The automotive industry (AI) shaped the industrial contours of the global economy in the twentieth century and continues to be a key player in the current vast socio-technical transition spurred by the digital revolution and the search for new mobility systems. While these processes evolve, there is a growing expectation that electrical and autonomous vehicles along with business and labor models based on online platforms and interconnected systems will come to transform the whole AI as we know it.
According to Sheller and Urry (2006) and Urry (2004), the AI created a powerful “system of automobility”: that is, a powerful, car-dependent system that produced an archetypal manufactured object linked to the last century’s iconic firms; a major item of individual consumption linked to images of social status and what constitutes “the good life”; an industrial complex linked to several other industries; and the predominant form of private mobility that subordinated other modes of mobility.
These features are still evident today, though they may adopt different expressions depending on economic, geographic, social, and technical borders. The fact remains that cars continue to be “freedom machines” for many: unique artifacts that provide solutions for the transportation of goods and people while encouraging personal expression. Indeed, few goods are as important for both people and society as cars are today. A 2015 study commissioned by the International Organization of Motor Vehicle Manufacturers (OICA) found that 57% of global consumers could not imagine living without a car and that cars are associated with unrivaled comfort, efficiency for daily travel, and a strong desire for ownership (TNS Sofres/OICA 2015).
The “system of automobility” rested on the powerful foundation of last century’s industrial paradigm that shaped the productive, distributive, and institutional frameworks that regulated industrial society and that developed out of Henry Ford’s assembly line. Based on this, the United States became the hegemonic center of the twentieth-century world economy, and mass production provided a technological and organizational template for other countries. Under the mass production paradigm, labor and management engaged in decisive battles and established collective bargaining agreements that both improved income distribution and were instrumental in unleashing the virtuous circle between production and consumption that lay behind the post-World War II economic boom. It was the golden age of capitalism, a period that extended to the first half of the 1970s (Piore and Sabel 1984; Field 2011).
This book recounts the frenetic state of transformation within which the global industry and automakers currently find themselves. For this purpose, a group of specialists from the sector’s 18 large jurisdictions look at the processes, results, and tensions being experienced in the AI, a product of the interaction between emerging geographies (new countries, leaders, and institutional frameworks) and disruptive borders in transition (technological, organizational, institutional, business models, and labor relations).
This introduction presents the ideas and logic of these evolutions, our analytical framework and propositions to study them, the structure of the book, and each contributor’s main findings. Before going to that, it is worth describing the prominence of the global automotive industry.
The Large Legacies of the AI
Many facts and data attest to the legacy and wealth of the sector.
Global auto industry revenues reached $3.8 trillion in 2018 after growing at an annual rate of 3.3% for the last five years. This means that if auto manufacturing were a country, it would be the fifth largest economy in the world, after the United States (with a GDP of $20.4 trillion), China (14), Japan (5.1), and Germany (4.2).1
The 11 largest auto makers (henceforth, OEMs)2 appear in the top 100 of the 2018 Fortune Global 500, namely Toyota (ranked 6th), VW (7th), Daimler (16th), GM (21st), Ford (22nd), Honda (30th), SAIC (36th), BMW (51st), Nissan (54th), Dongfeng Motor (65th), and Hyundai (78th). Even the largest auto parts corporation, Bosch, is amongst the top 100 (ranked 75th). The sector, therefore, occupies a 12% share of the top 100 global corporations and 20% of the top 10 (Fortune 2018). These auto corporations manage more resources than most of the world’s economies. Toyota’s and VW’s revenues are only next to the wealth of the world’s top 16 economies. Put differently, their economic reach is greater than that of 169 nations.
The industry foments the image that it drives economic growth, competitiveness, and the catch-up effect, to the extent that each year, developing and emerging countries try to either make inroads into or consolidate a position in the sector. While one billion cars were manufactured in the twentieth century, largely in the United States, Western Europe, and Japan , in 2017 alone, 40 countries manufactured 97.3 million vehicles: 73.5 million cars and 23.8 million commercial vehicles. The auto industry’s reputation is reinforced with well-known economic facts: for a typical, robust auto-producing country, the industry is the largest durable manufacturing activity, a net exporter, a major generator of international remittances, and an important source of research and development (R&D) as well as providing formal, skilled employment.
Spending on automobiles accounts for a large portion of the total consumer spending. In developed countries , this figure is around 10%; however, variations are sizeable. In the United States, spending on vehicles averaged $8427 in 2016, representing 14% of the total consumer spending.3 In less developed countries , this can be much higher. For instance, in Mexico , spending on vehicles can be as much as a quarter of total personal spending (Covarrubias V. 2017).
In 2017, cars were the world’s number one export product with a net value of $740.1 billion, up 9.2% from 2013 (Workman 2018). Ten countries accounted for more than three-quarters of all exports (Germany , Japan , United States, Canada , United Kingdom, Mexico , South Korea, Spain , Belgium, and France ), with the European countries alone representing a 55% share of these. The automotive industry is a leader in R&D spending and numbers of engineers employed. According to the Center for Automotive Research (CAR), it accounts for 16% of the total R&D funding for all industries with a $100 billion annual budget: the five largest OEMs are among the top 20 corporate spenders on R&D worldwide, and the sector hires more engineers per 1000 jobs than any other industry (Center for Automotive Research (CAR) 2014: 1–2). Additionally, the industry maintains backward linkages with many other industries, such as steel, iron, aluminum, glass, plastics, carpeting, textiles, computer chips, and rubber, while its forward linkages connect to the powerful oil industry and such diverse service providers as financing, insurance, advertising, marketing, parking, repair shops, and aftermarket.
Just as it plays a key role in propelling countries to catch up and remain competitive in the global economy, the auto industry is also one of the major industrial employment providers. Around 5% of manufacturing jobs are direct auto jobs. Furthermore, when considering that for each direct job the sector impacts five indirect jobs, the auto industry is related to more than 50 million jobs. These correspond to both the different tiers of auto parts and component suppliers as well as to retailers and services.
Given its impact on labor markets, the automotive industry has been pivotal in defining the frontiers of the labor-management relationship along with the aspirations of thousands of workers, including skilled and technical labor, in acquiring higher incomes and moving up the social ladder. The fact that assembly plants were conceived as vertical industrial complexes, integrating all materials, processes, and technologies needed to engineer a car, meant that they were industrial settings operated by thousands of workers. Plants thus became ideal work places for union activity that ultimately had one of the highest rates of labor unionization in entire economies. By the second half of the last century, the auto industry was not only home to some of the most far-reaching battles between labor and management but also gradually became a trendsetter for collective bargaining . During the second half of the twentieth century, the United Autoworkers (UAW) and automakers in the United States crafted labor agreements that provided a role model at both the national and international levels. The main ...