The Competitive Status of the U.S. Auto Industry A Study of the Influences of Technology in Determining International Industrial Competitive Advantage (1982) / Chapter Skim
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9 The Character of Automotive Innovation in the 1970s and Beyond
9 The Character of Automotive Innovation in the 1970s and Beyond
Pages 133-149
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From page 133... ...
Not only is the world price set through a complex political and economic process -- a process subject to swift and radical developments -- but we have had little experience on which to base judgements and estimates." Though organized in 1960, OPEC did not exercise significant control over the price of oil until the embargo of 1973. The shift in power in 1973 following the war in the Middle East was sudden and pervasive; the oil companies, long used to a negotiated price, were faced with ultimatums and drastically higher prices.
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From page 134... ...
Both developments are illustrated in Figures 9.1 and 9.2, which present historical data on gasoline prices in the United States and comparative data for other countries around the world. Because the full impact was not immediately felt, because the weight of history was on the side of stability, the 25 percent jump in the real price of gasoline was widely viewed as temporary.
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From page 135... ...
Department of Energy, National Petroleum News Factbook, 1979.) As the figures show, developments in 1975 and 1976 seem to reinforce this view, as the real price of gasoline fell in most of the major auto-producing countries.
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From page 136... ...
~ ~ Hi, ~ —— O ~ ~ On top of the obvious political instability in the Middle East, these considerations suggest that the real price of gasoline will continue to increase over the long term and that periodic explosions in prices and disruptions in supply are to be expected. It is also true that this long-term scenario is likely to be accompanied by periods of stable or declining real gasoline prices.
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From page 137... ...
Thus, the key issue is how a given change in product technology affects existing capital equipment, labor skills, materials and components, management expertise, and organizational capabilities within the production unit. Note that these categories encompass
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From page 138... ...
Confronted with a shift in market preferences and competition from firms producing closed bodies in great variety, Ford was forced to totally revamp the production process, replace 15,000 machine tools, introduce new processes, and lay off and hire thousands of workers. Moreover, management skills and organization appropriate to the production and marketing of a low-price standardized, mass-produced automobile were not viable in the era of the annual model change and increasing variety.
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From page 139... ...
It should be noted that a dominant design is not typically the product of radical innovation.9 To the contrary, a design approach becomes dominant, as did the integration of engine plants with transfer lines and the closed steel body, when the weight of many innovations tilts the economic balance in favor of one design approach. Typically, the relevant design approach has already been in existence.
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From page 140... ...
Similarly, initial gains in fuel economy were realized by changes in components and not in basic design!
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From page 141... ...
Yet in the midst of this diversity there appears to be at least some focus on ongoing developments, and some technologies appear to be achieving significant market acceptance. To illustrate this point, it is useful to consider the technology embodied in the new Ford Escort and the Chrysler K car.
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From page 142... ...
The shift in objectives underscores the fact that innovation has been significantly affected by market demand. And if the future developments given in Table 9.2 are at all indicative of the actual course of technology in the next several years, the efficiency-oriented pull of the market will be strongly felt for some time to come.
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From page 143... ...
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From page 145... ...
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From page 146... ...
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From page 147... ...
A potentially important example is the linking of a continuously variable transmission with an advanced engine concept (e.g., adiabatic engine) to achieve significant increases in efficiency.
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From page 148... ...
The implication is that incentives for innovations in engines, materials, and other technologies are strong: that it is unlikely that all Droducers will choose the same line of development; and that it is equally unlikely that any given producer will pursue development in all areas. Depending on the nature of technical breakthroughs, it is entirely possible that the market will see a diversity of advanceddesign power plants and other systems and components as the available options compete for market acceptance; in terms of product technology, a period of intense technological competition may be just ahead.
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From page 149... ...
11. Basic design in this context refers to such design concepts as front-wheel drive, the principal of energy transformation (gas, electric)
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