The geography of auto globalization and the politics of auto bailouts By Jim Stanford Presented by: Obioma Onwuka

Outline: Background of the author Author’s argument Authors supporting evidence/key points Agree or disagree/Summary

Jim Stanford Canadian economist Founder of the Progressive Economics Forum Holds a masters degree in economics form Cambridge University and a doctorate for the New School of Social Research

Jim Stanford’s Argument Stanford, in his article, articulated the facts on the actions numerous governments around the world took to combat the failing automobile sector resulting from the Great Recession towards the end of 2008. Stanford believed however that North America’s situation was unique compared to the rest of the world because we were the only continent that had to save our regional producers (GM, Chrysler) from liquidation. Government mandated renegotiation of labor contracts within the industry seemed to make things worse because government was giving off an “anti-union” tone. This caused political backlash among voters especially with a new president stepping into power. Ultimately, Stanford believed that the actions taken by North America were unlikely to restore the Continental industry’s structure.

Supporting Evidence #1: Changes in Geography among top Automakers Table 4. Changing rankings of top automakers (annual production, million units. 1999 2009 USA 13.9 China 13.8 Japan 9.9 Japan 7.9 Germany 5.7 USA 5.7 France 3.2 Germany 5.2 Canada 3.1 Korea 3.5 Spain 2.9 Brazil 3.2 Korea 2.8 India 2.6 UK 2.0 Spain 2.2 China 1.8 France 2.0 Italy 1.7 Mexico 1.6 This table compares the ranking of the 10 largest auto-producing locations in 2009 with its previous amount a decade earlier. Source: Authors calculations from Ward’s Automotive (2010) database.

Supporting evidence #2: high labor costs compared to minimal unionization In his article, Jim Stanford explains in detail about how labor prices are way too high for automakers in North America compared to other places like Mexico and Brazil. On top of that, Stanford explains how employees are suffering because of the fact that there are very few unionized automakers in North America compared to non-unionized multinational manufactures. Employees that are not part of the UAW have to find their own health insurance and fend for themselves financially if they are terminated. Which in turn, saves the non-union multinational companies billions.

Supporting evidence #3: steps the US government took to restructure the automaker industry To save Chrysler and GM from being liquidated, the US government needed to take drastic measures to try and restructure. Among those measures, Chrysler and GM had to implement a two-tier labor contract which would reduce wages for new hire 50%, reduction of hourly employment by 50% and, closed 12 assembly and powertrain plants in North America.

Agree or Disagree/Summary Jim Stanford's points are factual as he breaks down how the auto bailout was not only felt at home, but all over the world as well. He shows how different parts of the world leadership handled how to alleviate the pressing matter of our auto industry. Even though I believe the auto industry will never be what it once was especially after the bailout, new cars are being made every day. The bailout for the time being worked. I wouldn’t want to see a world where the government did not step in and let the auto industry fail completely.

Works Cited Stanford, J. "The Geography of Auto Globalization and the Politics of Auto Bailouts." Cambridge Journal of Regions, Economy and Society 3, no. 3 (2010): 383-405. Accessed April 2, 2019. doi:10.1093/cjres/rsq025.