North American Automotive Industry Research Articles

Changing interorganizational patterns in the North American automotive supply chain

The North American automotive industry is undergoing extensive change in its organization. This paper focuses on change in the automotive supply chain, that is, those firms in the industry such as Chrysler or Ford that assemble the vehicles, and those firms that are their suppliers. The data come from in-depth interviews with 26 senior executives in North American automotive companies, from a survey of 175 firms in the North American automotive industry, and from sessions with an advisory board of representatives of leading automotive industry companies. The particular topic in the research reported below is the differentiation of the supply chain into four broad categories, with on-going change in the proportion of all firms in each category. Emphasis is given to understanding the factors driving the differentiation. The changes are interpreted in terms of both firm-level and industry-level factors. At the firm level, explanations draw mainly upon agency theory and transaction cost economics. At the industry level, explanations are grounded primarily in the increasing competition and globalization among all the firms and in the types of networks that link firms in the industry. The changes and their underlying causes allow certain predictions: there will likely be few if any new automotive assemblers in North America in the near future, and only a few new suppliers of the first rank, known as system integrators. Of the two other types of firms, direct suppliers will decrease in number, and indirect suppliers will become more numerous. The process of differentiation will continue at least until 2005. Furthermore, the number of customers each type of supplier serves will decrease, and the type of relationship between the assemblers and both system integrators and direct suppliers is likely to become both more long-term and more complex.

A Continental Philosophy

The prevailing interpretation of Canadian-American relations in the 1960s emphasizes the fundamental differences that came to divide these close cold war allies during a decade of rapid change. For most historians, relations under Prime Minister Lester B. Pearson and President Lyndon Johnson were typified by mutual hostility, the product of Canadian nationalism and profound differences over the war in Vietnam.(f.1)But this is only part of the story. At a time when economic nationalists began to flex their muscle in Ottawa, Canada and the United States developed a framework for economic co-operation that drew the two countries more closely together than ever. A series of working agreements and official-level committees emerged during the decade to oversee financial relations between the two countries. During the Kennedy Round of the General Agreement on Tariffs and Trade (GATT), which opened in May 1964, bilateral negotiations reduced or removed tariffs on $3 billion-worth of North American trade.(f.2) In January 1965, the two countries signed the Canada-United States Agreement on Automotive Products, or autopact, a conditional free trade arrangement that tried to come to terms with the implications of the highly interdependent economic relationship that had developed since the 1940s. The autopact is a particularly important example of Canadian-American interaction, and its evolution casts a very different light on relations between Canada and the United States in the mid-1960s.The United States was a tolerant ally, responding to the economic nationalism that underlay unilateral Canadian efforts to deal with its perennial trade deficit in automotive products in an imaginative and thoughtful manner. Although it was determined not to sacrifice its legitimate interests for the sake of bilateral harmony, the United States was ready to seek an equitable arrangement for sharing the North American automotive industry in a way which acknowledged the unique conditions confronting Canada, the smaller neighbour of an economic giant. Washington tried hard to persuade Ottawa to resolve their differences over automotive products in a co-operative manner that stressed their common economic interests. In doing so, it posed a fundamental question for Pearson's government: should Canada agree to the further integration of the two North American economies in exchange for the benefits that greater access to the United States market would make possible?The issue divided the cabinet and pitted so-called continentalists against economic nationalists. One wing, led by the nationalist minister of finance, Walter Gordon, hesitated to endorse any measure that would lead to closer economic relations with the United States. A second faction, represented by Mitchell Sharp, the minister of trade and commerce, reflected more traditional liberal views: as a country whose prosperity depended on international commerce, Canada should encourage those developments that promised to reduce tariffs and expand trade. In late 1964, the debate came to a head. In accepting proposals for a closely integrated continental automotive industry, Pearson's cabinet confirmed and strengthened the North American orientation of the Canadian economy.The autopact's origins lie in Canadian efforts to overcome the limitations imposed on the growth of the automotive industry by the nature of its development in Canada. Erected behind the high tariff walls of Sir John A. Macdonald's National Policy, the industry was dominated by American branch plants, principally the subsidiaries of Ford, Chrysler, and General Motors. During the 1930s, British Commonwealth preferences encouraged a substantial export trade to Australia, New Zealand, and the United Kingdom. This trade declined at the end of the Second World War as American manufacturers established production facilities overseas and the major Canadian automotive producers concentrated on supplying the domestic market, importing many of the vehicles necessary to round out their narrow Canadian product range. …

IS0 9000—A Perspective on a Global Quality Standard

The development of Quality Standards currently used in industry was driven by a number of forces. Government initiated quality programs such as MIL-Q-9858 and MIL-1-45208 were a response to the poor quality of ordnance during World War 11. The North American automotive industry developed its own distinct quality program and supplier requirements in an effort to compete with the public perception of superior Japanese quality. The proliferation of the IS0 9000 standards is being driven by expanding world markets looking for a universally accepted and recognized quality program. This paper will discuss the history and purpose of the IS0 9000 series of standards, the projected course of the standards, the registration process, and the potential benefits within the supplier customer relationship.

Concurrent Engineering in the Automotive Industry: Prospects for Worker Participation

Concurrent engineering practices designed to shorten product development lead time are making their way into the North American automotive industry. This paper reports the results of case study research undertaken to determine whether these practices provide new opportunities for auto workers and their unions in decisions about technology design and training. At the plant level in particular, it was found that the company's efforts to integrate design and manufacturing operations provided production workers and plant-level union representatives with new opportunities for substantive input in process design, earlier exposure to the new product, and significant control over the pre-Iaunch training program for skilled trades and production employees.

Rules of origin issues related to NAFTA and the North American automotive industry November 1991

Rules of origin issues related to NAFTA and the North American automotive industry November 1991

The Continental Integration of the North American Automobile Industry: From the Auto Pact to the FTA and beyond

The continental integration of the US and Canadian automobile industries quickly followed the negotiation of a sectorial managed trade agreement—the Auto Pact—in 1965. Thus the recent Canada—US Free Trade Agreement (FTA) will likely have less short-term impact on restructuring in the auto industry than it will in most other industries. The paper begins with an analysis of the significant restructuring that occurred within the North American auto industry during the 1980s in response to the globalization of production and dramatic changes in competitive conditions. The future prospects of the industry as it enters the 1990s are examined with regard to three issues: the likely impact of the implementation of the automotive-industry provisions of the FTA; the consolidation of the significant auto-manufacturing presence in North America established by Japanese automakers during the 1980s; and the fact that, with or without the negotiation of a North American Free Trade Agreement (NAFTA), it appears likely that Mexico during the 1990s will become fully integrated into a truly North American automotive industry.

Review of the North American Automotive Industry

Review of the North American Automotive Industry