Driving Continentally

Driving Continentally: National Policies and the North American Auto Industry

Edited by Maureen Appel Molot
Copyright Date: 1993
Pages: 398
https://www.jstor.org/stable/j.ctt80z99
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  • Book Info
    Driving Continentally
    Book Description:

    The papers in this collection provide important new material on this industry in crisis which is critical to the economies of the U.S., Canada and Mexico. The authors examine major changes in the industry, and how government policies in the three countries have promoted, protected and shaped it.

    eISBN: 978-0-7735-8353-5
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. FOREWORD
    (pp. ix-xii)
    Murray G. Smith

    The papers in this volume examine the effects of national policies on the automotive industries in Canada, Mexico, and the United States. They

    analyze the potential tensions or conflicts arising from the effects of national policies on an industry that has become more integrated on a North American and global basis;

    identify the economic and technological forces favouring greater integration of the North American automotive industry through the North American Free Trade Agreement (NAFTA);

    explore the implications for workers and communities of the restructuring and capacity shedding that is occurring in the industry; and

    document the complex web of interests...

  4. CONTRIBUTORS
    (pp. xiii-xvi)
  5. ACKNOWLEDGEMENTS
    (pp. xvii-xviii)
    Maureen Appel Molot
  6. GLOSSARY
    (pp. xix-xx)
  7. 1 INTRODUCTION
    (pp. 1-22)
    Maureen Appel Molot

    The automobile industry is of enormous importance to the economies of Canada, the United States, and Mexico. In each of these countries it employs a significant number of people directly and indirectly through its links with suppliers and producers of raw material inputs. One out of every ten jobs in Canada and the United States is dependent on the automotive industry (US-Canada Automotive Select Panel 1992: 8).

    Even before the conclusion of the North American Free Trade Agreement (NAFTA), the economies of Canada, the United States, and Mexico were already closely linked (Cameron, Eden, and Molot 1992). Trade in autos...

  8. 2 FROM THREE INDUSTRIES TO ONE: Towards an Integrated North American Automobile Industry
    (pp. 23-62)
    John Holmes

    In the early 1960s there were essentially three separate automobile industries on the North American continent. Today, only thirty years later, the momentum toward full continental integration in the automobile industry appears irreversible. With the initialling of a North American Free Trade Agreement (NAFTA), it is likely that by the end of the decade significant progress will have been made toward the creation of one integrated North American automobile production and marketing system spanning Mexico, the United States, and Canada.

    The existing level of cross-border integration in the North American auto industry has been achieved in two broad stages. First,...

  9. 3 NAFTA, FOREIGN DIRECT INVESTMENT, AND THE AUTO INDUSTRY: A Comparative Perspective
    (pp. 63-100)
    Simon Reich

    This chapter examines the degree of complementarity among the policies of Canada, Mexico, and the United States toward each country’s auto industry. There is discussion of their treatment of foreign direct investors, the policy impetus that NAFTA will generate in that sector, and the implications that the agreement will likely have for each country’s economy.

    In performing this evaluation of the prospects for the North American economies, I will rely on an historical and comparative perspective that reflects contrasting treatments of potential or actual foreign direct investors, drawing from the experiences of the major European auto-producing countries. I will then...

  10. 4 THE DETERMINANTS OF TRADE AND INVESTMENT FLOWS IN LDC AUTO INDUSTRIES: The Cases of Brazil and Mexico
    (pp. 101-134)
    Helen Shapiro

    The automobile has become a symbol of national competitiveness and conflict in international trade. The automobile industry was one of the first manufacturing industries to open offshore assembly plants and to be characterized as a global oligopoly. In the last decade, it has also come to symbolize globalization in the sense that manufacturing and sourcing have become cross-national; firms now penetrate each other’s national markets to an unprecedented degree. Firms of different national origins have formed strategic alliances, blurring the definition of a national car, and products and performance standards have become more universal.

    The voluminous literature on the industry...

  11. 5 JAPANESE JOINT VENTURES IN THE AUTOMOTIVE INDUSTRY: Implications for North American Suppliers
    (pp. 135-162)
    Andrew Inkpen

    The North American automotive industry is undergoing significant structural change. The North American Free Trade Agreement (NAFTA) and the emergence of the Japanese car producers as leading international competitors have created new demands for North American automakers and suppliers. The focus of this chapter is on the increasing Japanese presence in the North American automotive industry.

    In 1981, there were no Japanese assembly plants in North America. By 1991, there were nine Japanese-operated assembly plants in the United States and three in Canada. These plants produced 1.78 million units in 1990, more than 20 percent of total North American production...

  12. 6 THE NORTH AMERICAN AUTOMOTIVE INDUSTRY: State Government Response to a Changing International Environment
    (pp. 163-180)
    Janice E. Plumstead, Brian R. Russell and David Stuewe

    This chapter discusses the nature and pattern of support provided by American state governments to the domestic auto industry. In the context of international trade agreements and global economic developments, the chapter provides several examples of the types of support available and the consequences that may follow. Government assistance programs play an increasingly important role in determining the future of the industry. The technological and financial challenges faced by a North American auto industry confronted with intense foreign competition have been a significant factor in determining the nature and extent of government support to business.

    Confronted with increasing budgetary restraints,...

  13. 7 REGULATING THE AMERICAN AUTOMOBILE INDUSTRY: Sources and Consequences of US Automobile Air Pollution Standards
    (pp. 181-208)
    Dennis J. Gayle

    The automobile industry is pivotal to America’s economy because of the size of its direct labour force, the magnitude of its purchases from other major sectors, and the level of consumer demand for individual transport in the United States.¹ It is also a pre-eminent global industry, characterized by wide geographic dispersion, welldeveloped international trade, extreme demand fluctuations, rapid technological change, large corporations, frequently strong unions, and interested governments. By 1980, more than forty-five nations produced or assembled automobiles. Without exception, large automobile companies seek competitive advantage in global competition by coordinating complex networks of internal as well as external activities,...

  14. 8 PUBLIC POLICY AND CANADIAN AND AMERICAN AUTOWORKERS: Divergent Fortunes
    (pp. 209-230)
    Charlotte Yates

    Negotiations between Canada, the United States, and Mexico for a North American Free Trade Agreement (NAFTA) are the latest in a series of policy challenges confronting and reshaping the Canadian and US auto industries. Since the third quarter of 1979, the North American auto industry has undergone massive restructuring in response to the dual pressures of increased international competition and saturation of consumer markets for automotive vehicles. As North American automakers have scrambled to restore their own fortunes in the world auto market, the Canadian and US governments have found themselves under pressure to preserve existing automotive capacity and create...

  15. 9 STRATEGIC MANPOWER POLICIES AND INTERNATIONAL COMPETITIVENESS: The Case of Mexico
    (pp. 231-254)
    Glen Taylor

    The North American automobile industry is in transition from a pattern of production and trade dominated by bilateral relations with the United States to a multilateral pattern in which Asian, European, South American, and North American trading partners all play a role in a more globally integrated industry. It is essential that production-sharing and trading partners, such as Canada, the United States, and Mexico develop a policy framework to guide the development of the North American automotive industry within a global context.

    The automobile industry embodies many of the dimensions of modern industrial life—good and bad. It is the...

  16. 10 THE EFFECT OF THE CANADA-U.S. FREE TRADE AGREEMENT ON THE AUTO PACT
    (pp. 255-284)
    Jon R. Johnson

    Since 1966, trade in automobiles and original equipment parts between Canada and the United States has been governed by the Auto Pact.¹ The Auto Pact was signed on January 16,1965, and came into force on September 16, 1966. On January 1, 1989, the Canada-US Free Trade Agreement (FTA) came into effect. The FTA devotes an entire chapter to trade in automotive goods. The relationship between the Auto Pact and the FTA provisions respecting automotive goods has been fertile ground for confusion ever since.

    At a trade policy conference in 1991, one speaker stated that the FTA has not affected the...

  17. 11 ALTERNATIVE APPROACHES TO NORTH AMERICAN FREE TRADE AND THE AUTO INDUSTRY
    (pp. 285-302)
    Murray G. Smith and Ronald J. Wonnacott

    In the negotiation of free trade with Mexico, there were several possible outcomes, each with different implications for the auto industry. These various outcomes can be grouped into some broad options as follows:

    1. A trilateral North American Free Trade Agreement (NAFTA);

    2. A bilateral US-Mexico Free Trade Agreement alongside the present Canada-US Free Trade Agreement (FTA); and

    3. A pair of US-Mexico and Canada-Mexico bilaterals along with the present Canada-US Free Trade Agreement.

    The objective of the negotiations was to create a trilateral NAFTA—an open market with a combined CNP of more than US $6 trillion and with...

  18. 12 CONTINENTAL INTEGRATION AND THE FUTURE OF THE NORTH AMERICAN AUTO SECTOR
    (pp. 303-328)
    Stephen Herzenberg

    The auto industry, like most manufacturing in North America, stands poised between two quite distinct futures. In one—a highwage, high-skill scenario—the auto industry throughout North America would enjoy rapid productivity growth, help develop and deploy new technology, and provide a positive example of work-force skill development, of cooperation between assemblers and suppliers, and of organizational practice generally. In a second—a segmented industry scenario—high productivity, new technology, and human resource development would be confined to portions of the operations of major assembly companies and first-tier suppliers. Even in this industry core, the weakness of worker representation and...

  19. 13 CORPORATE STRATEGY, GLOBALIZATION, AND NAFTA: Mexico’s New Role
    (pp. 329-352)
    Marc N. Scheinman

    This chapter examines the rapid growth of the Mexican automotive industry since 1986 from the perspectives of corporate strategy and positioning and their impact on production, sales, and trade. Mexico’s significance in these areas has been enhanced by the country’s growing integration into the globalization strategies of the major vehicle and components producers and by the negotiation of a North American Free Trade Agreement (NAFTA) with the United States and Canada. However, Mexico’s emerging role is not simply the reflection of structural changes in automotive competition. In addition, pervasive political and economic liberalization have provided a much more attractive operating...

  20. 14 THE MEXICAN AUTOMOTIVE INDUSTRY IN THE NAFTA NEGOTIATIONS
    (pp. 353-370)
    Miguel Angel Olea

    This chapter analyzes the North American Free Trade Agreement (NAFTA) negotiations from the standpoint of the interests of Mexican auto parts suppliers. Unfortunately, this group was not successful in obtaining everything it wanted in the negotiations. However, the aim of this analysis is to help explain the sector’s point of view with regard to the different elements of the NAFTA negotiation process, starting from a medium-term outlook on the auto parts industry in Mexico. The first part of the chapter sets out the context for the North American automobile industry at the regional level. The second part establishes the positions...

  21. 15 PROSPECTS FOR THE MEXICAN AUTOMOTIVE INDUSTRY IN THE CONTEXT OF A NORTH AMERICAN FREE TRADE AGREEMENT
    (pp. 371-377)
    Kurt Unger

    The purpose of this chapter is to look at the major trends in the automotive industry in an international context and to assess their impact on the Mexican automotive industry. Two major concerns will be discussed: the effect of technological transformation on the international location of production; and the extent to which the export potential from Mexico under a North American Free Trade Agreement (NAFTA) should, or could, remain associated with domestic market achievements.

    The Japanese organizational paradigm has dramatically altered the traditional view derived from product life cycle theory, namely, that labour-cost advantages can be gained by locating the...