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Should the Government Bail out the Auto Industry - Essay Example

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If auto industry is allowed to go down, then it will have greater effect on their suppliers, employees, middle-class society that reckons upon automobile…
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Should the Government Bail out the Auto Industry
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Download file to see previous pages Further, US automobile industry is dominated by three major players namely Chrysler, General Motors and Ford. However, from the year 2003, the scenario in the U.S. automobile industry has dramatically transformed. At present, the lion’s share of cars sold in the U.S market were either assembled or manufactured by foreign manufacturers at their new North American manufacturing units which is famously known as “transplant facilities” or imported.
Due to cut throat competition, the big three U.S. auto majors now have to concentrate only in light trucks manufacturing and even there, they are being encountered by competition from foreign manufacturers. Since 1980, on financial ground, the major three big players of U.S.A have laid off more than 600,000 jobs.
Michigan has been the worst affected state since more than 100,000 individuals have lost their jobs in the automobile industry since 1980. It is to be noted that in 1980, Regan administration had been urged to negotiate quotas on imports from Japan. Nonetheless, by and large U.S deficit in automotive trade deficit in automotive commerce had enlarged from $ 10 billion in 1979 to in excess of $150 billion per annum in 2000 despite of high quantum of inward remittances by foreign automobile manufacturers and a fall in the imports as foreign model cars have been manufactured at transplant assembly facilities in U.S.A itself. In 1980, U.S. had framed policies intended at demanding foreign automobile manufactures operating from America to manufacture more of the model of cars that they sell to America and some other policies intended at increasing awareness of consumers about imported vehicles and automobile parts, like the American Automobile Labeling Act, seem to have had no effect on the increase of this sector’s trade deficit.
In 2004, the trade deficit with the Japan was more than $48 billion and the U.S exports to Japan were just $ 2 billion Further, U.S.A trade deficit with Korea ...Download file to see next pagesRead More
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