Many people are of the opinion that the US automobile industry is one of the few industries in the world that has been able to survive during the recent economic crisis. They argue that the large number of American jobs created during the rapid growth of the past two decades has been enough to protect the US economy from any impact that the slowing of the global economy would have brought about. And even though the number of jobs lost during the recent financial crisis is far higher than those created during the two previous recoveries, they also point out that the number of jobs created since the start of the twenty-first century is still quite high by historical standards, especially considering that the number of jobs created per year is much lower than the number of jobs lost during the recession.
The debate over how economists: would describe the US automobile industry has become more acute after President Obama and his labor secretary, ashawncia Lewis, took a trip to the US last week. During that visit, they had a chance to meet with auto manufacturers throughout the country, as well as with the representatives of several US car companies. During their visit, they had a chance to hear directly from every automobile company in the country, asking them to explain how they view the state of the US economy, and how they are planning to overcome the current situation. From that meeting, it was clear to everybody that the auto industry is still very much part of the US economy.
What is interesting about: this fact is that it actually illustrates the rather paradoxical nature of the US economic crisis. Because the US is one of the largest producers of automobiles around the world, it is ironically losing some of its manufacturing capacity at the same time that it is enjoying an increase in demand for its products. For years, the United States has enjoyed a strong, positive trade balance – something that experts in the field of international trade believe is an essential ingredient for a healthy, vibrant economy. But during the past two years, the US has been dealing with a very sudden and rapid loss of economic strength, as a result of the global financial crisis.
So how would economists explain the current problems with the US economy?
One way is to point to the numbers. In recent months, we have seen a number of plant closures, mass layoffs, and factory bankruptcies – all of which suggests that we are not getting the productivity we need, and that we are not making the kinds of vehicles that will be popular with American consumers. Another way is to look at the demographics of the country. While the US is becoming a more diverse country, as it becomes more white and Asian, it remains a country where the majority of residents are of European descent.
What would be more useful: if we were in the business of making cars, to have a car company that understanding these issues? One company that springs to mind is GM. Yes, the company that is widely blamed for the demise of the US auto industry is also the home of some of America’s greatest car manufacturers. GM has also been a poster child for outsourcing, and its decision to move production of its European Union car production to Mexico is an example of such. And last but certainly not least, GM’s decision to allow Mexico to build the cars that it needs, rather than building its own cars in the United States – the car company received a shipment of $term, which apparently is all they care about these days.
So to answer how economists would describe: the US automobile industry, it is clear that the problems are complex, but are also longstanding. In recent years, General Motors has received a lot of bad publicity and lost a lot of business. But also consider the fact that in 2021, the company generated over five hundred million dollars in revenues. So it is not just losing money but earning it as well! And this is only in the auto sector!
