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AUTO INDUSTRY.   Term Paper ID:22161 Click to get this paper

Essay Subject: Challenges & responses since the 1970s, focusing on General Motors. Labor relations, competition with Japan, capital expenses, job structures. Chart. Table.... More...

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Paper Abstract: Challenges & responses since the 1970s, focusing on General Motors. Labor relations, competition with Japan, capital expenses, job structures. Chart. Table. Paper Introduction: For over a generation, General Motors Corporation (GM) was the largest American business enterprise, and nearly a symbol of the American industrial economy. Yet, by the 1980s, the company was near to collapse. The immediate cause of GM's difficulties was competition from Japanese imports, but the more fundamental cause was arguably GM's difficulty in making the most efficient use of capital and labor. Thus, the experience of GM in deploying its capital and labor is a useful illustration of some fundamental issues facing all firms in a competitive environment. The following pages will examine the challenges facing GM since the 1970s, and its response to those challenges. Automobile manufacture is the capital-intensive, assembly-line industrial process par excellence. The story of Henry Ford and the assembly line is a familiar piece of folklore. The Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. What do these findings tell us about the relative contributions ofcapital and labor to the productivity differential in the early 198 s?Process yield clearly belongs on the capital side of the ledger.Absenteeism--a major concern at GM as early as 1969 (Serrin, 1973, p. Material processing Casting, forging, plastic and glass forming, stamping. For over a generation, General Motors Corporation (GM) was thelargest American business enterprise, and nearly a symbol of the Americanindustrial economy. A comparison may be made here to that familiar stereotype of the"service economy," the fast-food restaurant. The Company and the Union: The "CivilizedRelationship" of the General Motors Corporation and the United AutomobileWorkers. (1994). The Saturn was, in effect,GM's last, best hope for establishing its ability to survive as acompetitive force under modern conditions and international competition(Sherman, 1994, pp. In contrast, if a worker at an auto plant is fired undercircumstances that other workers regard as unfair, the news or rumor islikely to spread quickly through the entire plant and the entire community. Work Pace 6.4 -6.5 (National Academy, 1982, p. GM executive vice-president F. Much of this labor force is"unskilled," in that many, perhaps most assembly operations are simple andrepetitive. Thequestion, in the 198 s, was the degree to which GM and other Americancarmakers could respond to the factors leading to the productivitydifferential. However, an automobile plant requires a large labor force,working in a shared environment--and also, due to the nature of theassembly line, an almost inevitably regimented environment. Thus, the experienceof GM in deploying its capital and labor is a useful illustration of somefundamental issues facing all firms in a competitive environment. GM spent $45 billion in capitalinvestments, yet increased its worldwide market share by only 1percentage point, to 22 percent. New York: Knopf.Sherman, J. But beginning in the late 196 s, GM and the other domesticcarmakers faced a new challenge, from Japan, and by the middle 197 s, itwas clear that the domestic industry was losing. Until mid-1986, the capital-spendingplan called for an additional $35 billion through 1989. In December of 1987, GM committedtwo billion dollars to launch the Saturn division, the first new GMdivision in decades (Sherman, 1994, p. 21, Figure 2.1)TABLE 1 Factors in Japanese-American Productivity Differential -- Rankings and Weights based on average of expert panel. A challenge by European small-car imports in the late 195 s hadbeen turned back. 196).A Ford Taurus plant required twenty-five labor hours to build a car; a GM A-Car plant required forty-one labor hours to build a car (Keller, 1989, p.196). Most of these components are fairly self-explanatory, but somerequire further explication. New York: OxfordUniversity.----------------------- 1 The sameis true of all the other production stages save perhaps the first, raw-materials processing. The "line," as we usuallyvisualize it, is in fact only the last of five basic stages in theproduction of automobiles; these stages are summarized in Figure 1 (takenfrom National Academy, 1982, p. The second, absenteeism, is an attribute of labor,while the third, job structure, can be regarded as a measure of theefficiency of the organization of labor. Comparative analysis of the utilization of capital and labor by thedomestic industry and the Japanese identifies some of the factors thatcontributed to the Japanese inroads. (National Academy, 1982, p. "For the same amount of money," [Smith] told the GMmanagers, "we could buy Toyota and Nissan outright" instantlyincreasing the market share to 4 percent (Keller, 1989, p. In spite of the element of automation implied by theassembly line, and further developments in automation (e.g., robots) inrecent times, a large labor force is required. 17 ). -1 7. Thefollowing pages will examine the challenges facing GM since the 197 s, andits response to those challenges. NewYork: Farrar Straus Giroux.Keller, M. In the Rings of Saturn. GM executives assumed that the future would be much likethe past. This complex industrial process requires a combination of enormouscapital investment and a highly specialized work force. Job structure analyses the division of responsibilities on theline. Washington: National Academy Press.Serrin, S. trim, wheels, brakes Systems / subassembly Engine, transmission, axles, suspension, steering, frame, body Final assembly Completed automobile. Yet, by the 198 s, the company was near to collapse.The immediate cause of GM's difficulties was competition from Japaneseimports, but the more fundamental cause was arguably GM's difficulty inmaking the most efficient use of capital and labor. The results of this analysis are shown in Table X (National Academy,1989, p. (1973). Moreover, theeffects of the stoppage will quickly spread up and down the productionsequence: suppliers to the plant must shut down, or produce a mass oftemporarily unusable materials or components, while "downstream" productionprocesses supplied by the plant (if it is not final assembly) will bestarved of parts, and must also shut down. Whether GM's attempt to reshape itself, starting with the Saturnproject, will succeed in the long run remains to be seen. The components consideredwere process yield, labor absenteeism, job structure, process automation,quality systems, product design, and work pace (National Academy, 1989, p.1 2, Table 6.5). (1989). New York: William Morrow.National Academy of Engineering (1982). But individualfast-food outlets employ only a relative handful of workers, and outletsand employees are scattered through a community, having little contact withone another. Factor Rank Weight (pct)1. 1 3, Table 6.6) ReferencesGelsanliter, D. Automobile manufacture is the capital-intensive, assembly-lineindustrial process par excellence. Much of the history of labor relations in the automobile industrystems from these characteristics. The former isstraightforward; an automobile assembly line is a large, complex, andhighly specialized machine, not readily adaptable to any other purpose(beyond turning out some slightly different model of automobile). 236). Job Structure 3.6 1 -254. The Competitive Status of theU.S. It will be noted that the three principal differentialfactors were found to be process yield, absenteeism, and job structure.The first of these, process yield, can be considered primarily an attributeof the employment of capital, the design efficiency of the actualproduction process. These conditions, we may suggest, are highlyconducive to labor solidarity; thus the United Automobile Workers hastended to be one of the strongest of American labor unions. Finally, job structures are ambiguous. Both industries involvemostly low-skilled work under fairly regimented conditions. Process Automation 4. Jump Start: Japan Comes to the Heartland. Entire communities have had much oftheir working population employed by a plant, and thus sharing an employerand a working experience. By the end ofthe 198 s, the domestic industry as a whole was showing signs of catchingup to the Japanese with respect to both price-competitiveness and quality(Gelsanliter, 199 , p. On the one hand, theorganization of workers on the line is designed by management; on theother, union work rules have, in the American industry, traditionallylimited the flexibility of work assignments and job structures. Rude Awakening: The Rise, Fall, and Struggle forRecovery of General Motors. Inthe early 198 s, however, the results of this capital investment werestrikingly small. (199 ). 1 2, Table 6.6; the table reproduced here shows only averagerankings and weightings, and not each panel member's individualevaluations). Absenteeism 2.2 2 -3 3. The Japanese, itappeared, could make better and more popular cars, and make them lessexpensively. Simply investing in capital plant was clearly not solving GM'sproblems. 6-155. The role of labor in the automobile production process requires somefurther explanation. In 1982, near the low point of GM'sand other domestic manufacturers' fortunes relative to the Japanesecarmakers, a panel of experts at the National Academy of Engineersevaluated the components of the productivity differential between Japaneseand American labor in automobile production. It is not surprising, then, thatlabor relations in the automobile industry have historically been asensitive issue. 5-9). If a worker is fired from one outlet, news of the firing isunlikely to spread. In short, automobile-industry labor has both inherent solidarity anda strong "veto power" over production. By the 196 s, GM was a mature corporation, the leader in a "mature"industry. A work stoppage at one outlet might have dramaticshort-term impact on that outlet, but an imperceptible one on the industryor community as a whole. Whether GM, which of the domestic Big Threewas the largest and most entrenched in its management practices, can fullyshare in this renewal remains an open question.FIGURE 1 The sequence of automobile production.Process Flow Basic Sectors Raw materials Iron and steel, aluminum, silicon, plastics, fibers, alloys. 21, Figure 2.1). 11)--as clearly belongs on the labor side of the ledger, though theresponsibility for excessive absenteeism may be placed upon either laboritself, by attributing it to worker attitudes, or upon management, byattributing it to low worker morale. GM's solution was to spend more money on capital improvements. Product Design 5. Quality Systems 5.2 5.5-1 6. Process yield is a measure of the directefficiency of the line production process, e.g., degree of materialwastage. Components Bearings, batteries, spark plugs ... In the middle and late 198 s, GM struck out in a new direction,attempting in a sense to start afresh. The story of Henry Ford and theassembly line is a familiar piece of folklore. Alan Smith, in the mid-198 s, outlined in stark terms the high cost and poor results of GM'scapital expenditure plans: From 198 through 1985 ... Product design is a measure of the degree to which the vehicledesign lends itself to easy manufacture--number of subcomponents, numberand type of fasteners, and so forth. Auto Industry. If a work stoppage results--and it requires relatively few workers toproduce one--the community will feel the impact at once. Process Yield 1 3 -4 2. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.