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

By Isabel Studer-Noguez | Go to book overview

9

Export dynamism

Reconciling the Mexican and the US Big Three's interests

A fortunate confluence of events, framed in the three-level bargaining dynamic, led to the structural transformations undergone by the Mexican automobile industry, which a included strong export dynamism and the incipient increasing integration into a North American system of automotive production. Mexico's enhanced resources at a time when the North American industry was going through a time of uncertainty and the fiscal incentives offered to US vehicle assemblers enabled the Mexican government to entice multinational auto makers to increase their investments in new, export-oriented plants. The oligopolistic competitive dynamics also forced Ford to follow GM's strategies of complying with Mexico's regulations, despite the parent company's conservative spending strategy and reluctance to commit scarce resources to relatively marginal foreign operations.

US government policies that fostered automotive production in maquiladora plants also altered the negotiating dynamic between the Mexican government and the US vehicle producers. The US auto makers learned about the low costs and the high quality of automotive production in Mexico, and the Mexican government learned about the benefits of rationalizing Mexican automotive production on a North American basis. In this context, Ford's aggressive investment strategy in Mexico set a precedent for the integration of the Mexican operations into an efficient regional system of production, although not all the company's operations were incorporated immediately in that rationalization strategy.

Finally, in the context of heightened levels of industry competition, the US Big Three also sought strategies to defend their shares in the Mexican market. They obtained preferential treatment in different policy measures taken by the Mexican government, including Mexico's membership of the General Agreement on Tariffs and Trade (GATT) and the 1989 Auto Decree.


Mexico's successful bargaining strategy in a context of international constraints: 1977-81

In contrast with the US and the Canadian situation, during the 1977-81 period, the Mexican automotive industry grew at high annual rates, almost doubling the value of automotive output. Employment in the industry also reached record

-161-

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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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