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

By Isabel Studer-Noguez | Go to book overview

10

A North American system of production

The rationalization and export dynamism experienced by the Canadian and the Mexican auto industries in the 1980s was followed by important regulatory changes that boosted even further the industry modernization. These regulatory changes permitted the US vehicle assemblers to implement fully their new efficiency-seeking strategies, which came to complement their traditional market-seeking strategies. By facilitating the cross-border exchange of automotive products, those regulations permitted automotive producers to rationalize their operations on a North American basis, exploit economies of scale and scope as well as national competitiveness, and therefore reduce production costs.

But given the heightened levels of industry competition, the US Big Three also sought defensive strategies to guarantee that their Japanese competitors did not use Mexico or Canada as a production platform to export to the United States. They obtained preferential treatment in the North American Free Trade Agreement (NAFTA). In this, they received US government support. But, in the triangular diplomacy dynamics, the Canadian and the Mexican governments each undertook unilateral policy measures to counterbalance the biases created by the CUSFTA and the NAFTA against non-regional producers.


The North American Free Trade Agreement and the auto industry

At the time of the NAFTA negotiations, 95 percent of Canada-US automotive trade was already duty free and it had been so for almost three decades. Since the CUSFTA had also removed the remaining restrictions on free trade in automotive products between Canada and the United States. NAFTA negotiations regarding the auto industry focused on guaranteeing access to the Mexican market, which was the most protected and regulated in North America. Whereas before the implementation of NAFTA a large proportion of Mexican automotive products already entered Canada and the United States duty free, through the Auto Pact, Canada's General Preferential Tariff (GPT) or the US Generalized System of Preference (GSP), Mexico maintained the highest auto tariffs on a most-favored-nation basis of the three countries - with the exception of US tariff on light trucks, which was 25 percent. Mexican tariffs on vehicles

-187-

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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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