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

By Isabel Studer-Noguez | Go to book overview

8

Successful bargaining in a situation of increasing interdependence

During the 1980s, the Canadian automobile industry exhibited a significant expansion in output and exports, and boosted further rationalization of automotive production on a North American basis. New investments were triggered by Canada's successful bargaining approach, which exploited heightened levels of industry competition and took advantage of the US auto makers' strategies of restructuring their manufacturing operations.

Canada's policy measures that attracted investments from non-regional producers again formed a triangular diplomacy dynamic that favored the Canadian auto industry. The interdependence between the Canadian auto industry's and the US Big Three's interests was such that offering special conditions to non-regional producers to enter the Canadian market would hurt the US Big Three as much as the Canadian auto industry. But, by attracting non-regional auto investments, Canada forced the US Big Three to enhance the industry's competitiveness and to end the limitations that the oligopolistic competitive dynamics had traditionally placed on the industry's full rationalization. In this round of triangular diplomacy, the US Big Three joined the US government, demanding both an end to the special programs offered by Canada to Asian producers and more protection for their regional system of automotive production.

Finally, Ford Canada's performance was outstanding in spite of its conservative investment strategy. Canada's high-quality labor and cost advantage, compared with the United States, allowed the Canadian subsidiary to make an important contribution to the parent company's overall restructuring strategy and its efforts to reduce production costs and enhance efficiency.


Interdependence and the declining supremacy of US vehicle manufacturers

The difficulties that the Canadian automobile industry faced throughout the 1970s were aggravated after the 1979 oil shock. While US vehicle sales dropped from 10.3 million in 1979 to 7.8 million in 1982, those in Canada fell from 1.4 million to about 920,000 in the same period (see Figure 8.1). In 1982, Japanese imports had captured more than 40 percent of Canada's total vehicle imports, and that same year Chrysler, GM, and VW cancelled some of their previous

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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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