The United States has become the most desirable location in the world to build cars. Despite the revival of the Big Three, new entries continually appear, with two European makers, BMW and Mercedes-Benz, setting up plants in the United States. At the same time, cracks are apparent in the vaunted Japanese manufacturing system. Exports to Japan are growing, albeit from a small base, and imports from Japan continue to plummet, having fallen in volume terms every year since 1986.1 Chrysler and Honda produce right-hand steering vehicles in the United States for export; Ford, Saturn, and Toyota have announced plans to do the same. Among parts producers, eighty American parts firms have representation in Japan, and there are more than two hundred U.S.-based, Japanese-run plants that are also potential exporters. Driving this reversal are two fundamental shifts in our relative competitiveness: a reformation of American manufacturing management and the tripling of Japanese labor costs in U.S. dollar terms. These changes, of course, extend beyond the U.S auto industry into many sectors of manufacturing and affect our position relative to the European Community (EC) as well.
Evidence of Reversal
In 1981, Japanese automakers raised car prices in the United States by as much as 25 percent. The Big Three responded by raising prices too. Market shares shifted rapidly, as imports made inroads on the Big... To read the complete article, login or sign-up using the form below.
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