Global Auto Manufacturing
Terms & Concepts OEM – Original Manufacturer FDI – Foreign Direct Investment Transplants – FDI plants 10% of Global Trade is auto related BRIC nations – Brazil, Russia, India & China
Purpose of Article Describe unevenness of Global Automobile Markets Question the impact of American unionized workforce on US auto decline Describe the subsidies provided by all major producing nations in wake of 2008 recession
Major & Minor Auto Markets European North American E. Asian
East Asian Japan & S. Korea Highly Asymetrical Closed local market 5% imports >50% production to exports Mainly N. America Substantial to Europe FDI outflow
N. America Magnet for Imports and FDI transplants Market 20% import bulk from E. Asia 25 Japanese plants (40% of all production) One each for Daimler, BMW, & Volkswagen US OEM’s badly bleeding 2005-2008 market share dropped – down to 47% Very few exports http://www.learner.org/resources/series180.html?pop=yes&pid=1951# 12:40
N. America cont. Southward shift of production away from unionized workforce states Across border into Mexico, away from Canada (Mexico now larger producer of two) Outbound FDI – mainly aimed at China and Brazil
Europe 2/3rds of market controlled by European OEMs Ony 10% imports Significant exports and outward FDI Some FDI in N America other towards China & Brazil Global balanced trade with exports to N. America, imports from E. Asia
Europe cont. Eastward/Southern migration – Spain, Central & Eastern Europe – Lower labor costs Eastern to Western Europe flows Small trade deficit in Western Europe
BRIC Nations China 10 fold increase in decade World’s largest market & producer 45% growth in 2009 alone Requires 50% joint ventures & technology transfers for foreign ventures Plans on moving into export market http://www.france24.com/en/20100111-china-overtakes-us-worlds-largest-car-market
http://video.cnbc.com/gallery/?video=3000039998 http://www.youtube.com/watch?v=T10Y5Chd4oQ
China Rapidly improving safety 2007 Model http://www.youtube.com/watch?v=g5SRyG6UR2A 2011 Model http://www.youtube.com/watch?v=tL_rfVhS2hg
Brazil 5th largest market in the world Highly productive & modern assembly http://www.youtube.com/watch?v=J1OkZ3xowKQ
Changing Global Markets Climbing emerging markets
Global Labor Markets
Comparison US not that much more expensive, and getting cheaper All Auto workers are paid a premium May be result of higher productivity Emerging market still holds a cost edge, but declining
2008 Recession All nations provided help to their industries Some provided direct labor support