Cars
...us parts of the new car. Test drivers check over the entire system, analyzing how it runs, and then gives suggestions on improving the vehicle. Automotive engineers test all the new, specialized parts of the car, and after all the parts are tested, plant engineers plan how to best mass-produce the new car. Of all the people working in the automobile industry, most will be found in this next industry which is the assembly plant. In the United States, the majority of these assembly plants can be found in the Michigan, Great Lakes area, and it, on average, takes about ninety minutes on the assembly line for an entire car to be produced. When planning a new car model, the company tries to create what the consumer wants. This is very difficult because as stated earlier it take between three and four years to develop a car. When General Motors begins developing a new product, it starts by assembling a new team to coordinate the production. After this team is assembled, millions of dollars are spent on dispensing and analyzing public surveys, private firm’s own research, government research, and past car sales to determine what the consumer wants. These specifications include physical dimensions, cost, fuel efficiency, comfort, market price, appearance, and performance. GM then would go on to begin producing the car. The most time consuming step when creating a new model is supplying the specialized pieces of the new model. Some of the parts can be carried over from previous models or other cars, but many times the company has to either create the new pieces themselves or buy them from a large scale supplier, like ITT Automotive. The company then looks for the supplier that will supply the parts the cheapest. After the model car has been created and approved, the plans are made for it to be made on the assembly line. The car is then ready to be sold to the public through private dealerships which, in the US, are not linked with any major automobile manufacturer. GM would then sell its cars to whichever dealership is willing to buy from them. In many Japanese firms, like Toyota, a new system has been created and has been coined ‘lean production’. The basic manufacturing ideas are the same, but it emphasizes developing relationships between the company and those it deals with. When Toyota begins developing a new car model, it already has a team assembled which has worked on previous models. The Toyota team then collects the same information about what the public wants just like the GM team but has a much cheaper way of going about it. Unlike the GM firm, Toyota has formed business ties with car dealerships, and in some cases even owns them. These dealerships use a new set of techniques to sell their cars, called “aggressive selling,” in which a very permanent, personal, and hopefully life-long relationship is created between the company, the dealer, and the buyer. Since the company keeps ties to its consumers, it already knows what the consumer wants, and the consumer is more willing to buy from the company. Toyota continues developing and producing its car, and it comes across the same problem as the GM team of not having all the specialized parts it needs. Like with the dealerships, Toyota has formed many symbiotic relationships with car part suppliers. These suppliers work hand in hand, with the Toyota team and develop any products that Toyota needs for its new model. The past decade has seen many interesting fluctuations within the automobile industry. Overall the auto industry fluctuates with the normal business cycle, for motor vehicles are an elastic demand to consumers. The more the price for cars goes up, the less people buy cars. For many years, the automobile industry has seen very large profits because the demand and necessity for cars has increased significantly. Recently, large foreign competitors and steadily increasing prices in motor vehicles have reduced these surplus profits within the industry. Consumers are now demanding lower prices and more luxuries in their cars. To deal with this consumer demand, auto manufacturers have begun by lowering employee pay rolls, replacing employees with machines and more capable workers to improve productivity, and many times merge with other companies to better compete in the market. Production growth has been about 2-3 percent for the past few years in the auto industry, and hopefully will continue by implementing new cost efficient procedures. American industries, competing in the international markets, face the problem of a strong dollar compared to the weaker currencies of foreign nations. This means that American cars to foreign nations are more expensive, and foreign cars to Americans are cheaper. This supply and demand problem was solved by the Clinton administration which opened up many foreign markets previously closed to the US auto makers. One of the main markets that the Clinton administration opened up was the Japanese market. This was such a positive victory for the US industries because the Japanese were notorious for charging very little for the cars they sold in foreign countries, making up the difference with extremely high prices for the cars they sold in the closed markets of Japan. The North Atlantic Trade Agreement also opened up trade to many nations in Latin America, especially Mexico. Overall, between 1992 and 1995 export sales rose 22 percent and the sales to Mexico and Japan each rose 250 percent. The auto industry is also a major source of jobs in the world. “During the early 1990s, approximately one of every seven jobs in the US domestic economy is related to the production, sale, operation, or maintenance of motor vehicles” (Tardiff 396) which makes abundantly clear the impact the car industry has on society, with GM, Chrysler, and Ford Companies making up three fourths of those jobs. Auto workers are also among the most highest paid workers in any industry and also the most productive. This great increase in worker productivity, due to advancing technology, also accounts for the huge profit gains the Big Three have received in the past few years. Until the late 1960s, the government did not get involved in implementing regulations on the automobile industry. Most of the regulations now placed on car manufacturers have to do with making the car drive safer and be more environmentally sound. Seat belts, reflectors, bumpers, windshield wipers, defrosters, dashboard controls and specialized lights, brakes, tires, and windows were all the result of government action. Today safety has become extremely important to car makers because of the high deaths that result from automobile accidents, the government, and most influentially, people’s growing concern for their well-being. The Environmental Protection Agency (EPA) has created standards for new cars called emission standards, which prevent excess carbon monoxide from being released into the atmosphere. There has been much talk of creating international standards to regulate the automobile and recently some progress has been made. Many nations including the US and Japan has become “active participants in the Group of Experts on the Construction of Vehicles, of the United Nations Economic Commission for Europe (ECE/WP29), the principal international forum for harmonization issues.” (Hoover’s Online) The future of the automobile indust...