Tough Competition

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Pradhan, Vishal
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Over the last few decades it has been increasingly clear that the United States is slated to lose its manufacturing base in favor for service. This has a large effect on the automotive industry and specifically the city of Detroit because jobs and production are being moved abroad. This is mainly due to the increasing pricing pressure that is passed on from the top to the bottom and the bottom to the top, the widening global market which brings quality products from low cost countries, and there high initial plant investments. There are ways that parts manufacturers in America can combat this problem and in this paper I have written many ways a firm can survive in the win or lose world of automotive, such as to align and reduce the cost structure. In order to improve their thin profit margins the domestic OEMs are attracted to not only set-up production capacity in these fast growing countries, but as a result also bolster the supplier base there even further as they start to purchase more product from them to service the low cost country market. Majority of my research has been from what I learned during my summer internship at a tier II automotive corporation and the teachings of my bosses. There are so many examples during the end of the 20th century and the beginning of the next which shows how smaller firms are being eaten up because they are not able to properly cost reduce. The result is that only the larger businesses survive and grow. Camaco, a tier II automotive parts supplier, has shown how a medium sized company can grow into a large one if it prepares itself correctly and uses its finances appropriately. They have set-up joint ventures and their own manufacturing plants at low cost country locations and transfer significant production offshore. They are a model for what a parts manufacturer can do to avoid the risk of a takeover or closure.
22 p.
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