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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10 The Automotive Future: Three Scenarios and Their Implications
10 The Automotive Future: Three Scenarios and Their Implications
Pages 150-168
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We will discuss the management implications and the implications for alternative public policies for each scenario. The scenarios depict possible chains of events and the likely impact on those events of broad public policy options.
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If any view of the future is to offer useful insight it must be more than a linear projection of simple trends; it must recognize interactions among shifting technologies, political events, and economic factors. One way to address this complicated reality is through the development of scenarios.
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U.S. producers develop new models and small-car capacity, but the extra Japanese capacity leads to intense price competition.
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Because of engineering expertise, unique market demands, and other factors associated With product differentiation, it is likely that a good fraction (e.g., 35 percent) of the cars sold in the United States will be produced domestically.
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firms lose their market shares in standard models. Unlike earlier periods, U.S.
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It is somewhat unrealistic to expect public policy to be on hold over the next several years. Legislation has already been proposed that would impose strong trade restrictions and reduce taxes.2 Although proponents have made various claims for such proposals, it is important to note that their effects are likely to differ under different patterns of industry development by meshing the scenarios with alternative policies, their joint implications can be made clear.
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From page 160... ...
Within the "internal" category, for example, the types of regulatory measures considered include a freeze on new regulations, postponement of compliance dates, or outright repeal of some regulations; tax incentives would include accelerated depreciation and an increased investment tax credit. On the "external" side, almost all current proposals are labeled "temporary" and are represented by quotas on imports; the basic thrust of such action would be to afford a measure of protection during a temporary transition period.
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Under transient misfortunes, tne transition period is characterized by increased capital spending, but the assumed parity of new U.S. products implies that marketshare losses will not be substantial.
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From page 164... ...
Especially in the case of Scenario 3, a policy of permanent quotas, essential to retention of domestic production under m aturity, would likely slow the industry's adjustment, both in organization and in technology. The result could well be a weaker industry in terms of performance and technical leadership than would be the case with temporary trade measures.
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From page 165... ...
Contrast this state of affairs with an organization that excels at innovation and at coping with uncertainty. It is likely to be guided by individuals willing to take risks when precise calculations cannot be made and to utilize organizational structures that are highly interactive and adaptive, where negative feedback is likely to be acted upon promptly.3 This is, of course, an ideal type, and there is as yet no reason to suppose that the successful auto producers will function like hi-tech electronics firms.
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From page 166... ...
Yet for the most part the research organizations in the auto industry have not been tied in to the basic competitive activities of the business, simply because innovation that required research was not essential to competitive success. An R&D organization that operates in its dominate mode as an applied engineering group tends to relegate basic or even applied research to the back seat; it is likely to be different from the organization one would design to generate new, competitively significant and viable concepts.
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From page 167... ...
2. The recent "voluntary" restrictions adopted by the government of Japan establish a short-term barrier to further penetration; the trade issue may well be raised once they are lifted.
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