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Challenge and opportunity in the U.S. auto industry: the key role of suppliers


  • Susan Helper


The U.S. economic crisis of 2008-2009 hit the automotive industry particularly hard; sales fell suddenly by 40% in the third quarter of 2008. The U.S. policy response to this automotive crisis was somewhat misdirected, attempting to solve the wrong problems. The U.S. automakers did not have a cost problem. Instead, they faced a price problem: consumers were willing to buy vehicles from the Detroit Three only if they were priced at least two thousand dollars less than their competition. The paper argues that the cause of this price problem was a failure over decades to adapt to new competitive methods introduced by Japanese automakers, methods which made untenable the traditionally hostile relationship the automakers had with their workforce and suppliers. Though the policies adopted by the U.S. government had their flaws, they may still be effective in returning profitability to U.S.-owned automakers, albeit in the context of a smaller and lower-paid industry.

Suggested Citation

  • Susan Helper, 2011. "Challenge and opportunity in the U.S. auto industry: the key role of suppliers," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2011(2), pages 51-68.
  • Handle: RePEc:fan:polipo:v:html10.3280/poli2011-002003

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    References listed on IDEAS

    1. Alan M Rugman & Alain Verbeke, 2004. "A perspective on regional and global strategies of multinational enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(1), pages 3-18, January.
    2. Pradhan, Jaya Prakash, 2008. "India’s Emerging Multinationals in Developed Region," MPRA Paper 12361, University Library of Munich, Germany.
    3. Mathews, John A., 2002. "Dragon Multinational: A New Model for Global Growth," OUP Catalogue, Oxford University Press, number 9780195121469, June.
    4. Pradhan, Jaya Prakash & Singh, Neelam, 2010. "Group Affiliation and Location of Indian Firms’ Foreign Acquisitions," MPRA Paper 24018, University Library of Munich, Germany.
    5. Alan M. Rugman & Alain Verbeke, 2004. "Regional Transnationals and Triad Strategy," Working Papers 2004-20, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
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    Cited by:

    1. Susan Helper & Rebecca Henderson, 2014. "Management Practices, Relational Contracts, and the Decline of General Motors," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 49-72, Winter.


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