RECENT PROBLEM IN THE CAR INDUSTRY IN THE USA

Recent problem in the car industry in the USA

Recent problem in the car industry in the USA

Introduction

The automotive industry produced a higher level of output in the United States than any other single industry, and this output had been growing. The productivity of the automotive industry can be compared with other U.S. industries in terms of value added per employee. Value added includes the sum of profits, rent, interest, and labor compensation paid within the industry. It is thus a measure of the actual value produced by an industry.

The U.S. Car sales declined in the United States, affecting both US based and foreign car manufacturers. The bridging loans lead to greater scrutiny of the US automotive industry in addition to criticism of their product range, product quality, high labor wages, job bank programs, and healthcare and retirement benefits. The "Big Three" U.S. market share declined from 70% in 1998 to 53% in 2008, global volume increased particularly in Asia and Europe. That's not to say the American automotive business is in dire straits — on the contrary, it's thriving. Automobile sales are still strong, but while times are good for some manufacturers, the nation's two biggest — General Motors and Ford — are in the midst of a massive and agonizing reorganization, hobbled by a shrinking domestic market share, plunging profits, and the high wages and generous health benefits promised to their existing and former workers. The major U.S. manufacturers are stuck with all sorts of problems that they can't get out of easily, from unwanted cars to health care costs.

Discussion

The major motor vehicle manufacturers, especially including Ford and GM, increasingly source their vehicles from manufacturing facilities in the regions where they are sold, in part due to differing customer demands and tastes. As the vehicle manufacturers globalize and rationalize their supply base, the impact on the U.S. auto parts manufacturing base, which employs several times as many people as the vehicle manufacturers themselves, could be the closure of many companies and facilities. With the Ford and GM market share in North America having declined, a large number of major U.S. automotive suppliers are in financial difficulties.

There is no doubt that the automobile industry's current problems are owing in part to the current economic recession -- particularly the drying up of the credit markets, which makes it difficult for consumers to get financing for new cars. But when given a list of five explanations or causes for the auto industry's slump today, Americans are overwhelmingly most likely to blame the auto executives themselves. Almost two-thirds of Americans say the executives should shoulder a great deal of blame, well above the 34% who feel that way about labor unions and the 29% who fault the recession. Even fewer Americans assign a great deal of blame to government regulations or American consumers who buy foreign rather than domestic cars.

There are some differences by partisan orientation in blame for the auto industry's ...