Thursday, November 20, 2008

Greg Mankiw's Blog: A Sustainable Auto Industry

Greg Mankiw's Blog: A Sustainable Auto Industry

Well, it looks a lot like the automotive industry run by "foreign" car companies that insource jobs into the U.S. In 2006 these foreign auto makers (multinational auto or auto-parts companies that are headquartered outside of the U.S.) employed 402,800 Americans. The average annual compensation for these employees was $63,538.

At the head of the line of sustainable auto companies stands Toyota. In its 2008 fiscal year, it earned a remarkable $17.1 billion world-wide and assembled 1.66 million motor vehicles in North America. Toyota has production facilities in seven states and R&D facilities in three others. Honda, another sustainable auto company, operates in five states and earned $6 billion in net income in 2008. In contrast, General Motors lost $38.7 billion last year....


How to muddle through international competition for Honda and Toyota:

Get ahead of market by doing less cost high quality substitutes products able to shark off newcomers’ challenge of innovation.

Sensitive the market so widening of the competitive cycle.

Through R& D, understand that technology allows cross-category competition.

Access a low-cost market information, outsourcing, reducing manufacturing intensity and avoid barrier to market entry.

Through customer services to reduce customer switching cost

In other word, among other braining, continues product innovation n development, excellent customer services thought closely guarded channels of distribution.