Blog: What is the 'American auto industry'?
Dave Leggett | 7 January 2009
There's a tendency for people to talk about 'Detroit' as if the Big 3 are synonymous with the US auto industry. It's a bit more complicated than that, as you know. I have come across an interesting article on Forbes that highlights the importance of the 'other' US auto industry - the foreign-owned one, which nevertheless contributes hugely to the US economy.
Does ownership and where it resides (often nominally - eg where most of the publicly traded shares are listed) or where the global HQ is actually matter? Less so than it once did, but I think it still does. I wouldn't advocate going fully down the UK route where it's all foreign-owned now ('it's not the British motor industry any longer, it's the motor industy in Britain' - SMMT CEO Simon Foster, circa 1990).
A mix of domestic and foreign is probably ideal. All domestic smacks of the Malaysia-style state champion approach with Proton (that has left it uncompetitive and ultimately exposed by freer trade in ASEAN). You want some competition in the market, not to mention the scale benefits for suppliers, that inward investment should bring with it.
But the US federal package for the Big 3 illustrates that government can still have traction with domestic companies in extreme cicumstances when it is looking at pulling economic levers to, for example, mitigate the impact of recession. Public money for a subsidiary of a foreign-owned company would be much more problematic, even if it was in taxpayers' interests.
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