It is no news to anyone that we are experi- encing the second major energy crisis of the decade. Everything from President Carter's unpopularity to the disaster at Three Mile Island seems to relate to the "shortage" of energy. But for the motor vehicle industry in- particular, the consequences of the crisis are especially drastic. JulylAugust 1979NACLA Report Transportation currently consumes 55% of all U.S. petroleum, 85% of which fills the tanks of automobiles.' And gas prices have skyrocketed from 35 cents per gallon four years ago to $1.00 a gallon and up as of mid-1979. The effect has been apparent in motorists' anger on long gas lines and in the unprecedented back inventories of large cars in factory parking lots. In response, all new car advertising now focuses on "miles per gallon" (mpg) and even the Cadillac is being billed as a "Long Distance Runner.'" 2 However, the energy crisis has implications for the motor vehicle industry that go far beyond superficial expressions of real or con- trived shortage. On the one hand, due to the industry's size and scope, a shake-up in auto reverberates throughout the economy. And these tremors occur regularly since auto sales are particularly vulnerable to the economy's boom/bust cycle: when times are hard, peo- ple simply put off buying a car. On the other hand, the mechanisms at work in auto graphically reveal the fundamental processes of capitalism. As this crisis has once again heightened competition, the auto companies are forced to decisively change their past practices. A general restructuring has been accelerated, which will affect the industry, workers and the overall economy. Briefly, the U.S. motor vehicle industry comprises three large terminal producers (i.e., those producing fully-assembled vehicles), all of which are among the largest transnational corporations (TNCs) in the United States. General Motors (GM) is the largest, currently capturing almost 60% of the U.S. market;* Ford follows second with a little more than 27%; and beleaguered Chrysler tails behind with under 12% of the market share. 3 In the last year, Volkswagen (VW) has stolen fourth place from American Motors Corp. (AMC) whose auto share is a meager 2.1%.4 All together, 9.2 million vehicles were sold in the United States in 1978 and these companies totaled $100 billion of * These figures are approximate since the unpre- dictability of auto sales translates into shifting percentages. But small changes can make big dif- ferences. To manufacturers, a 1% market share can be worth $700 million in revenues. (Business Week, March 26, 1979.) sales worldwide.s About one out of six jobs in the United States is directly or indirectly related to automobile production, with some 14 million workers engaged in vehicle manufacture and its dependent industries. 6 Aside from the 760,500 production workers directly making and assembling a car, thousands of others make the estimated 20,000 components that go into one automobile.' Key inputs include steel (20% of all that is produced in the United States), glass, tires (60% of all rubber), batteries, radios and upholstery. 8 Workers in road construction, auto service and repair, retail and advertising are all in- trinsically affected by the industry. Three- fourths of the terminal-end autoworkers still work in the Great Lakes Region, about 40% of them in Michigan." UNTIL NOW, THE BIGGER THE BETTER For years, Detroit had pushed gas guzzlers as the most desirable way to travel because, as is commonly understood in the industry, the larger the car the higher the profit.1' The auto companies had relied on the glamour of annual model changes with progressively lower levels of fuel efficiency. But with the gas crisis of 1973-75, a trend toward "downsizing" began, so that even the largest and flashiest models became more compact. However, change comes slowly to an industry that takes three years to translate new car designs from paper to assembly line. And to varying ex- tents, the "Big Three" producers-GM, Ford and Chrysler-hoped that the crisis would soon pass. Pressure to downsize not only persists, but has gotten worse. Imports of smaller foreign cars have sped up from 6.3% in 1965 to more than 21% of the U.S. market for the first five months of 1979." In addition, the U.S. market, though still the largest in the world, is approaching the saturation point with one car for every two people in the country. 2 Therefore, foreign markets in both Europe and the underdeveloped countries are fast becoming crucial areas for expansion. And large fuel-eating monsters simply won't sell in those markets. To top it all off, the U.S. government has entered the scene to regulate the industry's 45 transition to greater gas economy. The in- dustry has been instructed to achieve cor- porate average fuel economy (CAFE) re- quirements* of 19 mpg in 1979 and 27.5 mpg by 1985, accompanied by both environmental controls and greater safety requirements. " As a result of these pressures, Ford estimates that by the 1980s, one out of three cars will be sub- compacts, as opposed to the one in five ratio of the late 1960s." 4 Ex-Transportation Secretary Brock Adams has asserted that Detroit, forced by federal regulations, is doing "nothing less than re- inventing the car."'" Although he vastly exag- gerates the task at hand and the government's role within it, the "next five years are really the heart of this century for the automobile industry," according to Lee Iacocca of Chrysler. 1 6 The combined effect of all these factors has indeed accelerated the motor force of increased capital accumulation: competi- tion. ENTER THE WORLD CAR With much fanfare, the business press has announced the coming of the "world car." A world car is simply one built from standard- ized parts and sold, with few changes, in any major market. To some extent a world car is not an earthshakingly new idea. After all, Ford pioneered the idea with its Model T, building it in the United States and shipping it unchanged to Europe. But not until VW's Beetle was there large-scale penetration of a foreign market with a versatile car. And the "Bug" was only competing for the small economy car market, then the least important sector in Detroit's eyes. But the new world car differs from its predecessors in several respects. First, it reflects an increased interpenetration of traditional international markets. As the president of Nissan Motors explained: We find ourselves on the eve of intense interna- tional competition with American automakers in the small-car market, which hitherto has been the Japanese makers' stronghold. From now on we will have to map out strategies on a global scale and deploy our forces dynamically." * CAFE requirements refer to the average mpg figures of a company's various models rather than the figure attained by each car model. Secondly, the world car represents an inter- nationalized production process, not just the marketing of finished vehicles. But not only cars will be made in different countries; since parts are increasingly standardized, they, too, will be produced across national borders and then assembled into one vehicle. This facility will allow manufacturers a flexibility they've never had before. And again, Ford was at the forefront of this development: In the three quarters of a century since its found- ing, Ford has built nearly 150 million vehicles. But, outside of the Model T, none seems likely to have such a long-lasting and decisive effect on the management of our world-wide operations as an 11-foot-long little car called The Fiesta ... (Fiesta) began a new chapter in multinational business co-operation with management im- plications far beyond the European continent or Ford." Thirdly, the world car is essentially redefin- ing the type of car North Americans drive, which will be more similar to cars the world over. Although the full product line will still exist (luxury cars, compacts, subcompacts, etc.), a new emphasis will be placed on fuel efficiency and competitive advantages with imports. In this sense, the clamor over the world car is a bit of a hype. Partially, the ex- citement is a cover for the companies to jack up small car prices to levels that would have been unthinkable a few years ago. Moreover, the world car has become the focus of a new level of international competition, ushering in a period of global restructuring for the in- dustry. As a Ford executive so graphically put it: "It's going to be a hell of a dog fight. Some noses are going to get bloodied."' 9 PAST DEVELOPMENT The origins of the industry date back to carriage and bicycle production, the latter being the first mass-produced transportation vehicle reaching its heyday in the 1890s. Among the original bicycle producers were Henry Ford, Glen Olds and the Chevrolet brothers. In 1893, the Duryea brothers built the first successfully gas-propelled vehicle, and by the early 1900s, a primitive auto in- dustry was developing. It was primarily centered in the Great Lakes Region, which was to become one of the world's largest in- dustrial complexes. The area was well suited to supply the myriad of necessary parts, and JulylAugust 1979NACLA Report was the home of the engineering industry which supplied the necessary machine tools. The river and lake system, supplemented by rail, facilitated transport. Also attractive was the fact that Detroit was notorious as an anti- union, open-shop town. Within a decade, nearly half of all autoworkers lived in Michigan alone, making 75% of all autos. 2 0 Initially, the production process was quite underdeveloped, as revealed by Ford's ac- count of the early Model T: In our first assemblying, we simply started to put a car together on a spot on the floor and workmen brought to it the parts as they were needed in exactly the same way that one builds a house ... usually one workman performed all of the operations necessary on a small part 21 Since only simple technologies with low capital requirements were needed, entry into the industry was easy. In the early period, a total of 181 companies were producing cars. But soon thereafter, Ford had a better idea. After instituting a series of measures to heighten efficiency, including fragmenting tasks to their simplest operations, and re- organizing the shop to reflect an uninter- rupted sequence of production, the moving assembly line was invented, which revolu- tionized auto manufacture. Within the first five years of its introduction, production costs were cut by 50% and the price of a Model T fell by one-third. This great technological ad- vance of the conveyor belt did not put new tools into workers' hands, but did imply drastic plant reorganization and sharply raised the capital-labor ratio by expanding the necessary economies of scale. It enabled Ford to dramatically increase annual car pro- duction from 12,000 in 1909 to two million in 1921, and to thereby capture a full 55% of the U.S. market. 2 2 A second consequence of the moving assembly line was that many less efficient pro- ducers were driven out of business. This pro- cess of economic centralization and concen- tration was rapid; by 1930 Ford, GM and Chrysler, three out of the 30-odd producers, Magneto assembly operation at Ford Motor Co.'s Highland Park plant, 1913; this early application of the moving assembly line reduced production time by one-half 6JulylAugust 1979 had already seized 90% of the U.S. market. (See Table.) The market had expanded so quickly that by 1925, "ownership of an automobile reached the point of being an ac- cepted essential of normal living." Close to five million cars were coming off the line by 1929, owned by one out of every five adults.2" CENTRALIZATION IN U.S. AUTO COMPANIES ca. 1910 181 1923 108 1927 44 1931 35 1941 12 1954 6 1979 4* * 5, if VW is included Source: Rhys Jenkins, Dependent Industrialization in in Latin America and current industry sources. However, the squeezed-out firms were not the only casualties of the moving assembly lines. The workers were assaulted by the com- bined attack of increased speed-up and the de-skilling of their jobs. The description of this process, explained by a visitor to a Ford plant at the time still holds true today: When the conveyor is speeded up the workers are forced to follow its dictates, and to hurry with their jobs accordingly. The conveyor's speed invariably determines the worker's speed .... The conveyor is the master. If the management in a factory decided to increase its speed by ten percent.., tens of thousands of hands. . must work ten percent faster. The workers are bound to the conveyor the way the galley slaves were bound to the vessel. 2 4 Each job was so broken down that work amounted to repeating the same small task hour after hour, day after day. Productivity jumped from two cars per worker per year in 1904 to more than 20 in 1925.25 This produc- tivity increase was largely accomplished by the intenification of labor, not by the in- troduction of more sophisticated machinery. The introduction of mass production was met by massive worker resistance- sabotage, slowdowns, and absenteeism. The ratio of supervisors to workers had to be tripled in order to control production. But the most graphic illustration of worker unrest was the high level of labor turnover. At Ford's main plant, turnover reached 400% in the first few years; Ford was forced to hire 52,000 workers just to maintain a workforce of 13,600.26 UNIONIZATION The companies' use of incentive pay systems (piece rate), acute job insecurity, and dangerous working conditions with an excep- tionally high accident rate made the need for labor organization compelling. Organizing was undertaken by many groups, but by 1919 the only major trade union was the United Automobile, Aircraft and Vehicle Workers (AWU). The union had originally organized carriage and wagon workers through the Knights of Labor, and in 1891 became an AFL affiliate. The number of autoworkers soared from 12,000 in 1904 to 76,000 in 1909, and by 1916 the AWU had 13,000 members. Soon after, disputes arose with the AFL over its craft orientation, which was becoming in- creasingly inappropriate for autoworkers as the effects of mass production de-skilled their jobs. The AWU was suspended from the AFL, became an independent and by early 1920, had 45,000 members. However, the combined effects of the reces- sion of the early 1920s, open-shop drives and the Palmer raids, all but decimated the AWU. By 1922, 65% of Detroit's working population was unemployed and the AWU's national membership was reduced to 800. Throughout the 1920s internal struggles, economic crises, employers' anti-union tactics and jurisdic- tional disputes plagued organizing efforts. Then came the Big Crash in 1929. By the first year of the Depression, Detroit registered the highest unemployment rate in the country, and hundreds of thousands of autoworkers were jobless everywhere." The AWU was effectively replaced by the United Automobile, Aerospace, and Agri- cultural Implement Workers of America (UAW). The UAW was part of the general labor upsurge of the mid-30s that argued for industrial organization and representation. It secured its position in the industry in 1936-37 with the well-known sit-down strikes at GM plants. Workers took over the plants to ensure that production was not shifted to scab labor for less organized shops, and led militant bat- tles against the companies and police until the 7NACLA Report right to organize was finally won. By World War II, the UAW had become the largest union in the country with a membership of over one million workers. Unionization- although a crucial and hard- fought victory-- hardly marked the end of the workers' struggle with the auto companies. For example, during World War II, when the industry nearly stopped producing cars and converted to military production, real wages fell and the number of strikes more than doubled. Many of these strikes were wildcats over intolerable working conditions and low pay. Labor militancy reached a high point in 1944 when there were more strikes, involving more workers, than in any other period of the industry's history. 2 8 INTENSIFICATION OF LABOR Since World War II, the push to squeeze maximum production from every worker has continued. Athough the workforce has ex- panded by about 20.4% since 1948, motor vehicle production has increased by 144.5%.29 As impressive as these figures ap- pear, they are considered low relative to the spectacular productivity gains attained in the early years of the industry. Between 1919 and 1930, annual productivity increased by more than 8.6% (as compared to 1.9% for U.S. in- dustry as a whole), but from 1960 to 1971 it fell to 3% per year and has since dropped fur- ther. 3 0 The auto executives maintain that these productivity increases mainly accrue to new machinery and what is known euphemis- tically as good management. For workers, it means speed-up. There is no doubt that some technological changes have been striking. Although the use of robots and numerical control (see third ar- ticle) are the most apparent changes, the overall proportion of fixed costs for machinery has increased steadily in the last two decades. But since auto production involves so many different components, generalizations can be quite misleading. There are three essential parts to any vehicle: engines, transmissions and gearboxes, and stamped-out bodies. For all three, the processes involved tend to be highly capital-intensive and by and large are done by the Big Three companies themselves. They require high-volume production in order to attain economies of scale, and to some extent, specialized factories have developed as a result. Many of the operations in these plants have been greatly affected by mechanization. Other parts, like upholstery, which are needed in lower volume and vary significantly from model to model, remain less mechanized. When walking through a plant, the distinc- tions between operations are readily ap- parent. Passing by the manufacture of engine blocks, almost no workers are visible, the parts falling from one machine to the next. Workers merely supervise. Final assembly is quite another story, with many working on one car simultaneously. Between 25% and 30% of the total labor force is absorbed in final assembly and body trim." 3 The work itself has only superficially changed since the early days. The upshot is that the auto in- dustry and its suppliers as a whole are labor- intensive and capital-intensive at the same time. This dual nature of the industry has meant that when technological changes are im- plemented on the line, not only is efficiency enhanced and the number of jobs reduced, but usually only one segment is automated. This uneven automation feeds right into the old routine of speed-up and job de-skilling. For example, as explained by a union official at GM's Lordstown plant: When they took the Unimates on, we were building 60 an hour. When we came back to work with the Unimates, we were building 100 cars an hour. A Unimate is a welding robot. It looks like a praying mantis. It goes from spot to spot to spot. It releases that thing and it jumps back into position, ready for the next car. They go by them about 110 an hour. They never tire, they never sweat, they never complain, they never miss work .... Another path to labor intensification is us- ing the fewest workers for the maximum amount of time. Compulsory overtime, an endemic feature in the industry, can extend to 53 hours a week under the contract, but ex- tra "voluntary" overtime is in practice often non-negotiable. When 60-hour weeks go on for too long, workers have resisted, but for the most part, the overtime is welcomed. For many workers, the memory of 1973-75 is still9 very vivid. At that time, the energy crisis in- duced cutbacks in production, and about one-third of the labor force was laid off." Because plant closures, automation and recession continue to threaten their jobs, workers often try to get the extra money while they can. 3 4 Although conditions vary considerably within the Big Three's plants-- Chrysler being in notoriously bad shape-in general, auto- workers' jobs are physically exhausting and mentally deadening. Although wages are higher than the national average for in- dustrial workers, they are currently low enough to give the companies a competitive edge over some of their European rivals. In- dustrial workers in Germany, for example, receive 40% higher wages than comparable workers in the United States."s All in all, autoworkers have been hard hit by speed-up, hazardous or unhealthy working conditions and job insecurity, while auto ex- ecutives make millions. Worker militancy has not again reached the level it was at a decade ago but as a leader at that time stated: There is literally a war going on inside the American factories. This is a violent struggle. Sometimes it is organized and guided. Most times it is unorganized and spontaneous. But in the course of this struggle more American workers have died than in all the four major wars. 3 FURTHER CHANGES DOWN THE PIKE Since World War II, the number of trans- national auto corporations competing on a world scale has sharply increased and the percentage of U.S.-produced vehicles has drastically fallen. (See Table.) For renewed competitive strength, Detroit is presently con- ducting the largest overhaul in its history. Cost estimates for the massive re-tooling vary widely, but somewhere between $18-80 billion will be spent by the U.S. industry before 1985.91 Ford and GM, with record sales in the first quarter of 1979, will not suffer from the expenditures and are prepared to get their money's worth. They are using this period to streamline all aspects of production and to bring onto line as sophisticated techniques as possible. Chrysler is the exception to every rule, and rather than improving old plants, WORLD PRODUCTION OF AUTOMOBILES Number of cars Percentage of North produced American Production* 1950 7.8 million 85% 1971 21.7 million 41% 1976 37.5 million 34.7% *U.S. and Canada. Does not include Mexico. Source: Counter-information Service, CIS Anti-Report: Ford. their tendency is to shut them down, rehabilitating what they can. Unlike the crisis of 1973-75, however, the momentary effects of increased automation have not witnessed extensive job loss, at least at GM and Ford. Re-tooling requires addi- tional labor and, especially in the skilled trades, employment is up. Additionally, it is possible that other jobs will emerge for com- puter programmers, designers and engineers, builders of advanced technology, etc. From a social point of view, a logical answer to the energy crisis would be to resur- rect a mass transit system. It is no secret that the United States, with the most advanced auto industry, maintains the worst system of public transportation in the developed world. 3 " Not surprisingly, the two are related. According to a document submitted to the U.S. Senate Subcomittee on Antitrust and Monopoly in 1974: ". . . three powerful auto- mobile companies. . . secured control over rival bus and rail industries and then max- imized profits by substituting cars and trucks for trains and streetcars, subways and buses." 3 ' GM expressed it more obliquely back in 1958: "If GM has said it once, it's said it ten thousand times: 'a good used car is the answer to the American public's need for cheap transportation.' "40 The only change in 20 years is that now, they are celebrating the world car as the cheap solution for the public and the most profitable solution for them. Before describing the details and analyzing the meaning of the world car in the third arti- cle, we turn to look at the development of the industry in Latin America.
MAPPING OUT AUTO 1. Newsweek, July 16, 1979. 2. Taken from an advertisement appearing in the New York Times, July 17, 1979. 3. First two statistics from New York Times, April 27, 1979; third statistic from Detroit Free Press, June 10, 1979. 4. Fortune, July 16, 1979. 5. Ward's Automotive Yearbook, 1978, p. 9 5 , for a number of vehicles; Time, March 19, 1979, for sales figures. 6. Time, March 19, 1979. 7. Bureau of Labor Statistics figures for SIC 371, Employment and Earnings, 1978, for number of pro- duction workers; number of components according to UAW sources. 8. Percentages taken from William Serrin, The Com- pany and the Union (New York: Vintage, 1974), p.5. 9. These figures for 1974 are taken from the Motor Vehicle Manufacturers Association (MVMA), Motor Vehicle Facts and Figures, 1978, p. 69. 10. "For example, in 1978 General Motors earned an operating profit of $1,362 on each full-sized car it sold, compared to just $449 on each compact and a mere $147 on each subcompact." Al Fabar, "Auto in the Eighties: Uncars and Unworkers," Radical America, Vol. 13, No. l(January-February 1979), p. 32. 11. "The Ford Motor Company," Counter Information Service (CIS) Anti-Report (London, 1978), p. 4 for 1975 figure; New York Times, June 19, 1979, for 1979 figures. 12. MVMA, 1972 Automotive Facts and Figures, pp. 28-9. 13. Business Week, November 20, 1978. 14. Philip Caldwell, Vice Chairman of the Board, Ford Motor Company, "The Fiesta Factor: Turning Point in Multinational Management," speech delivered in Dearborn, Michigan, April 19, 1978, p. 5. 15. Time, March 19, 1979. 16. Business Week, March 12, 1979. 17. Time, March 19, 1979. 18. Caldwell, op. cit., p. 2. 19. Business Week, November 20, 1978. 20. Roger R. Keeran, "Communist Influence in the Automobile Industry, 1920-1933: Paving the Way for an Industrial Union," Labor History, Vol. 20, No. 2 (Spring 1979), p. 192, and Gerald Bloomfield, The World Automotive Industry (Newton Abbot, England: David & Charles, 1978), p. 162 ff. 21. As quoted in Institute for Labor Education and Research (ILER), Work in a Gold-Plated Sweatshop, un- published mss. of forthcoming pamphlet, p. 3. 22. Rhys Owen Jenkins, Dependent Industrialization in Latin America: The Automotive Industry in Argen- tina, Chile and Mexico (New York: Praeger, 1977), p. 17. 23. Keeran, op. cit., p. 189. 24. ILER, op. cit., p. 10. 25. Ibid., p. 32. 26. Ibid., p. 40, p. 20. 27. Keeran, op. cit., pp. 193-223. 28. Roger R. Keeran, "Everything for Victory: Com- munist Influence in the Auto Industry During World War II," Science & Society, Vol. XLIII, No. I (Spring 1979), p. 4, 13, 18. 29. Bureau of Labor Statistics figures for SIC 371, Employment and Earnings, 1909-75, and yearly report for 1978. 30. Emma Rothschild, Paradise Lost: The Decline of the Auto-Industrial Age (New York: Random House, 1973), p. 48. 31. Bloomfield, op. cit., p. 38. 32. ILER, op. cit., p. 17. 53. Fabar, op. cit., p. 32. 34. NACLA interviews with autoworkers in Michigan and Massachusetts, June 1979. 35. Forbes, March 19, 1979. 36. Dan Georgakas and Marvin Surkin, Detroit: I Do Mind Dying(New York: St. Martin's Press, 1975), p. 107. 37. For example, Time, March 19, 1979, says lower figure and Business Week, March 26, 1979, cites higher one. 38. Report published inJune 1979 by National Trans- portation Policy Study Commission, as quoted in News- week, July 16, 1979. 39. As quoted in Stephen Geisler, "GM and the De- struction of Urban Transportation," Win, August 17, 1978. 40. GM's then-president Harlon H. Curtice as quoted in Lawrence J. White, The Automobile Industry Since 1945 (Cambridge: Harvard University Press, 1971), p 184.
