Comments on: US Auto Industry – Is it in terminal decline?(1/2)

By: Gaurav choudhari

Gaurav choudhari — Wed, 10 Jun 2009 08:03:09 +0000

Just to add few points,

1.one of the crucial reason for the disasster casued for fall of 3 giants is the overall labour wages in US.

The basic wages given by all the companies whether its a one of gaint three or an asian comp (like totyota & honda) are the same. But there is diff in the overall wages given by these comp (as mentioned in fig by author). So from this diff has come up?
The GM/ford/Chrysler have been present since more than a century in US , it caused into having older workforce with them and more pentioners with them when compared to Toyota and Honda.
It has resulted into this drastic diff in the wages which costed the 3 giants!

2.Secondly, UAW played a very key roll in this heavy downfall!!
UAW (United Auto Workers) which showed its very first presence in 1950′s starting in GM itself, and later gaining sucess year by year it started dominating the mnfg insutry (specially Auto industry)

GM/Chrystler/Ford workers were part of UAW where as japanese comp didn’t allow such unions in their comp.

Playing a key role, UAW has apporved very heavy demands from the comp , like, the package for retired/layed off workers apart from pention. In which comp has to deposit the money to provide the future earning options for the workers. such things have costed the american comp badly!

3.This mightsound as repeatition,but couldnt resist to write it down. Giants never forcasted the coming race! GM being the first comp in 1950 to think of a hybrid vehicle , but couldnt take it forward. When Asian comp started launching Generation 2 hybrid vehicles , these comp were still manufactuing the gas guzzling SUVs!!!

now it has become more diff for GM or chrysler t compete with the Asian comp( rather now frm here i should call asian comps as the Giants)

3.Also ppl are gettingmore reluctant to go for cars manfg by the comp which are quite near to the bankruptsy! as they are worried abt the future support, creating more challenge to the US auto comp!

By: US Auto industry - Is it in terminal decline (2/2) « Strat . In

US Auto industry - Is it in terminal decline (2/2) « Strat . In — Sun, 03 May 2009 06:27:55 +0000

[...] industry and the current apparently terminal decline it is going through. Kindly go through the first part of the post here. This second part now examines the present situation more deeply and tries to understand the steps [...]

By: Pushkar

Pushkar — Sat, 02 May 2009 07:41:20 +0000

There is a stage in the growth of any firm, which i like to call “King Kong”. A basic methodology follows the rise of most firms..an idea to capture a market segment..expansion of segments..and trial of new ideas on established markets which lead to further expansion of older segments and induction of newer segments based on advantage derived from competencies of older segments. A stage comes when a firm grows so big that it starts operating irrespective of the market. In other words..the market needs it more than the firm needs the market. Thats the King Kong stage. Though at this point it is critical that the King Kong closely examines its competitors..especially newer and leaner ones looking to rise. Thats where the American auto industry failed. They failed to see the importance of capitalizing on their lion share by further improving quality. Japanese firms struck precisely at this point and the King Kong was so lost in its glory and old plaudits..it failed to see…it was soon gonna be just another chimp..and a new King Kong came along..

By: shubham

shubham — Fri, 01 May 2009 06:59:05 +0000

A very informative article indeed. The US car manufacturers have been outdone by foreign car manufacturers and now even American People do not buy Big 3′s cars. Big Problem and probably no solution.

By: Ravi

Ravi — Fri, 01 May 2009 04:07:37 +0000

Very rightly said. The US auto had a history of great innovations, but it had a very gradual but significant decline over the past few years/decades. The unions as you pointed out, plays a very imporant factor too, and it is a testimony to the inefficiency and corruption on the part of the government.
Imagine a normal US citizen hitting the matka by grabbing a job in the Auto industry, and attaining a virtual social security over the rest of his life !

To me, the scene is very similar to the Govt undertaken organizations in our own country. However, we have not seen such outcomes as yet over here, thanks to the increased competition and the Govt’s response to act on it.