Daimler Chrysler Merger - Case Study Example

From its inception until 1978, the U.S. automotive industry showed a steady expansion, with the exception of the years during World War II when its plants were converted to the production of war materials. In 1978, motor vehicle production reached an all-time high of 12.9 million units, including about 9.2 million cars; since then production has fluctuated. In the early 1980s the industry was in a recession, producing fewer cars in 1982 than in any year since 1958. From 1990 to 1992 the industry experienced another recession.

In 1996, U.S. motor vehicle production totaled 11.8 million, including 6.1 million cars and 5.7 million trucks; North American motor vehicle production, including all vehicles made by domestic and foreign companies in the U.S., Canada, and Mexico, reached more than 15.4 million-8.2 million cars and 7.3 million trucks. In the mid-1990s, the U.S. auto industry showed signs of recovery (History.com). To try to improve their global positions in terms of output and market share almost all of the major firms in the industry embarked on a period of consolidation in the 1980s and continued this in the 1990s.

Ford acquired Aston Martin, Mazda, Jaguar, Land Rover and Volvo. Volkswagen gained Skoda and Seat. General Motors took major interests Saab, Suzuki, Isuzu and Daewoo. Finally, Renault merged with Nissan, Dacia and Samsung. The most salient point arising for the purposes of this paper is the firms which bought firms in economies where they had little previous presence as part of their strategy of going global. Essentially then DaimlerChrysler was caught up in a general trend and found itself following others in the search for what seemed global security through scale and scope.

Worker involvement in the full process began in the 1980s. Worker "circles," as developed by the Japanese, gained adherents in the U.S. auto industry as a means of taking some of the drudgery from repetitive, assembly-line tasks and simultaneously giving workers a larger interest in decision making. Profit sharing among auto workers began at the American Motors Corp. in the early 1960s. Chrysler Corp. approved the concept in bargaining with the United Auto Workers (UAW) union in 1981, as did Ford in 1982.

By the mid-1980s profit sharing had become standard in the industry. In 1990 the U.S. auto industry and related industries employed about one of every 13 workers in the nation. It is the largest single consumer of steel, plastics, glass, and rubber, to name four key supporting industries. The auto companies could not exist without outside suppliers, who typically supply 30 to 70 percent of the industry's requirements (History.com). To provide U.S. automakers time to catch up with the Japanese, during the 1980s the U.S. government pressed Japan to restrain motor vehicle exports to the U.S. to 2.

1 million per year. This quota was lowered to 1.6 million as the Japanese began producing large volumes of vehicles in American plants. Under the National Competitiveness Act of 1984, the three U.S.-based automakers began forming consortia in 1989 under which they share in research and development to reduce costs and speed new