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Global Auto Manufacturing

This article discusses the unevenness of global automobile markets, explores the impact of the American unionized workforce on the decline of the US auto industry, and describes the subsidies provided by major producing nations in the wake of the 2008 recession.

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Global Auto Manufacturing

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  1. Global Auto Manufacturing

  2. 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

  3. 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

  4. Major & Minor Auto Markets European E. Asian North American

  5. East Asian Japan & S. Korea • Highly Asymetrical • Closed local market • 5% imports • >50% production to exports • Mainly N. America • Substantial to Europe • FDI outflow

  6. 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

  7. 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

  8. 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

  9. Europe cont. • Eastward/Southern migration – Spain, Central & Eastern Europe – Lower labor costs • Eastern to Western Europe flows • Small trade deficit in Western Europe

  10. 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

  11. http://video.cnbc.com/gallery/?video=3000039998 http://www.youtube.com/watch?v=T10Y5Chd4oQ

  12. China • Rapidly improving safety 2007 Model http://www.youtube.com/watch?v=g5SRyG6UR2A 2011 Model http://www.youtube.com/watch?v=tL_rfVhS2hg

  13. Brazil • 5thlargest market in the world • Highly productive & modern assembly http://www.youtube.com/watch?v=J1OkZ3xowKQ

  14. Changing Global Markets • Climbing emergingmarkets

  15. Global Labor Markets

  16. 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

  17. 2008Recession • All nations provided help to their industries • Some provided direct labor support

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