Assessment Of The Domestic Automobile Industry

2029 words - 8 pages

Assessment of the Domestic Automobile IndustryIntroductionThe domestic automotive industry has been playing a leading role in spurring growth in economies throughout the world since the industrial revolution. It is a sector characterized by not only tremendous potential growth, but also high profile trade disputes, and intense competition. This paper will detail an objective analysis on how different economic indicators have impacted the domestic automotive industry.History and Overview of Domestic Automotive IndustryA timeline approach can be used to analyze the evolution of any major business. However, a look at how the domestic automobile industry evolved reveals a different time scale than of almost any industry today. The evolutionary stages took decades to play out. The major U.S. automobile industry took about three-quarters of a century to evolve however, early automobile executives were well aware of the need to forge a positive business cycle. (Wade, 2004, p. 3)The late 1800s were a time of experimentation, as the first automobile pioneers struggled to grasp the potential of individualized, motorized transportation. Ransom E. Olds and a handful of others established practical automobile businesses by the turn of the century. Their machines worked reasonably well, were accepted by a small but dedicated number of customers, and could be profitably produced.The next 20 years carried the domestic automobile industry deep into the second stage of competition. In 1904, William C. Durant began building what would become General Motors with marginal benefit. Durant's strategy for GM, however, was based on acquisitions of early companies, marketing might, sales coverage, and product variety. Durant's captured the market share by pooling and integrating the production facilities of a variety of smaller companies. However, by 1920, General Motors had nearly collapsed because of the of Durant's complex collection of business entities inverse relationship of profit and product distribution.Henry Ford founded the Ford Motor Company, and, in 1908, he introduced his mass-produced, mass-marketed Model T. Near-legendary battles between Ford and GM ensued- struggles as much for soul and future definition of the business as for simple market share. Ford's approach was based carefully engineered production, and product simplicity. Ford had monopoly power by 1914; the company produced over 267,000 cars and held 48% of the market. (Wade, L., 2004, p 6)From about 1910 to 1930, industry leaders directed the large expansion of the automobile market, By the 1930s, battles for community leadership and bargaining power revolved around the principal supplier to the auto industry: labor. In the late 1920s, around 500,000 people worked in the Detroit area car factories. Working conditions were dangerous; one auto body plant was known as "the slaughterhouse." But by the mid-1930s, the United Auto Workers Union had formed. In 1937, the UAW achieved a landmark victory...

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