| To say that 2009 was a tough year for the United | | | | wage costs. Outsourcing becomes a tempting avenue |
| States automobile industry is quite the | | | | in order to help drive down the rising average costs |
| understatement. Many questions arise about the | | | | of their units sold. |
| future of the U.S. auto industry. Will the U.S. auto | | | | Additionally, with oil prices continuing to rise, this has |
| makers make a comeback in 2010? What kind of | | | | required U.S. auto manufacturers to look at their car |
| changes will the companies make? How will they be | | | | lineups and determine what types of vehicles they |
| able to compete globally with their international | | | | need to develop and enhance for the current market |
| competitors? | | | | demands. Consumers are looking for more |
| Looking at GM and Ford, one would have to say Ford | | | | fuel-efficient cars. U.S. auto companies, for a long |
| has a healthier and more positive outlook. GM stood | | | | time, did not accept the fact that the rising gas |
| in line for a government bailout last year, and the U.S. | | | | prices would impact their demand for large |
| government has an approximate 60% stake in GM. | | | | SUV’s and trucks. Walter McManus, University |
| On the contrary, Ford has not had to ask for any | | | | of Michigan economist and former sales forecaster |
| government bail out money. Ford has been able to | | | | for GM, stated “he and other GM analysts |
| ride the performance of some solid vehicles (e.g. Ford | | | | tweaked projection model when they didn’t |
| Fusion) to keep them going steady. A concern, | | | | believe the results”, while devaluing the impact of |
| though, is since the government does have such a | | | | fuel economy in their forecasts (source: LA Times |
| big stake in GM and is assisting them financially, will | | | | article). Listening to the consumers and creating |
| this hinder equal and fair competition in the market, | | | | automobiles with specifications they want seems like |
| and, as a result, put Ford at a disadvantage. In | | | | a no-brainer, but has unfortunately been overlooked |
| other words, if GM continues to struggle, will the | | | | by many U.S. auto manufacturers. |
| government continue to pump money into their | | | | It will be interesting to see how Ford and GM |
| company and enable them to have promotions and | | | | perform in 2010. So far in January, all major U.S. |
| make investments, they otherwise would not have | | | | auto makers performed better than expected sales. |
| been able to. Will this result in Ford feeling like they | | | | And according to the Wall Street Journal, Ford |
| should receive a bailout too in order to equal the | | | | obtained second place, falling only to Toyota, in a |
| playing fields? | | | | consumer poll measuring “overall auto brand |
| In the past few years, there has been much analysis | | | | perception”. GM has said that it will focus on |
| and research conducted on U.S. labor unions and how | | | | four core brands in 2010 and is looking to release an |
| they have impacted U.S. manufacturing industries. | | | | electric vehicle. Ford is continuing to increase its |
| Henry Payne wrote an article in 2005 discussing | | | | market share in the last few months, while GM’s |
| Delphi’s bankruptcy, and the company’s | | | | continues to decline. In addition, Ford analysts are |
| restructuring specialist Steve Miller said, “We | | | | making projections to break-even in the 2011 |
| cannot continue to pay $65 an hour for someone to | | | | timeframe, and GM is saying 2011 as well. Analysts |
| cut grass and remain competitive.” (source: | | | | are predicting a slow recovery in 2010, and the |
| National Review article) | | | | companies are making fixed costs reductions as |
| The article goes on to discuss how unions have been | | | | much as possible to enhance their profitability. |
| able to classify the grass cutting job the same as an | | | | Hopefully, the U.S. auto industry will be able to make |
| assembly line worker, resulting in the employee | | | | a turnaround and regain their strength. They have |
| receiving lucrative benefits. The U.S. auto industry | | | | been a foundation to the American culture and |
| has had to deal with these high labor and overhead | | | | lifestyle. The U.S. auto makers need to continue |
| costs negotiated by the labor unions and has created | | | | making quality products and staying ahead of the |
| obstacles and hardships when competing in the global | | | | game on innovation and technology. They used to |
| marketplace. These U.S. companies are not able to | | | | be the leaders of the pack and will hopefully soon be |
| invest this money into technological advancements or | | | | there once again. It would be a shame to see them |
| new innovative concepts like a foreign competitor | | | | go away. |
| who does not have to pay anywhere near the same | | | | |
