Globalization and the North American Auto Industry

ADMN-3046-WI 829

OPERATIONS MANAGEMENT

Individual Paper

Globalization and the North American Auto Industry

Jason Rekker

Student Number 0566891

The North American auto industry has always been cyclical in nature. As new cars are made and old ones retired from use, sales have fluctuated up and down. This has meant periodic layoffs for North American auto industry worker. However, the auto workers stoically endured knowing that their jobs were secure and the layoffs were closer to unpaid vacations. This began to change in the 1980s with the surge in sales of Japanese cars. Now with the advent of globalization, this cyclical occurrence has become much more volatile. The highs are higher, the lows are lower. Further damaging the auto industry has been the dramatic effect of the global market place on the industry. Cheaper labour in foreign countries and cheaper parts from overseas coupled with weakening unions has meant that workers have less job security. As large countries like China and India begin to demand more vehicles for their use, target markets are shifting. This has meant that in order to remain competitive, North American auto manufacturers have had to adjust to global pressures and influences. Globalization’s ultimate impact upon the auto industry is still not fully understood. Firms are still attempting to understand how the new market place looks, who the major players are and will be and how to remain competitive while still being corporately socially responsible to domestic producers and clients.

History of auto industry

To understand globalization’s impact on the auto industry we should examine its history briefly first. The auto industry’s origins date back to over 100 years ago in America with the emergence of the “Big Three” (Ford 1903 (NPR, 2006), Chrysler 1920 (Chrysler, 2012)and GMC 1902 (General Motors Corporation, 2011)). Foreign operations were also underway with companies like Benz (1885) (The Auto Channel, 2012) preceding American...