Abstract
Over the past 30 years the U.S. auto industry has faced multiple existential crises, illustrating both the cost of lost opportunities and the power of innovation as the archetypical industrial enterprise adapts to a postindustrial knowledge economy. Most policymakers and outside observers still make simplistic assumptions about labor and management in the auto industry, assuming, for example, that the industry’s problems can be alleviated just by reducing labor costs and relaxing union work rules. In contrast, the overarching goal of this report is to present a series of windows into the industry that convey its complexity, and that make clear the limitations of simplistic assumptions about labor and management. In particular, this paper aims to develop a deeper appreciation of the industry’s problems and of the sources of resilience in the industry, which include management leadership, union partnership, and front-line workforce teamwork.
A more holistic understanding of the industry is important since its footprint accounts for an estimated one in every 22 U.S. jobs—and because the lessons are relevant to other industries facing transformational challenges. To increase understanding and appreciation of the strategic dynamics facing the industry, we offer a comparison of the industry’s responses to two major recessions (the early 1980s recession and the Great Recession); a look at the relationship between productivity and compensation; a specific focus on labor costs and work rules; an examination of the geography of the industry, including the role of what are termed “transplants” (foreign-owned assembly and supplier facilities); and a consideration of how new technologies and systems to achieve quality and efficiency improvements are challenging core operating assumptions.