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February 1992, Vol. 115, No. 2
Christopher J. Singleton
T he U.S. automobile industry has undergone tremendous structural change in the past decade.1 Once the world's dominant motor vehicle producers, U.S. automakers faced increasingly fierce competition from foreign manufacturers during the 1980's. This stiff competition, coupled with the highly cyclical demand, has resulted in fluctuating output and employment growth for the U.S. motor vehicle industry. The industry's strong long-term productivity growth rate, in the context of moderate demand, has also depressed employment growth. Traditionally one of the U.S. economy's largest employers, the industry affects, both directly and indirectly, the job prospects of hundreds of thousands of workers. Its lack of sustained employment growth during the 1980's has therefore had a noticeable negative impact on the U.S. economy, particularly the manufacturing segment. (See appendix for a more inclusive definition and discussion of "automobile manufacturing" industries.)
This article provides a historical overview of the U.S. automobile market, focusing on factors that affected output and employment trends during the crucial decade of the 1980's. It describes the competitive pressures faced by American automakers and presents the primary issues affecting the industry's future economic vitality and employment requirements.
History of the market
Until the late 1970's, the nature of the American automobile market had remained fairly consistent throughout most of the twentieth century. The "Big Three" automakers-General Motors, Ford, and Chrysler-dominated the market, with imports controlling a rising, but hardly destabilizing share. Huge capital requirements and economies of scale created barriers to entry and perpetuated a concentrated market structure.
This excerpt is from an article published in the February 1992 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 The automobile industry is classified as SIC 371, motor vehicles and equipment, in the Standard Industrial Classification Manual.
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