Academic journal article Michigan Academician

Organizing Supply Chains for Japanese Automotive Transplants in the United States

Academic journal article Michigan Academician

Organizing Supply Chains for Japanese Automotive Transplants in the United States

Article excerpt

ABSTRACT

How have the American assembly plants of foreign automotive manufacturers organized sets of other companies' factories that provide their parts or components, that is, their supply chains? Foreign automakers' assembly plants in the United States (or assembly "transplants"), like assembly plants everywhere, purchase many of their components from other companies (automotive suppliers). A recent study of transplants offers data that address the question of supply chain organization. Strategies include the foreign automakers encouraging their overseas suppliers to establish the suppliers' own plants in the United States, in turn urging those suppliers to participate in joint ventures with traditional American supplier firms, and sourcing selectively from traditional American supplier firms. The resulting supply chains often look like hybrids between the foreign automakers' home country supply chains and the traditional American automakers' domestic supply chains. The data lead to explanations of why this occurs. The evidence also permits consideration of ideas about the hybridization of overseas suppliers in their American plants, and the hybridization of American supplier firms that acquire assembly transplants as customers. Finally, the data bear on theories of how business organizations are linked together, and indicate that a hybrid model, rather than a strict "market" or a thoroughgoing "hierarchy" model, best represents these supply chains.

INTRODUCTION

How to organize an effective supply chain has been a challenge for automotive manufacturers. Supply chains are those sets of factories of other companies (suppliers) that provide manufacturers with parts and components. (1) Automotive manufacturers, also known as assemblers or as OEMs, outsource to suppliers as much as seventy to eighty percent of the content of their vehicles. This content amounts to thousands of distinct parts and components. In recent decades, the issue of supply chain organization has come up again with renewed urgency, as assemblers have established many automotive "transplants." Transplants are factories located outside of the nation that is the site of a firm's headquarters. Assembler transplants are becoming more numerous in the United States. How have these assembly transplants organized their supply chains, and what explains the form of these supply chains?

In this paper, we address these questions with data from a study of several assembly transplants and several supplier transplants in the United States. (2) We emphasize data from four assembly transplants involving Japanese manufacturers. Our investigation began with a review of available data on transplant supply chains, and then proceeded with over two dozen in-depth, qualitative interviews with transplant executives.

Despite its concentration on transplants in the United States, this paper has implications for the entire automotive industry. With the world-wide integration of this industry, many automotive manufacturers and suppliers have built and continue to build factories in nations distant from their home countries. Furthermore, the automotive industry is not only large, but tends to be an attractive industry, often welcomed (albeit with regulations) by developing nations. Thus the tasks of constructing transplant supply chains in this country are also faced in other nations as they develop economically, in both their automotive and other industries.

The paper also has implications for conceptions about business organizations. Theories of organizations, as well as studies of particular industries (Boyer et al. 1998; Freyssenet et al. 1998; Womack et al. 1990) raise questions about the extent to which globalization means convergence on a common pattern of organizational structure and of inter-organizational relationships, and questions about the nature of that structure and those relationships. We examine those questions in our final section. …

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