demand for the seemingly safer Japanese cars. This hasn’t changed a tremendous amount in the 30 years since. Parts have since been made overseas with outsourced jobs. Most if not all cars now cannot lay claim that they were made in American auto plants. This is a real travesty in the history of American Consumerism.
The next aspect to take a look at is gas mileage and consumer willingness to purchase certain types of vehicles. American consumers are always looking to save a buck while they get the best deal for it. This includes gas mileage. An article takes in indirect approach to this when it says, “Also the proportion of first-time buyers in the minicompact subcompact segments is double that of the compact segment and much larger than that of the midsize and full-size segments. This indicates that firms have a motivation to be aggressive in the minicompact and subcompact segments but to be cooperative in the larger-car segments. This effect is magnified by the country-of-origin loyalty. Because the Japanese have much smaller market shares in the larger-car segments, compared to those in the smaller-car segments, domestic firms would find it optimal to be aggressive in the smaller-car segments so that they do not los further market share to Japanese firms, which can be detrimental to their long term market share” (Sudhir 44). This article speaks to the challenge that the American auto industry faces in terms of competing cost wise to Japanese cars. They are typically smaller, more aerodynamic, get more miles to the gallon and are cheaper. This along with safety makes Japanese cars look like the more attractive deal. This is the main trouble with trying to compete with the Japanese automobile industry.
NAFTA is another big obstacle for the American automobile industry to overcome. This agreement led to the outsourcing of jobs and the increased cutting of American jobs. The Japanese auto market has also appeared in Western Europe. However their losses weren’t as significant. This next article states this argument when it says, “Rapid expansion of direct foreign investment by the Japanese motor industry in North America and Western Europe from the 1980s onward led to mounting public concern on both continents about the implications of such “transplant” production for domestically own manufacturers of automobiles and automotive components. Internationalization helped Japanese companies gain a growing market share, capturing one-third of sales in the United States. This boom was largely at the expense of the American “Big Three” (General Motors, Ford, and Chrysler), nudging them into financial deficit and forcing tens of thousands of job losses across the continent. In Western Europe, Japanese market share was limited to about 10 percent (mainly by some uncompromising nation trade policies), although this degree of market penetration looked likely to at least double by the end of the 1990s” (Sadler 41). This illustrates the problem in this country how NAFTA has impacted the strain that is present on the national economy in general and more specifically in the United States automobile industry.
The United States environment has very much hostility in some respects to Japanese auto manufacturing in this country. When Japan puts plants on American soil it is seen as a sign of hostility by way of injecting one strong culture into another. There isn’t any one single factor that is always the problem and everybody doesn’t always have a problem with the Japanese plants. However, one factor of hostility has arisen and that is the fact that injecting their auto industry into the country has provided a firing range for American auto worker jobs. In an article of similar topic, this is discussed when it says, “Japanese automobile manufacturing plants in the United States, which we refer to as the “transplants,” provide an ideal test of these hypotheses because they have been transferred from a supportive to a nonsupportive environment. The U.S. environment is typically characterized in terms of “diversity,” ”individualism,” and unrestrained market forces, while Japan is characterized in terms of “homogeneity,” “familism,” “paternalism,” and/or “welfare corporatism” (Kenny 381). Japan, as it wouldn’t take a genius to deduce, has a completely different cultural makeup than the United States. This complicates things for their automobile industry in that the set of values they hold dear are not necessarily the ones the United States shares in. This makes adapting to cultural biases, inherent disagreements employees might have with bosses, among other things will need to be addressed before they can thrive here.
Automobiles are particularly important in rural and suburban areas. Big cities, except in Detroit’s case, for the most part have mass transportation so they are not as highly dependent on cars. For the rest of the country, the car has become a symbol of freedom, opportunity, and most of the time a way to earn a living. Cars hold a special importance in American society, and it’s been this way for most of the invention’s existence. It is no surprise that moving in on that particular slice of consumer real estate is of prime importance for most business people. There has been a transformation of the way in which businesses vie for the people’s spending dollar. Companies used to just sell their product and nothing else. Nowadays comparisons between companies are made, disparaging remarks are thrust into the open, safety is now a must for a car to be attractive, plus there is a tremendous need, now that the gas prices are soaring, that the car be fuel efficient for the most part. There aren’t many ways in which the American public can enact change than to not spend their money. That has caused all that was discussed here and more. The lack of money pumped into the American auto industry has made it change in ways in which it surely had never envisioned.
Conclusions that have been reached through the research have definitely been not what had been originally contemplated. To restate the conclusions were originally intended to reach are as follows, first that NAFTA was the biggest factor in the changing conditions between the Japanese and American auto industries. Secondly that the outsourcing of jobs was both the effect of Japanese auto manufacturers moving in on American soil and profits and because of NAFTA. Thirdly that the most important factor in the changing consumer standards are attractiveness of vehicles. These conclusions came attached with biases toward American auto workers. The empathy that comes with that group of the American work force can never be underestimated. Also the fact that the shrinking of this part of the work force is being thrust out the door because of the invasion of the Japanese auto industry is the biggest bias that existed going into this topic.
The way these biases and conclusions played out were indeed surprising from the standpoint of the extent and lack of credibility that they have. Firstly the attractiveness of a vehicle is not the only reason that the American public had to go to purchase a vehicle. Through research, the evidence bears out that the American public takes a whole lot more into account than just that. It doles out stars for safety, miles per gallon, size, and lastly attractiveness. The reason previously thought was found to be extremely lacking in content and credibility.
The second wave of biases and conclusions that were made before the research was about the infiltration and invasion of Japanese auto manufacturers onto American soil and their product’s impact on the American public’s spending. This conclusion was found to be a little closer to the mark than the first conclusion. Still there were some incomplete thoughts and statements in that generalization. There was far more to take into account than just the fact they were here and invading American territory. First of all certain business is not conducive everywhere and with America being a capitalist system, Japan deserved a fair shot. With that shot being taken, though, there were complications in environment shock and adaptation. Since there were more complications than just that, like the lack of acceptance from certain strands of the public, there has to be given a certain amount of respect for the initiative Japan took for trying to sell their product to a whole different kind of people.
Lastly, the conclusion and bias toward NAFTA was well founded. Through research there was supporting evidence that there were significant signs that NAFTA led to the outsourcing and slashing of American auto worker jobs. That still doesn’t excuse the American public for buying America’s own product and supporting its own economy and workers. NAFTA still does influence bad decisions to be made in finding and pandering to countries that produce cheap laborers. There isn’t a shred of doubt that giving these jobs to Americans is less cost effective than shipping them overseas, however that doesn’t mean that it’s the moral thing to do either. It also serves the American public better in the long run to do right by the American auto worker.
This topic was a frustrating one in some ways when it spoke of the Japanese auto industry thriving in the west when it should be the American one doing so. However there isn’t complete unrest with the possibility of competition because that is what this country’s economic roots were founded on. Competition is not a terrible thing, however when it is done for the wrong reasons or it harms the American public and its workforce, it is always good to try to limit their suffering in lieu of making a little more money.

Rising Gas Prices