Federal Energy Policy and Competitive Strategy in the US Automobile Industry

Abstract

United States automobile manufacturers today face unprecedented pressures for change. Not only has the real price of gasoline almost doubled during the past decade, but international competition and a weak domestic economy have challenged the very existence of the manufacturing industry most closely identified with US productivity and affluence. This paper identifies the role that U.S. federal energy policy plays in influencing the competitive strategies of auto manufacturers as they confront pressures for change. The following points are attempted to be established: 1. The nature of the long- and short-term effects of federal energy policy on the manufacturing capacity and product-line strategies of auto manufacturers was reasonably predictable at the time energy policies were being deliberated. (This belief is held even though understanding of the complexities of industrial evolution was, and still is, quite limited.) 2. The short-run effects of public policy appear to have been detrimental to the maintenance of the international competitive position of the US industry in the long run.