In the last four decades of the 20th century, the three major auto manufacturers in the United States have faced challenges to their domination of the market. Environmental and safety concerns, the instability of the world economy, and increased foreign competition forced the manufacturers to make radical structural changes while attempting to meet increasing demands from consumers in a competitive market.
In the late 1960s and early 1970s, U. S. auto manufacturers, in particular General Motors, were still reeling from Ralph Nader’s expose of the auto industry in his book Unsafe at Any Speed (1965; rev. ed. 1972), which exposed the design deficiencies of the Chevrolet Corvair. The manufacturers were accused of abusing their corporate power and knowingly producing defective cars. While the manufacturers responded by introducing safety features they were also faced with growing competition from abroad. Volkswagen, Toyota, and Nissan all began to increase sales in the United States during the 1970s. The Organization of Petroleum Exporting Countries (OPEC) embargoes on oil in 1973 and 1979, and the economic recessions of the 1970s led to the increased popularity of cheaper and more fuel-efficient imports. In 1970 the U. S. government introduced the National Air Quality Control Act (better known as the Clean Air Act), which required auto manufacturers to reduce auto pollutants; the government also set new standards for fuel economy, placing extra demands on the U. S. auto manufacturers. Japanese manufacturers were able to capitalize on the problems in the U. S. market and increase their market share, so that by the end of the 1970s, Japanese imports accounted for almost 25 percent of market sales.
Japanese manufacturers also benefited from a more efficient and modern manufacturing infrastructure. U. S. manufacturers responded by adopting many of these methods, known as “lean production,” and began to introduce smaller cars. These changes, which included increased quality control, the development of automated production techniques, and the introduction of just-intime ordering, helped the U. S. manufacturers slowly recover. H owever, the cost of reorganization resulted in extreme financial difficulties for the manufacturers. Chrysler in particular was on the verge of bankruptcy, and increased layoffs, employee reorganization, and the exportation of manufacturing work overseas in the 1970s brought the manufacturers into conflict with the United Auto Workers Union.
Increased global competition and emerging new markets since the 1980s had profound effects on the national character of auto manufacturers. Japanese and German manufacturers established plants in the United States, and in the 1990s U. S. manufacturers established joint ventures or invested in overseas companies. Chrysler and Daimler-Benz merged in 1998 while maintaining separate brands, and Ford bought Volvo in 1999. General Motors has arrangements with manufacturers in Japan and Fiat in Italy. By the late 1990s the national origin of any car became increasingly difficult to ascertain.
Since the 1970s, energy and environmental concerns have increased, and forced manufacturers to develop more fuel-efficient and environmentally friendly vehicles. In 1993 a joint initiative between the U. S. government and auto manufacturers established the Partnership for a New Generation of Vehicles (PNGV) which aims at producing more ecologically efficient vehicles using new forms of fuel technology such as electricity or natural gas.
Computer technology has led to great changes in industrial design and manufacturing. Here, robots operate on an assembly line at a Ford Motor Company plant in Michigan. (Hulton/Archive)
Auto manufacturers have also had to respond to growing consumer demand for increased comfort and safety. Since the 1980s, a growing economy and increased global competition has seen the rise in the popularity of four-wheel drive (4WD) and luxury vehicles. The biggest demand has been for sport utility vehicles (SUVs) that combine the off-road and safety features of the Jeep with the passenger comforts of luxury cars. In 1996 sales of light trucks and vans (LTVs), which includes SUVs, represented 44 percent of new vehicle sales in the United States.
The difficulty for auto manufacturers of balancing consumer demand with environmental concerns became pronounced in 2000 when the president of Ford Motor Company, William Clay Ford, publicly acknowledged the inefficiency of Ford’s SUVs and the threat they pose to the environment. In the same year, Ford was also forced to recall a large number of its fleet due to defective tires made by the Firestone Company in a blaze of publicity reminiscent of the Corvair controversy in the late 1960s. The U. S. auto industry was almost dealt a death blow by the economic meltdown of 2008. Detroit’s big three automakers all saw their sales drop (as did their foreign competitors to a lesser extent) by as much as 40 percent over the previous year when consumers shied away from buying automobiles during the uncertain economy. Facing the prospect of bankruptcy, General Motors, Chrysler, and Ford took dramatic action by closing several of their manufacturing plants, slashing production, and going to Washington, D. C., to ask lawmakers for a bailout. In December 2008 Congress ultimately refused to give the automakers any money, but President George W. Bush took executive action by allowing the automakers to receive a share in the Troubled Assets Relief Program (TARP), the $700 billion bailout fund for troubled financial institutions. Critics argued that the automakers had only themselves to blame for their predicament, citing poor planning and lack of innovation on the part of management, and that reorganization under bankruptcy may be the only way to get Detroit automakers healthy again. However, others have argued, including President Bush, that no one is going to buy a car from a company that is in bankruptcy, and that to let the U. S. automobile industry fail would put millions of people out of work. In 2009, GM and Chrystler filed for bankrupcy, and the federal government assumed part ownership of the corporation.
See also BUSINESS; Chrysler Corporation Loan Guarantee Act; conservation movement; economy; energy CRISIS; ENVIRoNMENTAL MoVEMENT; LABoR.
Further reading: Micheline Maynard, The End of Detroit: How the Big Three Lost Their Grip on the American Car Market (New York: Currency/Doubleday, 2003); James M. Rubenstein, Making and Selling Cars: Innovation and Change in the U. S. Automotive Industry (Baltimore, Md.: Johns Hopkins University Press, 2001).
—Stephen Hardman
World History
