Ford and the Global Strategies of Multinationals: The North American Auto Industry

By Isabel Studer-Noguez | Go to book overview

4

Ford of Mexico

Confronting a nationalistic approach to industrialization

As in Canada, in Mexico the lack of efficient, indigenous vehicle assemblers and the small market for automotive products created structural barriers for the development of a national automotive industry under mass production. In contrast to the Canadian case, Mexico's goal was not only to develop an auto industry but to develop an independent one, owned by Mexicans. This goal fashioned a fundamental conflict with the US auto makers that wanted to have full control of their operations there. The 1960s industry context of heightened levels of oligopolistic competition at the worldwide level, however, acted in favor of the Mexican government, which was able to attract automotive investments through import substitution policies and a nationalistic approach. Since it was the leader, Ford played a key role in encouraging other auto makers to comply with Mexico's requirements. Ford's positive reaction to the Mexican government's demands to assist in the development of an auto parts sector also stemmed from the parent company's strategy of gaining first-mover advantages abroad, in order to compete with GM.

The basic conflict between the vehicle assemblers' strategies (ownership, product differentiation, and multiple sourcing and competitive bidding, for example) and the Mexican government's nationalistic and protectionist policies exacerbated the inherent difficulties of the Mexican auto industry to achieve economies of scale. Other structural factors frustrated the Mexican government's goals of creating an independent automotive industry, such as the geographic proximity to the United States, the US assemblers' strategies of product differentiation, and the Mexican consumers' preference for US-styled cars.

The game of triangular diplomacy was also present in the development of the Mexican auto industry. The Mexican government's interests conflicted with the US vehicle assemblers and also with those of the US government, which assisted US companies in blocking the Mexican government's attempts to exclude full foreign-owned assembly firms and to restrict the number of vehicle assembly firms operating in the Mexican market.


Import substitution in Mexico: a nationalistic approach

As in many other countries, Ford Motor Company's opening of an assembly plant for vehicles in Mexico is associated with the origins of an automobile

-51-

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Ford and the Global Strategies of Multinationals: The North American Auto Industry
Table of contents

Table of contents

  • Title Page v
  • Contents ix
  • Figures xi
  • Tables xiv
  • Acknowledgments xvii
  • Abbreviations xix
  • 1 - Introduction 1
  • 2 - Ford Motor Company's Multidomestic Strategy 14
  • 3 - Ford of Canada 30
  • 4 - Ford of Mexico 51
  • 5 - The 1970s 73
  • 6 - Ford's Survival Strategy 98
  • 7 - Ford's Global Strategy 118
  • 8 - Successful Bargaining in a Situation of Increasing Interdependence 142
  • 9 - Export Dynamism 161
  • 10 - A North American System of Production 187
  • 11 - Conclusion 218
  • Notes 235
  • Bibliography 254
  • Periodicals (Newspapers, Newsletters, and Magazines) 275
  • Appendix 1 276
  • Appendix 2 302
  • Appendix 3 326
  • Index 351
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