Driving Continentally: National Policies and the North American Auto Industry

Graham Adams, Jr., is a professor of American history at Mount Allison University in New Brunswick.

Automobiles rank as the single most important industry in North America.
The essays in this volume focus on the effects of national policies
(particularly NAFTA) on auto manufacturing in Canada, the United States,
and Mexico.

Although at one time the Big Three (Chrysler, Ford, and General Motors)
dominated North America, their market share fell from 83 percent in 1978
to 56 percent in 1991, with a concurrent loss of 200,000 jobs. Foreign
competition, several authors note, constantly and successfully
challenged domestic automakers in terms of quality and price. Each of
the Big Three at one time or another hovered on the verge of bankruptcy.

North American companies had to devise new strategies to ensure their
own survival. These took several forms, including the introduction of
new technologies, the adoption of Japanese production methods, the
closing of inefficient plants, and the reduction of excess capacity.
Industry representatives increased their demands for protection against
“unfair” competition and for easier access to markets in Japan.
State and federal governments offered financial assistance and
inducements for investment. A final step came with the establishment of
NAFTA, which, the essayists note, created an integrated North American
production and marketing system.

Most writers conclude that both the United States and (especially)
Mexico will benefit from NAFTA. Canada, on the other hand, must improve
its productivity or be reduced to the role of provisioner of raw
materials. Mexican labor receives $2.45 (U.S.) per hour as compared to
$16.60 and $21.80 in Canada and the United States, respectively. Failure
to raise Mexican incomes could exert a downward pressure on North
American wages and force a relocation of plants to south of the Rio
Grande.

These balanced, well-researched, and factually grounded studies serve
as a welcome antidote to the emotionalism sometimes provoked by the
free-trade debate. They represent a triumph of rationality over polemics
and make a valuable contribution to our understanding of highly
important issues that affect our economic future.