Geographical Dimensions of Corporate and Labour Dynamics in
the Global Auto Industry
Over the past 25 years the global auto industry has undertaken an almost
revolutionary transformation. Corporate restructuring strategies undertaken to
reverse declining profits and productivity have been substantial, ranging from
mass plant closures to significant changes in component sourcing: moving from a
‘just-in-case’ to a ‘just-in time’ system. The
increased mechanisation of the industry, in particular the use of programmable
robotics, has changed the role of the worker in the automobile factory from an
integral part of the production process to, in many cases, a supervisor of the
machines. These restructuring strategies have had significant impacts upon
workers: in traditional automobile assembling regions such as Detroit and much
of the Western Europe there has been mass unemployment as new production
systems require a far smaller labour force. In addition, the labour force that
is required consists of more highly skilled workers such as engineers or
computer programmers. This has resulted in the upskilling of workers, who are
often employed according to their personalities or their general high school or
college qualifications rather than their specific skills. Because the
automobile industry has traditionally been a leader in innovation, and is one
of the largest manufacturing industries in the world it is important to
understand the nature and impact of such changes as they will inevitably not be
confined to only this particular industry.
Prior to the 1970s the automobile industry
had been characterised by a production system known as Fordism. Based upon
methods of scientific management and work-study, initiated by Taylor in the
early 20th century, Henry Ford developed an assembly line system of
production. When applied to the youthful automobile industry, this system led
to a dramatic and sustained rise in labour productivity through placing an
emphasis upon producing large volumes of goods so that impressive economies of
scale could be achieved. The full potential of this system, known as Fordism,
although first applied in the 1910s at Detroit’s River Rouge plant, was
not realised until after the Second World War, when the rise of mass
consumption made it possible for automotive firms to produce in such high
quantities. (Holmes, 1987) However, the
Fordist model relied upon economic booms to balance the mass production, and
the economic crisis of the late 1960s and early 1970s led to a decrease in
demand and a saturation of the market as firms responded to lower profits by
further increasing production – a response that only made the crisis
worse.
Some
firms responded to the ‘crisis of Fordism’ by internationalising
their production, moving to lower cost sites in ‘Newly Industrialising
Countries’ such as Southeast Asia and Latin America – particularly
to any free trade zones located in these countries. While this response reduced
the cost of variable capital, as wages were lower, it proved only to be a
short-term solution as no significant expansion in markets or increased
productivity was achieved. As an alternative, automobile firms began to
“rapidly change the production technology of automobile assembly with the
aim of improving flexibility that could provide better response to changing
competitive conditions.” (Holmes: 126) This change was made possible by
the development of robotics and other microprocessor based machine tools that
could significantly improve labour productivity and ran in direct conflict with
Fordist philosophy. The flexibility provided by robotics meant that “the
link between lowering unit product cost and long production runs based on
economies of scale has been considerably weakened, if not completely
severed.”(Holmes: 126)
This
shift from Fordism to flexible production has had wide reaching consequences on
the global auto industry. Factories such as Ford’s River Rouge plant in
Detroit had employed up to 100,000 workers, making 1,200 cars each day whereas
now the plant employs 3,000 workers yet still manages to produce 800 Mustangs
daily. (The Economist, 2002) This dramatic decline in the number of workers
employed by automobile firms reflects not only the increased use of
mechanisation, but also the vertical disintegration of the industry which has
occurred over the past 25 years. Factories no longer “suck in coal and
iron ore at one end and pump out cars at the other (The Economist, 2002),
instead concentrate solely on the final assembly, or even in some cases moving
away from ‘metal-bashing’ and focusing on the core tasks of
designing, engineering and marketing vehicles.
The
source of these changes was the leading Japanese producers, who instead of
concentrating mass production techniques, refined what has been termed lean
production (Dicken, 1998: 335) which combines the best of both craft and
mass production – the same ability to reduce costs per unit and
dramatically improve quality while, at the same time, provide an even wider
range of products and even more challenging work. (Dicken, 1998) The corporate
restructuring strategies involving this shift to lean production has not meant
that economies of scale have reduced importance, but that a variety of products
can be produced – fulfilling an increased demand in ‘post-modern’
society for niche products. “The crucial connection between a relatively
stable and homogenous market and highly standardised production processes has
been severely eroded.” (Shoenberger, 1987: 202) The use of programmable
machines, only developed in the 1970s and 80s has been essential to permitting
a substantial degree of flexibility. Under Fordism, the changing of a model
could take weeks or even months to achieve, as machinery would have to be
replaced and workers completely retrained. This lengthy and extremely costly
transition has been revolutionised, as product change can occur virtually
immediately by changing the software of the robotics. Therefore “short
runs, and a mix of product types on the line have become economically
feasible.” (Schoenberger, 1987) Another move away from Fordism can
clearly be seen in the use of ‘just-in-time’ component sourcing,
where small inventories are held rather than the large number of parts stored
by the Fordist ‘just-in-case’ principle. As a result, the costs of
storing and maintaining such large inventories is reduced, while there is also
an increased necessity for a close relationship between the component firms and
the final assembler – often geographically as well as economically.
Predictably,
these restructuring strategies have had an enormous impact upon the labour
dynamics of the industry, as whole new work practices have appeared. The change
that has had the greatest impact on workers is the reduced demand for labour,
which has led to mass-unemployment in some areas. Schoenberger (1987) explains
that “increasing mechanisation both reduces the firm’s overall
demand for labour and changes its character (notably through
deskilling).” The effects of this reduction in demand are significant;
during the 1980s employment in the US automobile industry fell by 24 per cent,
from 470,000 to 355,000. Plant closures have been under way since the late
1970s in the US, and have been concentrated in traditional automobile
assembling centres such as Detroit, Michigan (Dicken, 1998). “Out of the
twenty-five shutdowns in 1979 and 1980, eleven were located in Michigan and six
more were in other midwestern states.” (Dicken, 1998: 350) These kinds of
figures are not limited to the US however, as Ford cut its blue-collar labour
force by 26 per cent and its white-collar labour force by 34 per cent during
the 1980s while other firms have also frequently cut thousands of jobs over the
last 20 years. Japanese auto firms, on the other hand have managed to avoid
shedding labour on such a large scale, although Nissan closed its Zama plant in
Tokyo and an engine plant in Kyusuhu in 1995. (Dicken, 1998: 351). The job
losses have had particularly harsh consequences on the local regions because of
the very nature of the automobile industry – the factories tended to be
large and geographically concentrated in certain areas. Therefore the
employment ramifications of the closure of an automobile plant are more severe
than other industries. Moreover, the use of many different materials from a
large number of industries means that the impact of a closure is not limited to
job losses at the assembly plant. Minority groups have been particularly
affected by the plant closures, as “in August 1979 virtually 30 per cent
of Chrysler’s national employment was made up of black, Hispanic, and
other minorities while over half of its Detroit workforce was non-white”.
(Dicken, 1998: 351) For those lucky enough to retain their jobs, the nature of
work in the automobile factory has itself changed dramatically as a result of restructuring.
There
is much debate among researchers about how work practices have changed in the
auto industry throughout the last 25 years. Some argue that the increased
automation of the industry has led to “the progressive deskilling of the
workforce through the transfer of human skills to the machine”
(Shoenberger, 1987: 202); while others such as Rutherford (1994) claim
“firms have attempted to delegate greater responsibilities to workers,
develop work teams and worker problem-solving skills.” What both parties
agree upon is that the role of the worker has changed dramatically, and that
even if setups and transitions between tasks are increasingly orchestrated by
machinery rather than the worker, the application and utilisation of the new
process requires that new skills be developed. As the most basic tasks are
easiest to automate, it is these which have been eliminated first. Therefore,
either the workforce has to upskill or they will become surplus to
requirements.
As
automation is no longer incompatible with product differentiation, there has
been a marked shift away from the employment of low-skilled workers in the auto
industry. This shift can be seen by Renault’s changes by 1990, as 25 per
cent of their unskilled workforce had been reduced while the number of
technicians and skilled workers had risen by 15 and 8 per cent respectively.
(Shoenberger, 1987) The recruitment and training standards have also been
increased as new importance is placed upon worker discretion and initiative
than under Fordism. This process has been described as a shift which
“moves responsibility for as much as possible down to the shop floor