American Automobile Industry
Essay Preview: American Automobile Industry
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-American Automobile Industry-
As we move towards a globalized business world, new competitors have risen from developing nations. These nations now pose a threat to the many industries still stuck in their old ways. One industry in particular is the American auto industry that has seen a large fall in their earnings. Japan is one nation who has revolutionized the auto industry through Toyota. The world is growing and with this growth we see a need for energy and with it has come a high price at the pump. Ford Motor Co. and General Motors Corp. due to a lack of planning, inability to adjust to this energy crisis, and other problems have led to massive losses. With investors anxious for change, American auto industry in order to compete in the car industry has sought ways to cut their costs. Both Ford and GM have resolved to plant closed downs and massive layoffs.
To compete with foreign automakers GM announced in Nov. of 2005 that it would be cutting costs by eliminating 30,000 hourly jobs and close or scale down operations at about a dozen U.S. and Canadian locations in attempts to save in a bid to save $7 billion a year. Ford announced similar plans in Jan. 23rds 2006 press release. They planned to close 14 plants in North America and cut between 25,000 to 30,000 Jobs by 2012 as they try to stop losses and adjust to a significantly lower market share. Rival Toyota has been able to present a more fuel economic car, which has brought on this lower market share. Further on, back in 2003 the American car industry reported inventory levels were at a record high, finishing of the year with 3.2 cars and trucks in stock (Mergentonline.com). This goes to show that with further planning and more concern toward globalization they could have lessened the blow.
Now where does this leave all those people who lost their jobs? Jim McIlreavy, 34, from South Lyon, Michigan, has worked for Ford for seven years said, “Many of us are going to have to sell our homes and move our families to wherever the work is.” He went even further to address what was to blame, but this has been coming for a long time. The Big Three [Ford, General Motors, Chrysler] have been losing the market share for the past 10 years. These companies have lost focus on what the customer really wants. They kept building trucks, but people just cant afford to pay for the fuel for these gas-guzzlers (BBC NEWS, 01/24/2006). Many agree with this comment if these automakers were stuck in the old ways of and didn’t have to worry about foreign competition. However with many companies overseas expanding it was inevitable that Japanese automakers would seize the opportunity. To add to their list of competitors we see Chinese automakers jumping in to get their share.
Asian automakers have not made it easy for The U.S. They have been able to cut cost by using the cheap labor provided by their huge labor forces. Further more they have provided more sleek looking and fuel economic cars. With their sleek cars they have been able to attract the future which is to say the youth market, and with fuel economy to round it off they seem to have the ability to touch upon a large market. So what’s the American industry to do? They should design more appealing cars and trucks. The reality is that all these job cuts in the world wont help if Ford, and General Motors, don’t offer Americans many more cars that can run on fuels other than gasoline. They need to invest in more research and development and this begins with proper planning for the future. Ford needs not to look inside but outside and see where it can find alternatives and new projects. This could be done through various ways one being overseas. Like stated before with globalization we see information more easily attainable. These car manufacturers know what buyers in the U.S. want the thing is obtaining the information. With developing nations in India, Japan, China these automakers might want to consider putting some research and development centers in these countries to further expand their capabilities of creating more innovative cars. Ford seems to be attempting to do just that with its recent hiring Moray Callum, previous general manager of design at Mazda Motor Corp. Callum is credited with reviving Mazdas product portfolio (The Wall Street Journal, 5/1/2006).
Beyond planning, cutting costs, globalization