It is no news to anyone that we are experi-
encing the second major energy crisis of the
decade. Everything from President Carter’s
unpopularity to the disaster at Three Mile
Island seems to relate to the “shortage” of
energy. But for the motor vehicle industry in-
particular, the consequences of the crisis are
especially drastic.
JulylAugust 1979NACLA Report
Transportation currently consumes 55% of
all U.S. petroleum, 85% of which fills the
tanks of automobiles.’ And gas prices have
skyrocketed from 35 cents per gallon four
years ago to $1.00 a gallon and up as of
mid-1979. The effect has been apparent in
motorists’ anger on long gas lines and in the
unprecedented back inventories of large cars
in factory parking lots. In response, all new
car advertising now focuses on “miles per
gallon” (mpg) and even the Cadillac is being
billed as a “Long Distance Runner.'” 2
However, the energy crisis has implications
for the motor vehicle industry that go far
beyond superficial expressions of real or con-
trived shortage. On the one hand, due to the
industry’s size and scope, a shake-up in auto
reverberates throughout the economy. And
these tremors occur regularly since auto sales
are particularly vulnerable to the economy’s
boom/bust cycle: when times are hard, peo-
ple simply put off buying a car. On the other
hand, the mechanisms at work in auto
graphically reveal the fundamental processes
of capitalism. As this crisis has once again
heightened competition, the auto companies
are forced to decisively change their past
practices. A general restructuring has been
accelerated, which will affect the industry,
workers and the overall economy.
Briefly, the U.S. motor vehicle industry
comprises three large terminal producers
(i.e., those producing fully-assembled
vehicles), all of which are among the largest
transnational corporations (TNCs) in the
United States. General Motors (GM) is the
largest, currently capturing almost 60% of
the U.S. market;* Ford follows second with a
little more than 27%; and beleaguered
Chrysler tails behind with under 12% of the
market share. 3 In the last year, Volkswagen
(VW) has stolen fourth place from American
Motors Corp. (AMC) whose auto share is a
meager 2.1%.4 All together, 9.2 million
vehicles were sold in the United States in 1978
and these companies totaled $100 billion of
* These figures are approximate since the unpre-
dictability of auto sales translates into shifting
percentages. But small changes can make big dif-
ferences. To manufacturers, a 1% market share
can be worth $700 million in revenues. (Business
Week, March 26, 1979.)
sales worldwide.s
About one out of six jobs in the United
States is directly or indirectly related to
automobile production, with some 14 million
workers engaged in vehicle manufacture and
its dependent industries. 6 Aside from the
760,500 production workers directly making
and assembling a car, thousands of others
make the estimated 20,000 components that
go into one automobile.’ Key inputs include
steel (20% of all that is produced in the
United States), glass, tires (60% of all
rubber), batteries, radios and upholstery. 8
Workers in road construction, auto service
and repair, retail and advertising are all in-
trinsically affected by the industry. Three-
fourths of the terminal-end autoworkers still
work in the Great Lakes Region, about 40%
of them in Michigan.”
UNTIL NOW, THE BIGGER
THE BETTER
For years, Detroit had pushed gas guzzlers
as the most desirable way to travel because, as
is commonly understood in the industry, the
larger the car the higher the profit.1′ The
auto companies had relied on the glamour of
annual model changes with progressively
lower levels of fuel efficiency. But with the gas
crisis of 1973-75, a trend toward “downsizing”
began, so that even the largest and flashiest
models became more compact. However,
change comes slowly to an industry that takes
three years to translate new car designs from
paper to assembly line. And to varying ex-
tents, the “Big Three” producers-GM, Ford
and Chrysler-hoped that the crisis would
soon pass.
Pressure to downsize not only persists, but
has gotten worse. Imports of smaller foreign
cars have sped up from 6.3% in 1965 to more
than 21% of the U.S. market for the first five
months of 1979.” In addition, the U.S.
market, though still the largest in the world,
is approaching the saturation point with one
car for every two people in the country. 2
Therefore, foreign markets in both Europe
and the underdeveloped countries are fast
becoming crucial areas for expansion. And
large fuel-eating monsters simply won’t sell in
those markets.
To top it all off, the U.S. government has
entered the scene to regulate the industry’s
45
transition to greater gas economy. The in-
dustry has been instructed to achieve cor-
porate average fuel economy (CAFE) re-
quirements* of 19 mpg in 1979 and 27.5 mpg
by 1985, accompanied by both environmental
controls and greater safety requirements. ” As
a result of these pressures, Ford estimates that
by the 1980s, one out of three cars will be sub-
compacts, as opposed to the one in five ratio
of the late 1960s.” 4
Ex-Transportation Secretary Brock Adams
has asserted that Detroit, forced by federal
regulations, is doing “nothing less than re-
inventing the car.”‘” Although he vastly exag-
gerates the task at hand and the government’s
role within it, the “next five years are really
the heart of this century for the automobile
industry,” according to Lee Iacocca of
Chrysler. 1 6 The combined effect of all these
factors has indeed accelerated the motor force
of increased capital accumulation: competi-
tion.
ENTER THE WORLD CAR
With much fanfare, the business press has
announced the coming of the “world car.” A
world car is simply one built from standard-
ized parts and sold, with few changes, in any
major market. To some extent a world car is
not an earthshakingly new idea. After all,
Ford pioneered the idea with its Model T,
building it in the United States and shipping
it unchanged to Europe. But not until VW’s
Beetle was there large-scale penetration of a
foreign market with a versatile car. And the
“Bug” was only competing for the small
economy car market, then the least important
sector in Detroit’s eyes.
But the new world car differs from its
predecessors in several respects. First, it
reflects an increased interpenetration of
traditional international markets. As the
president of Nissan Motors explained:
We find ourselves on the eve of intense interna-
tional competition with American automakers in
the small-car market, which hitherto has been
the Japanese makers’ stronghold. From now on
we will have to map out strategies on a global
scale and deploy our forces dynamically.”
* CAFE requirements refer to the average mpg
figures of a company’s various models rather than
the figure attained by each car model.
Secondly, the world car represents an inter-
nationalized production process, not just the
marketing of finished vehicles. But not only
cars will be made in different countries; since
parts are increasingly standardized, they, too,
will be produced across national borders and
then assembled into one vehicle. This facility
will allow manufacturers a flexibility they’ve
never had before. And again, Ford was at the
forefront of this development:
In the three quarters of a century since its found-
ing, Ford has built nearly 150 million vehicles.
But, outside of the Model T, none seems likely
to have such a long-lasting and decisive effect on
the management of our world-wide operations as
an 11-foot-long little car called The Fiesta …
(Fiesta) began a new chapter in multinational
business co-operation with management im-
plications far beyond the European continent or
Ford.”
Thirdly, the world car is essentially redefin-
ing the type of car North Americans drive,
which will be more similar to cars the world
over. Although the full product line will still
exist (luxury cars, compacts, subcompacts,
etc.), a new emphasis will be placed on fuel
efficiency and competitive advantages with
imports. In this sense, the clamor over the
world car is a bit of a hype. Partially, the ex-
citement is a cover for the companies to jack
up small car prices to levels that would have
been unthinkable a few years ago. Moreover,
the world car has become the focus of a new
level of international competition, ushering in
a period of global restructuring for the in-
dustry. As a Ford executive so graphically put
it: “It’s going to be a hell of a dog fight. Some
noses are going to get bloodied.”‘ 9
PAST DEVELOPMENT
The origins of the industry date back to
carriage and bicycle production, the latter
being the first mass-produced transportation
vehicle reaching its heyday in the 1890s.
Among the original bicycle producers were
Henry Ford, Glen Olds and the Chevrolet
brothers. In 1893, the Duryea brothers built
the first successfully gas-propelled vehicle,
and by the early 1900s, a primitive auto in-
dustry was developing. It was primarily
centered in the Great Lakes Region, which
was to become one of the world’s largest in-
dustrial complexes. The area was well suited
to supply the myriad of necessary parts, and
JulylAugust 1979NACLA Report
was the home of the engineering industry
which supplied the necessary machine tools.
The river and lake system, supplemented by
rail, facilitated transport. Also attractive was
the fact that Detroit was notorious as an anti-
union, open-shop town. Within a decade,
nearly half of all autoworkers lived in
Michigan alone, making 75% of all autos. 2 0
Initially, the production process was quite
underdeveloped, as revealed by Ford’s ac-
count of the early Model T:
In our first assemblying, we simply started to
put a car together on a spot on the floor and
workmen brought to it the parts as they were
needed in exactly the same way that one builds
a house … usually one workman performed all
of the operations necessary on a small part
21
Since only simple technologies with low
capital requirements were needed, entry into
the industry was easy. In the early period, a
total of 181 companies were producing cars.
But soon thereafter, Ford had a better
idea. After instituting a series of measures to
heighten efficiency, including fragmenting
tasks to their simplest operations, and re-
organizing the shop to reflect an uninter-
rupted sequence of production, the moving
assembly line was invented, which revolu-
tionized auto manufacture. Within the first
five years of its introduction, production costs
were cut by 50% and the price of a Model T
fell by one-third. This great technological ad-
vance of the conveyor belt did not put new
tools into workers’ hands, but did imply
drastic plant reorganization and sharply
raised the capital-labor ratio by expanding
the necessary economies of scale. It enabled
Ford to dramatically increase annual car pro-
duction from 12,000 in 1909 to two million in
1921, and to thereby capture a full 55% of
the U.S. market. 2 2
A second consequence of the moving
assembly line was that many less efficient pro-
ducers were driven out of business. This pro-
cess of economic centralization and concen-
tration was rapid; by 1930 Ford, GM and
Chrysler, three out of the 30-odd producers,
Magneto assembly operation at Ford Motor Co.’s Highland Park plant, 1913; this early application of the moving
assembly line reduced production time by one-half
6JulylAugust 1979
had already seized 90% of the U.S. market.
(See Table.) The market had expanded so
quickly that by 1925, “ownership of an
automobile reached the point of being an ac-
cepted essential of normal living.” Close to
five million cars were coming off the line by
1929, owned by one out of every five adults.2″
CENTRALIZATION IN
U.S. AUTO COMPANIES
ca. 1910
181
1923 108
1927 44
1931 35
1941 12
1954 6
1979 4*
* 5, if VW is included
Source: Rhys Jenkins, Dependent Industrialization in
in Latin America and current industry sources.
However, the squeezed-out firms were not
the only casualties of the moving assembly
lines. The workers were assaulted by the com-
bined attack of increased speed-up and the
de-skilling of their jobs. The description of
this process, explained by a visitor to a Ford
plant at the time still holds true today:
When the conveyor is speeded up the workers
are forced to follow its dictates, and to hurry
with their jobs accordingly. The conveyor’s
speed invariably determines the worker’s
speed …. The conveyor is the master. If the
management in a factory decided to increase its
speed by ten percent.., tens of thousands of
hands. . must work ten percent faster. The
workers are bound to the conveyor the way the
galley slaves were bound to the vessel. 2 4
Each job was so broken down that work
amounted to repeating the same small task
hour after hour, day after day. Productivity
jumped from two cars per worker per year in
1904 to more than 20 in 1925.25 This produc-
tivity increase was largely accomplished by
the intenification of labor, not by the in-
troduction of more sophisticated machinery.
The introduction of mass production was
met by massive worker resistance- sabotage,
slowdowns, and absenteeism. The ratio of
supervisors to workers had to be tripled in
order to control production. But the most
graphic illustration of worker unrest was the
high level of labor turnover. At Ford’s main
plant, turnover reached 400% in the first few
years; Ford was forced to hire 52,000 workers
just to maintain a workforce of 13,600.26
UNIONIZATION
The companies’ use of incentive pay
systems (piece rate), acute job insecurity, and
dangerous working conditions with an excep-
tionally high accident rate made the need for
labor organization compelling. Organizing
was undertaken by many groups, but by 1919
the only major trade union was the United
Automobile, Aircraft and Vehicle Workers
(AWU). The union had originally organized
carriage and wagon workers through the
Knights of Labor, and in 1891 became an
AFL affiliate. The number of autoworkers
soared from 12,000 in 1904 to 76,000 in 1909,
and by 1916 the AWU had 13,000 members.
Soon after, disputes arose with the AFL over
its craft orientation, which was becoming in-
creasingly inappropriate for autoworkers as
the effects of mass production de-skilled their
jobs. The AWU was suspended from the
AFL, became an independent and by early
1920, had 45,000 members.
However, the combined effects of the reces-
sion of the early 1920s, open-shop drives and
the Palmer raids, all but decimated the AWU.
By 1922, 65% of Detroit’s working population
was unemployed and the AWU’s national
membership was reduced to 800. Throughout
the 1920s internal struggles, economic crises,
employers’ anti-union tactics and jurisdic-
tional disputes plagued organizing efforts.
Then came the Big Crash in 1929. By the first
year of the Depression, Detroit registered the
highest unemployment rate in the country,
and hundreds of thousands of autoworkers
were jobless everywhere.”
The AWU was effectively replaced by the
United Automobile, Aerospace, and Agri-
cultural Implement Workers of America
(UAW). The UAW was part of the general
labor upsurge of the mid-30s that argued for
industrial organization and representation. It
secured its position in the industry in 1936-37
with the well-known sit-down strikes at GM
plants. Workers took over the plants to ensure
that production was not shifted to scab labor
for less organized shops, and led militant bat-
tles against the companies and police until the
7NACLA Report
right to organize was finally won. By World
War II, the UAW had become the largest
union in the country with a membership of
over one million workers.
Unionization- although a crucial and hard-
fought victory– hardly marked the end of the
workers’ struggle with the auto companies.
For example, during World War II, when the
industry nearly stopped producing cars and
converted to military production, real wages
fell and the number of strikes more than
doubled. Many of these strikes were wildcats
over intolerable working conditions and low
pay. Labor militancy reached a high point in
1944 when there were more strikes, involving
more workers, than in any other period of the
industry’s history. 2 8
INTENSIFICATION OF LABOR
Since World War II, the push to squeeze
maximum production from every worker has
continued. Athough the workforce has ex-
panded by about 20.4% since 1948, motor
vehicle production has increased by
144.5%.29 As impressive as these figures ap-
pear, they are considered low relative to the
spectacular productivity gains attained in the
early years of the industry. Between 1919 and
1930, annual productivity increased by more
than 8.6% (as compared to 1.9% for U.S. in-
dustry as a whole), but from 1960 to 1971 it
fell to 3% per year and has since dropped fur-
ther. 3 0 The auto executives maintain that
these productivity increases mainly accrue to
new machinery and what is known euphemis-
tically as good management. For workers, it
means speed-up.
There is no doubt that some technological
changes have been striking. Although the use
of robots and numerical control (see third ar-
ticle) are the most apparent changes, the
overall proportion of fixed costs for
machinery has increased steadily in the last
two decades.
But since auto production involves so many
different components, generalizations can be
quite misleading. There are three essential
parts to any vehicle: engines, transmissions
and gearboxes, and stamped-out bodies. For
all three, the processes involved tend to be
highly capital-intensive and by and large are
done by the Big Three companies themselves.
They require high-volume production in
order to attain economies of scale, and to
some extent, specialized factories have
developed as a result. Many of the operations
in these plants have been greatly affected by
mechanization. Other parts, like upholstery,
which are needed in lower volume and vary
significantly from model to model, remain
less mechanized.
When walking through a plant, the distinc-
tions between operations are readily ap-
parent. Passing by the manufacture of engine
blocks, almost no workers are visible, the
parts falling from one machine to the next.
Workers merely supervise. Final assembly is
quite another story, with many working on
one car simultaneously. Between 25% and
30% of the total labor force is absorbed in
final assembly and body trim.” 3 The work
itself has only superficially changed since the
early days. The upshot is that the auto in-
dustry and its suppliers as a whole are labor-
intensive and capital-intensive at the same
time.
This dual nature of the industry has meant
that when technological changes are im-
plemented on the line, not only is efficiency
enhanced and the number of jobs reduced,
but usually only one segment is automated.
This uneven automation feeds right into the
old routine of speed-up and job de-skilling.
For example, as explained by a union official
at GM’s Lordstown plant:
When they took the Unimates on, we were
building 60 an hour. When we came back to
work with the Unimates, we were building 100
cars an hour. A Unimate is a welding robot. It
looks like a praying mantis. It goes from spot to
spot to spot. It releases that thing and it jumps
back into position, ready for the next car. They
go by them about 110 an hour. They never tire,
they never sweat, they never complain, they
never miss work ….
Another path to labor intensification is us-
ing the fewest workers for the maximum
amount of time. Compulsory overtime, an
endemic feature in the industry, can extend
to 53 hours a week under the contract, but ex-
tra “voluntary” overtime is in practice often
non-negotiable. When 60-hour weeks go on
for too long, workers have resisted, but for the
most part, the overtime is welcomed. For
many workers, the memory of 1973-75 is still9
very vivid. At that time, the energy crisis in-
duced cutbacks in production, and about
one-third of the labor force was laid off.”
Because plant closures, automation and
recession continue to threaten their jobs,
workers often try to get the extra money while
they can. 3 4
Although conditions vary considerably
within the Big Three’s plants– Chrysler being
in notoriously bad shape-in general, auto-
workers’ jobs are physically exhausting and
mentally deadening. Although wages are
higher than the national average for in-
dustrial workers, they are currently low
enough to give the companies a competitive
edge over some of their European rivals. In-
dustrial workers in Germany, for example,
receive 40% higher wages than comparable
workers in the United States.”s
All in all, autoworkers have been hard hit
by speed-up, hazardous or unhealthy working
conditions and job insecurity, while auto ex-
ecutives make millions. Worker militancy has
not again reached the level it was at a decade
ago but as a leader at that time stated:
There is literally a war going on inside the
American factories. This is a violent struggle.
Sometimes it is organized and guided. Most
times it is unorganized and spontaneous. But in
the course of this struggle more American
workers have died than in all the four major
wars. 3
FURTHER CHANGES DOWN THE PIKE
Since World War II, the number of trans-
national auto corporations competing on a
world scale has sharply increased and the
percentage of U.S.-produced vehicles has
drastically fallen. (See Table.) For renewed
competitive strength, Detroit is presently con-
ducting the largest overhaul in its history.
Cost estimates for the massive re-tooling vary
widely, but somewhere between $18-80 billion
will be spent by the U.S. industry before
1985.91 Ford and GM, with record sales in the
first quarter of 1979, will not suffer from the
expenditures and are prepared to get their
money’s worth. They are using this period to
streamline all aspects of production and to
bring onto line as sophisticated techniques as
possible. Chrysler is the exception to every
rule, and rather than improving old plants,
WORLD PRODUCTION OF AUTOMOBILES
Number of cars Percentage of North
produced American Production*
1950 7.8 million 85%
1971 21.7 million 41%
1976 37.5 million 34.7%
*U.S. and Canada. Does not include Mexico.
Source: Counter-information Service, CIS Anti-Report:
Ford.
their tendency is to shut them down,
rehabilitating what they can.
Unlike the crisis of 1973-75, however, the
momentary effects of increased automation
have not witnessed extensive job loss, at least
at GM and Ford. Re-tooling requires addi-
tional labor and, especially in the skilled
trades, employment is up. Additionally, it is
possible that other jobs will emerge for com-
puter programmers, designers and engineers,
builders of advanced technology, etc.
From a social point of view, a logical
answer to the energy crisis would be to resur-
rect a mass transit system. It is no secret that
the United States, with the most advanced
auto industry, maintains the worst system of
public transportation in the developed
world. 3 ” Not surprisingly, the two are related.
According to a document submitted to the
U.S. Senate Subcomittee on Antitrust and
Monopoly in 1974: “. . . three powerful auto-
mobile companies. . . secured control over
rival bus and rail industries and then max-
imized profits by substituting cars and trucks
for trains and streetcars, subways and
buses.” 3 ‘ GM expressed it more obliquely
back in 1958: “If GM has said it once, it’s said
it ten thousand times: ‘a good used car is the
answer to the American public’s need for
cheap transportation.’ “40 The only change in
20 years is that now, they are celebrating the
world car as the cheap solution for the public
and the most profitable solution for them.
Before describing the details and analyzing
the meaning of the world car in the third arti-
cle, we turn to look at the development of the
industry in Latin America.
MAPPING OUT AUTO
1. Newsweek, July 16, 1979.
2. Taken from an advertisement appearing in the
New York Times, July 17, 1979.
3. First two statistics from New York Times, April 27,
1979; third statistic from Detroit Free Press, June 10,
1979.
4. Fortune, July 16, 1979.
5. Ward’s Automotive Yearbook, 1978, p. 9 5 , for a
number of vehicles; Time, March 19, 1979, for sales
figures.
6. Time, March 19, 1979.
7. Bureau of Labor Statistics figures for SIC 371,
Employment and Earnings, 1978, for number of pro-
duction workers; number of components according to
UAW sources.
8. Percentages taken from William Serrin, The Com-
pany and the Union (New York: Vintage, 1974), p.5.
9. These figures for 1974 are taken from the Motor
Vehicle Manufacturers Association (MVMA), Motor
Vehicle Facts and Figures, 1978, p. 69.
10. “For example, in 1978 General Motors earned an
operating profit of $1,362 on each full-sized car it sold,
compared to just $449 on each compact and a mere $147
on each subcompact.” Al Fabar, “Auto in the Eighties:
Uncars and Unworkers,” Radical America, Vol. 13, No.
l(January-February 1979), p. 32.
11. “The Ford Motor Company,” Counter Information
Service (CIS) Anti-Report (London, 1978), p. 4 for 1975
figure; New York Times, June 19, 1979, for 1979 figures.
12. MVMA, 1972 Automotive Facts and Figures, pp.
28-9.
13. Business Week, November 20, 1978.
14. Philip Caldwell, Vice Chairman of the Board,
Ford Motor Company, “The Fiesta Factor: Turning
Point in Multinational Management,” speech delivered in
Dearborn, Michigan, April 19, 1978, p. 5.
15. Time, March 19, 1979.
16. Business Week, March 12, 1979.
17. Time, March 19, 1979.
18. Caldwell, op. cit., p. 2.
19. Business Week, November 20, 1978.
20. Roger R. Keeran, “Communist Influence in the
Automobile Industry, 1920-1933: Paving the Way for an
Industrial Union,” Labor History, Vol. 20, No. 2 (Spring
1979), p. 192, and Gerald Bloomfield, The World
Automotive Industry (Newton Abbot, England: David &
Charles, 1978), p. 162 ff.
21. As quoted in Institute for Labor Education and
Research (ILER), Work in a Gold-Plated Sweatshop, un-
published mss. of forthcoming pamphlet, p. 3.
22. Rhys Owen Jenkins, Dependent Industrialization
in Latin America: The Automotive Industry in Argen-
tina, Chile and Mexico (New York: Praeger, 1977), p. 17.
23. Keeran, op. cit., p. 189.
24. ILER, op. cit., p. 10.
25. Ibid., p. 32.
26. Ibid., p. 40, p. 20.
27. Keeran, op. cit., pp. 193-223.
28. Roger R. Keeran, “Everything for Victory: Com-
munist Influence in the Auto Industry During World
War II,” Science & Society, Vol. XLIII, No. I (Spring
1979), p. 4, 13, 18.
29. Bureau of Labor Statistics figures for SIC 371,
Employment and Earnings, 1909-75, and yearly report
for 1978.
30. Emma Rothschild, Paradise Lost: The Decline of
the Auto-Industrial Age (New York: Random House,
1973), p. 48.
31. Bloomfield, op. cit., p. 38.
32. ILER, op. cit., p. 17.
53. Fabar, op. cit., p. 32.
34. NACLA interviews with autoworkers in Michigan
and Massachusetts, June 1979.
35. Forbes, March 19, 1979.
36. Dan Georgakas and Marvin Surkin, Detroit: I Do
Mind Dying(New York: St. Martin’s Press, 1975), p. 107.
37. For example, Time, March 19, 1979, says lower
figure and Business Week, March 26, 1979, cites higher
one.
38. Report published inJune 1979 by National Trans-
portation Policy Study Commission, as quoted in News-
week, July 16, 1979.
39. As quoted in Stephen Geisler, “GM and the De-
struction of Urban Transportation,” Win, August 17,
1978.
40. GM’s then-president Harlon H. Curtice as quoted
in Lawrence J. White, The Automobile Industry Since
1945 (Cambridge: Harvard University Press, 1971),
p 184.
