NAFTA: The Process of Regional Integration of Motor Vehicle Production

In the 1980s and 1990s, the North American auto industry experienced changes that were both profound and comprehensive. There is little dispute that this great transformation of what was the historical bedrock of the industry emerged as a response to the challenges imposed by Asian manufacturers in the early 1970s. The response of the North American industry, whether it is explained by the powerful innovative forces at play, by its imposing of technological and organizational change, by new market orientation, or by the transformation of labour relations, was widely recognized as a process which had great geographical undertones and implications. Indeed, as was the case in most other regions of the world, the functional and geographical transformation of the industry went hand in hand. In North America, it was precisely this powerful impetus towards regional economic integration that help us to understand both the new ways in which the auto industry has achieved a greater competitive edge, and the possible trajectories for the region in the future. The three countries involved in the process of regional integration — the United States, Canada and Mexico — were affected by the new institutional and corporate arrangements. However, these changes could not be entirely understood when considered as separate entities, but only when their complementarities are revealed, and when their interaction is put forward as a single social system of provision, production and distribution. The purpose of this chapter is to document these changes, to explore the underlying process of economic and productive integration in North America, and to attempt to understand the future of this new industrial configuration.1