Henry Ford, with his genius concepts of the assembly line and interchangeable parts, create the American auto industry in Detroit in the early 1900’s. Throughout the 20th century, the industry flourished and floundered. Numerous unique factors impact the auto industry. Below is a summary of the following factors as they relate to the auto industry: government regulations, the US economy and globalization, technology, and socio-cultural influences.
Government Regulations
While Americans have historically loved automobiles, they also perceive them as quite deadly. It is common knowledge that a person is more likely to die in a car accident than in an airplane crash. In fact, there were 30,800 fatal motor vehicle crashes in the United States in 2012 (Lists of Motor Vehicle Deaths by Year, Wikipedia). This dangerous perception prompted the government to establish the National Highway Traffic Safety Administration (NHTSA) in 1970 and its first action was to mandate seat belts. Today NHTSA has three categories of safety codes: crash avoidance, crash worthiness, and crash survivability. There are 38 crash avoidance standards. Some examples are windshield wiping and washing, air brake systems, and rear and side view mirrors. There are 26 standards for the crash worthiness category. These include side impact protection, head rest/restraints, and child safety systems. Lastly, there are five standards of crash survivability and they encompass fuel systems and flammability (Federal Motor Vehicle Safety Standards, Wikipedia). Another negative perception of the automobile is that it is not environmentally friendly. Similar to safety concerns, environmental concerns prompted government regulation. The US Environmental Protection Agency, alongside NHTSA, regulates the emissions of greenhouse gases and the fuel economy of automobiles. In 2016, the carbon dioxide emissions level for car is 212 grams per mile. The EPA plans to lower this requirement to 143 grams per mile by the year 2025 (EPA Website). The US Economy and Globalization Referring the to the year 2012, the article, “The Automotive Industry in the United States” …show more content…
The industry contributed 3.5% of the US Gross Domestic Product and employed 786,000 people (Select USA Website). The Academic Mind Automobile Industry Analysis discussed how the auto industry is supported by numerous other US industries including “computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber” (2004).
Globalization has had a great impact on the auto industry and has certainly changed the way US auto manufacturers do business. According to a Supply-‘Chain Merchant Review article, “A ‘design anywhere, make anywhere, sell anywhere’ strategy will lead to the formation of a global plant floor” (SCMR Staff, 2010). Detroit, nicknamed “Motor City”, has historically been the hub of the US auto industry. With globalization, car manufacturing in Detroit has declined since the 1960’s. Detroit peaked with 200,000 factory jobs and today it has only 20,000 jobs left (Cutcher-Gershenfeld, 2015). With developing nations such as China demanding more cars, manufacturing plants are relocating to areas by seaports. Many US plants are moving to Mexico where there is an attractive cheap labor force. However, the US auto industry is gaining strength in the post-industrial and even after the recession of 2008. Global competition has driven the industry towards higher quality standards, innovation, and improved production management. This can be seen in rising US Auto profits. For example, Ford reported the following increasing profits: $6.2 billion in 2011, $7.2 billion in 2012, and $8.3 billion in 2013 (Cutcher-Gershenfeld,
Government Regulations
While Americans have historically loved automobiles, they also perceive them as quite deadly. It is common knowledge that a person is more likely to die in a car accident than in an airplane crash. In fact, there were 30,800 fatal motor vehicle crashes in the United States in 2012 (Lists of Motor Vehicle Deaths by Year, Wikipedia). This dangerous perception prompted the government to establish the National Highway Traffic Safety Administration (NHTSA) in 1970 and its first action was to mandate seat belts. Today NHTSA has three categories of safety codes: crash avoidance, crash worthiness, and crash survivability. There are 38 crash avoidance standards. Some examples are windshield wiping and washing, air brake systems, and rear and side view mirrors. There are 26 standards for the crash worthiness category. These include side impact protection, head rest/restraints, and child safety systems. Lastly, there are five standards of crash survivability and they encompass fuel systems and flammability (Federal Motor Vehicle Safety Standards, Wikipedia). Another negative perception of the automobile is that it is not environmentally friendly. Similar to safety concerns, environmental concerns prompted government regulation. The US Environmental Protection Agency, alongside NHTSA, regulates the emissions of greenhouse gases and the fuel economy of automobiles. In 2016, the carbon dioxide emissions level for car is 212 grams per mile. The EPA plans to lower this requirement to 143 grams per mile by the year 2025 (EPA Website). The US Economy and Globalization Referring the to the year 2012, the article, “The Automotive Industry in the United States” …show more content…
The industry contributed 3.5% of the US Gross Domestic Product and employed 786,000 people (Select USA Website). The Academic Mind Automobile Industry Analysis discussed how the auto industry is supported by numerous other US industries including “computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber” (2004).
Globalization has had a great impact on the auto industry and has certainly changed the way US auto manufacturers do business. According to a Supply-‘Chain Merchant Review article, “A ‘design anywhere, make anywhere, sell anywhere’ strategy will lead to the formation of a global plant floor” (SCMR Staff, 2010). Detroit, nicknamed “Motor City”, has historically been the hub of the US auto industry. With globalization, car manufacturing in Detroit has declined since the 1960’s. Detroit peaked with 200,000 factory jobs and today it has only 20,000 jobs left (Cutcher-Gershenfeld, 2015). With developing nations such as China demanding more cars, manufacturing plants are relocating to areas by seaports. Many US plants are moving to Mexico where there is an attractive cheap labor force. However, the US auto industry is gaining strength in the post-industrial and even after the recession of 2008. Global competition has driven the industry towards higher quality standards, innovation, and improved production management. This can be seen in rising US Auto profits. For example, Ford reported the following increasing profits: $6.2 billion in 2011, $7.2 billion in 2012, and $8.3 billion in 2013 (Cutcher-Gershenfeld,