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Comprehensive report of an “auto manufacturing” industry sample essay
“Auto manufacturing” industry appeared in the end of the 19th century in the United States, Great Britain, Germany and France. Its significance at present time and future trends depend on the place motor transport takes in transport-energetic infrastructure, and its role in the national economy.
The countries-leaders in automobile industry take the first places in the world economy. This industry has a direct impact on technological progress and better than any statistics says about people’s paying capacity and thus about standard of life.
On the one hand “auto manufacturing” industry is a big consumer of material, financial and labor resources; on another hand it is one of the main producers of industrial output and plays a great role in social production development and country’s economy as a whole.
By combination of construction and technological complexity of every manufactured article with the mass production scales automobile industry has no analogues among other industries of modern machine-building. High level of capital concentration in auto manufacturing as well as rapid reduction of firms – independent producers – is concerned with this feature. Developed countries in many respects depend on automobile industry because auto multinational corporations play a significant role in their economies.
At present a process of regional structure changing is taking place in automobile industry. This process includes shares redistribution between the leading producing centers as well as increasing part of economically developing countries, where the intensive development of auto manufacturing is taking place under the influence of world automobile companies.
Three companies - auto-giants - form “The Big Three” in the United States and control the most part of American auto market, and are the biggest multinational companies in the world. They are Ford, Daimler Chrysler and General Motors. However some other firms are also controlled by these producers. Thus Daimler Benz and Chrysler united into one corporation. And now such brands as Mercedes, Chrysler, Jeep and Dodge are produced under the direction of Daimler Chrysler.
General Motors is the biggest of three “auto-giants”. Its annual output is more than 6 million automobiles. Both American companies (Chevrolet, Pontiac, Buick, Saturn and Cadillac) and European ones (Opel, Vauxhall and Saab) belong to General Motors. Besides this the corporation owns 20 per cent of Subaru company shares and 49 per cent of Isuzu, and in this way it can influence the Eastern market. Isuzu has been providing engines for Opel and Saab vehicles for 10 years already. However General Motor’s influence on Subaru is still insignificant because of small share of capital in it.
The second by size auto-concern is Ford. It includes such companies as Aston Martin, Jaguar, Lincoln, Mercury, Volvo and Mazda. Total annual output is about 4.6 million vehicles. The most part of the output is formed by such brands as Ford (more than 2 million vehicles) and Mazda (almost 1 million).
Daimler Chrysler is the third biggest auto manufacturing company in the USA. However it takes only the 6th place in the world scale, letting Volkswagen and Toyota go ahead. Its annual output is about 3.55 million automobiles. Of “The Big Three” Chrysler remained a pure American company longer than others. In 2001 Daimler Chrysler united with Mercedes and got an opportunity to produce prestigious cars which were inaccessible to the company before. This union has a positive impact on both companies from technical and tactical points of views.
“The Big Three” controls 62.7 per cent of American auto market, 36 per cent of Brazilian market, 28 per cent of European market and 10 per cent of Asian market. Besides this these companies form 4.4 per cent of United States Gross National Product. It also provides a lot of working places for the population: about 731 thousand people are working at the auto manufacturing enterprises disposed in the United States. And their annual income is about 29 billion US dollars. Moreover about 900 thousand people supply production to “The Big Three”.
In order to succeed, the automobile manufacturers have to establish and control large supply chains, span different geographic regions, be competitive in the national and world markets and fulfill all state regulations.
Today there are a lot of reasons for the state to be interested in the auto manufacturing industry. They include such important points as passengers’ safety, conservation of the environment, and development of more efficient engines, which will reduce dependence on foreign petroleum.
The history of automobile industry regulations dates back up to 1946 when President Harry Truman called National Traffic Safety Council. This Council declared that the automobiles should have a progressive design and operate safer in order to protect passengers from injuries in traffic accidents. But as it was a postwar period the plants were unable to shift to producing safety cars immediately, as not so long ago they had been producing bombs and tanks.
In 1952 Cornwell University suggested to introduce seat bells into motor vehicles, as its researches showed that they would reduce number of injuries in accidents. But people wanted to enjoy life but not invest money in set bells. So about 10 year had passed till they became popular, as from 1950 to 1966 the number of fatal accidents on the roads increased from 34,763 to 53,041. And in 1964 the first safety standards were established by the Congress. Primarily they concerned the cars that were bought by the General Services Administration.
In 1966 the National Highway Traffic Safety Administration was established. It created 17 standards, which required auto companies place padded dashes with recessed control knobs, padded visors, seat belts, standard bumper heights, safety door latches and collapsible steering columns into vehicles. 3 years later a regulation for air bags was set up. General Motors was the first to invest $80 million to equip 300,000 autos with them. But although airbags were being sold much below cost (for $300), many customers refused to install them.
A lot of environmental regulations were set up later. In 1970 Senator Edmund Muskie was the first to revise the Clean Air Act. The exhaust had to be cut by 90 per cent. In 1975 the Congress adopted the Energy Policy and Conservation Act, creating Corporate Average Fuel Economy policy. All these regulations brought Chrysler almost to bankruptcy. And only due to its chairman Lee Iacocca, who switched from Ford to Chrysler at this period, the company could reach a high level again.
There were a lot of other environmental restrictions which made companies bear great costs to introduce new technologies. And anti-trust laws prohibited auto manufacturers’ co-operation. However later these restrictions were reduced and “The Three Big” began to work together in such areas as safety, electronics and battery technology. Besides they cooperate to create cars that get more miles per gallon. This allows lessening country’s dependence on imported mineral oils.
In 1970 the Center of Auto Safety was created by Ralph Nader and Consumer Union. Due to its efforts “Lemon Laws” were adopted. They provided indemnity to the customers for autos that did not meet some quality standards or performance.
It is necessary to mention here the Free Trade Agreement between Canada and the US that removed barriers of auto and auto parts trade between two countries.
New regulations for high-powered long-range trucks are expected soon. Shorter stopping distances will be set, and trucks’ brakes will be redesigned in order to diminish the probability of emergency conditions on the roads.
Nowadays there are a lot of debates about regulation’s role in auto manufacturing industry as from one hand they speed up creating safe vehicles, but from another lead to great expenses.
Bibliography
1. Berger, Michael L. The Automobile in American History and Culture: A Reference Guide. Westport, Conn. Greenwood Press, 20012. “Center for Auto Safety”. Wikipedia, The free encyclopedia. 26 March 2006.
3. Fine, Charles H. and Clair, Richard St. Meeting The Challenge: U.S. Industry Faces the 21st Century. The U.S. Automobile Manufacturing Industry. The International Motor Vehicle Program. Massachusetts Institute of Technology. 1996.
4. Gardner, Greg. “Government assault: forcing the automakers to think safety and fight smog - automobile industry regulation”. FindArticles. 2006.
5. Luger, Stan. Corporate Power, American Democracy, and the Automobile Industry. University of Northern Colorado, 1999.
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