TITLE OF THE CASE: TIME CONTEXT: SUMMARY: 1980

Competition in the US automotive retailing industry

More than one million Americans are employed in manufacturing motor vehicles, equipment and parts. But the industry has changed dramatically since the U.S. Big Three motor vehicle corporations (General Motors, Ford and Chrysler) produced the overwhelming majority of cars and light trucks sold in the United States, and directly employed more than that many people themselves. By 2003, most passenger cars sold in the U.S. market were either imported or manufactured by foreign-based producers at new North American plants (so-called transplant facilities). The Big Three now dominate only in light trucks, and are being of Americans employed in challenged there by the foreign brands. The Big Three have shed about 600,000 U.S. jobs since 1980, while about one-quarter automotive manufacturing (nearly 300,000) work for foreign-owned companies and that excludes Chrysler, which was acquired by Daimler Benz of Germany in 1998. These changes have had major effects on the structure and location of the U.S. motor vehicle industry. Michigan has been the state most directly and adversely affected, losing about 100,000 auto industry jobs since the late 1970s. Most other Midwest auto belt states have either held steady or posted gains in total industry employment, even if they have lost Big Three jobs. Some southern states, notably Kentucky and Tennessee, have been the largest net gainers of jobs in the industry. The transplant vehicle manufacturers virtually all began and have remained nonunion; the United Auto Workers (UAW) union has lost more than half its members since 1979 from 1.5 million to less than 700,000. Big Three representatives state that they are now burdened with health care and pension costs of as much as $1,500 per vehicle in competing with foreign-based companies and have sought tax relief from Congress to alleviate this disadvantage.

I. STATEMENT OF THE OBJECTIVES A. Assess the gap between employers perceptions and what market trends suggest will be competitive practice.

B. Identify skill needs of companies to meet future business challenges. C. Resolve environmental issues including vehicle emissions, fossil fuel consumption and resource use.

II. CENTRAL PROBLEM Since the 1960s and 1970s, environmental issues, including vehicle emissions, fossil fuel consumption, and resource use, have played an increasing role in shaping the U.S. auto industry. How will the US automotive industry comply with the changes in fuel economy standards?

III. AREAS OF CONSDERATION (SWOT Analysis) A. Strengths 1. Strong Asia, Africa and Europe operations. 2. Profitable financial services division. 3. Yearly revenue increase in comprehensive financial statements. B. Weaknesses 1. Weakening North American operations. 2. Tarnished brand image or tarnished brand reputation. 3. Large unfunded pensions and other obligations. C. Opportunities 1. The way forward plan. 2. Hybrid vehicles (electric vehicles). 3. Opportunities in India and China and South East Asia. D. Threats 1. Rising new material prices. 2. Increasing competition. 3. Low capital spending.

IV. ALTERNATIVE COURSES OF ACTION A. Increase productivity in Hybrid automobile division. 1. Advantage: a. Will attract people in class A and B sector to purchase hybrid vehicles in a high price. b. Fuel economy will increase dramatically. c. Government relations will be improve due to pollution reduction. 2. Disadvantage: a. Customers from class C and D will decrease because of high price of hybrid vehicles b. Fuel prices will surely increase because of the Law of Supply and Demand.. B. High compensation on research and development for fuel economy fund. 1. Advantage: a. It will help to reduce the greenhouse effect b. It will support the Clean Air Act Mandate. 2. Disadvantages: a. Cost on research and development division will increase. b. Inventory will decrease because of high price of raw materials on making fuel economy cars.

V. RECOMMENDATION
I therefore conclude that the US automotive industry, while not currently in crisis, faces the possibility of gradual marginalization within automotive global value chains over the long term. The automotive industry is part of a global industry with strong regional elements nested within it. At the global level the industry is shifting investment toward large developing countries such as China, India and Brazil, where markets are growing rapidly. At

the regional level Canada's ties to the U.S. market have been the lifeblood of the industry, so the continued viability of regional production, at a time when other industries are rapidly shifting production to China, might seem to be good news.

But a gradual and seemingly inexorable shift of production within North America to the southern U.S. (for final assembly and parts) and Mexico (for parts), and the eroding market share of the Big 3 European automakers, are slowly undermining US position. Another vulnerability for US, as well as for the North American automotive supply base as a whole, comes from rising parts imports from outside North America, especially China. For Canada, all of these vulnerabilities stem from the importance of the automotive parts sector and the confinement of US firms to the supplier role in automotive global value chains. VI. PLANS OF ACTION A. Work to attract new assembly plant investment, especially by Japanese firms,
which are gaining market share in North America and treat their suppliers better.

B. Help domestic suppliers scale up and set up facilities outside US. C. Help suppliers serve multiple customers, including automotive and nonautomotive customers.

D. Reduce border bottlenecks to allow Asian suppliers to serve US plants. E. Help suppliers develop export opportunities both to take advantage of growing
assembly operations in emerging economies and to diversify sales.

VII. POTENTIAL PROBLEMS A. What if the oil price continues to get high? B. What if product demand decreases dramatically?

VIII.

CONTINGENCY PLANS A. Building hybrid cars is a great option. According to studies, you also get the already mentioned higher fuel economy and more power at lower speeds than you might expect. Going from 15 mpg to 20 mpg is worth more than going from 40 to 45 mpg. If your hybrid truck is being driven 12,000 miles a year, you'll be buying 200 gallons less every year. At today's gas prices (say $3.75/gallon) you'll spend $750 less a year. That means even at $4,000 extra you have to pay for the hybrid motor, you can still make that up during the life time of the car. And

the more you drive, the quicker you'll make the hybrid truck pay for itself.

B. A great and effective way to promote a business is through car advertising. Many organizations use magnetic signs for car advertising in order to get their companies noticed easily. These signs display the logo, name, brand of the company, and messages in bright colors that can sure draw attention of the passers-by. As these are not permanent ones, taking off the old signs and putting up new ones are very much hassle free. These are stuck on the sides or top of the cars and get a lot of market exposure. When a car moves around the city or town, the signs act as mobile billboards. There are many methods of car advertising. Recently, the former Supergrass front man Gaz Coombes, has moved into the world of acting by starring in a Toyota advertisement. However, a magnetic sign is the best mode of car advertising. This mode of car advertising is like personally giving the business cards to all the existing and prospective new customers