Made in America? The US Auto Industry, 1955-95

Abstract

This paper examines the production and political responses of the Big Three auto assemblers to the penetration of the North American market by Japanese auto assemblers over the 1955-95 period, using the technological competition model to analyze three successive challenges faced by the Big Three: import competition (1955-73), surplus capacity (1973-83) and transplant production (1983-95). We argue that the US auto makers first responded with intensification strategies and then by rationalizing production. These production strategies, together with lobbying for favorable US government policies, were unsuccessful in stemming import penetration. It was only after the Japanese firms began onshore production that the Big Three understood the competitive challenge - the need to shift from mass to lean production - and began to transform their auto operations.

Keywords: mass production, lean production, automotive industry, Big Three, technological change, technological competition

JEL Classification: F21, F23, O14, O32, O34, L62, O51