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The Big Three of Detroit (Ford, General Motors and Chrysler), long a symbol of American industry, no longer rule the roads. China surpassed the United States in passenger car production for the first time ever in 2006 producing 5.2 million cars, while the US made 4.4 million, the Financial Times reported citing a Bank of America report. The figures are remarkable considering that in 1997 China’s car output was at 5.4% of US levels and in less than seven years their production skyrocketed to 118% of US levels. But recent lagging production is not the only thing changed about the Big Three: In 1998 Chrysler was taken over by a German company Daimler-Benz becoming DaimlerChrysler. Now all three companies, including the remaining American Big “Two,” are floundering. Ford lost more than a billion dollars in 2005 and subsequently announced it would be eliminating up to 30,000 North American jobs by 2012. General Motors Corporation lost $10.6 billion from 2005-2006 and plans eliminate 30,000 North American jobs by the end of 2008. DaimlerChrysler is set to cut 13,000 North American jobs by 2009.
Insourcing has lead to a surge of international dominance in the American automotive market. Foreign competition currently controls 39% of the US market in terms of domestically-owned production. Foreign ownership of the US market is now over 59%. Despite “free trade” agreements promising increased exports, America has been ineffective in penetrating foreign markets and as a result US balance of trade continues to set record yearly deficits. The automotive market numbers reflect this free trade inequity: American shares of the Japanese auto market are around 1% according to Canada’s industrial research council. The massive fiscal and job losses coupled with steep foreign competition is now relegating the nation that perfected the assembly line to the sidelines of automotive production. The loss of US’s once proud car production primacy is emblematic of the paradox of America’s depleted and outsourced manufacturing base of today. How long can Silicon Valley thrive yet continue to import 59% of its computer equipment? Who holds the real power when American shoe giants like Nike and New Balance import 90% of their footwear? This country, built on production and industry, is now exclusively a consumption and debt-laden paper-tiger, steering both the automotive industry and the country’s future down a road of bleak trade trends and deteriorating economic prospects. Click here to contact your Representative in Congress. Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles
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Article Comments From Readers
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ReformerRay says "Cars" on 08/12/07
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guest says "Unfair tariffs cripple Detroit auto makers" on 03/27/07
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Given the unfair tariff of 25% slapped on the price of American cars sold in Korea and Japan and possibly China versus the meager 2.5% added to imports sold in the USA, its no surprise that the Big 3 are losing ground.
Its not just tariffs however that have been destroying the big 3. They've been shooting themselves in the foot for at least 30 years by failing to make interesting, high quality, fuel efficient automobiles. The results? 100% predictable, rational and logical. The public has turned to foreign cars as an alternative. No one can rightly blame the consumer for wanting decent reliable transportation with a little style and gas efficiency. Congress could help by imposing a 50% "payback" tariff on Asian cars to help the Big 3 regain their footing. Congress should also reimpose CAFE standards (relaxed under Reagan)and mandate E85 sold at every gas station by Jan.1 2008. Until Congress and the President stand up for Americans and force industry to do the right thing, the downslide will continue. Its time to rebuild America as a better country. Only a Ralph Nader or Ross Perot will be independant enough to begin the project. |
U.S. automobile makers must join all other U.S. manufacturers in improving product AND IN INSISTING THAT THE U.S. CONGRESS RESTRICT IMPORTS FROM THE 5 COUNTRIES THAT ARE CREATING 60% OF THE U.S. TRADE DEFICIT.
Our problem is dramatized by the automobile industry but we need a solution which helps all manufacturing - both current and future - especially the new firms that can compete with other nations.