Experts' view: automakers will grow - with changes

Is the automobile industry a mature, if not declining business? When the United States automobile industry was in the depths of despair a year or so ago, beset by recession and high fuel prices, hurt by safety and environmental regulations, there were some who thought this was the case.

But not auto expert Martin Anderson. ''The motor vehicle is here to stay,'' he says. ''It has proved itself incredibly versatile.''

Mr. Anderson is executive director of the Future of the Automobile Program, headquartered at the Massachusetts Institute of Technology here. For four years teams of high auto company executives, senior government officials involved with the industry, auto union officials, and some 120 researchers from seven of the major auto-producing nations have been studying the industry. The results of their research will be published next year in a core volume here and in other books abroad.

Mr. Anderson, in an interview, summarized some of the conclusions reached by this knowledgeable group. The first was that the industry would survive, dealing successfully with problems of energy, environment, safety, and so on.

''There will be dislocations,'' he cautions. There will be changes in the relative power among the noncommunist world's top 25 companies. There will be shifts in the number of auto jobs in different countries and regions.

Nor does the group of auto experts believe that all auto production will move to the third world to take advantage of the lower wages there. ''Most don't see it as a clear-cut thing,'' said Mr. Anderson.

They expect production to grow most rapidly in the developing nations as their domestic demand grows. And they figure some low technology, shippable components - for example, small castings or plastic moldings - may be produced in such countries as Brazil. However, high-technology components will continue to be made and cars assembled in the industrial nations of Western Europe, the United States, Canada, and Japan.

This will be part of a more genuine ''internationalization'' of the auto industry in the United States. Western Europe's smaller auto manufacturers became fully internationalized in the 1950s and 1960s, says Mr. Anderson. They bought components or portions of their cars from foreign companies or entered into joint ventures for their production or sale. They became expert at working together with other auto companies or outside suppliers.

But the massive American firms such as General Motors and Ford, though they had divisions abroad, were much more self-reliant. For two decades they found it advantageous ''to do everything themselves.'' They suffered from the so-called ''not-invented-here syndrome,'' rejecting foreign auto ideas, argues Mr. Anderson. They were protected from overseas competition by the American demand for large cars. Then came the oil shocks of the 1970s and the arrival of Japanese imports. The Europeans already had fuel-efficient cars and did not suffer such a market collapse. But the American firms, stuck with their big gas-guzzlers, faced a major challenge.

The American auto executives thought of themselves as heading multinational firms because of their divisions abroad. But, by Mr. Anderson's definition, these US firms are ''Midwest companies'' with 60 percent of their production, including components, taking place within 200 miles of Detroit. Their executives suffered from ''inbreeding,'' missing some fresh product ideas elsewhere. They tended to go to the same country clubs.

Now they're in a catch-up game in making linkages with other auto companies around the world and changing their attitudes. ''No company is strong enough to follow this international wave by itself, not even GM,'' says Anderson.

He expects American firms to join in the scramble for international ties in the way of joint ventures, sharing in the production of components, sales links, and so on. ''Twenty years from now it will be hard to tell the dominant nationality of a car, there will be so much shipping of components.''

Rather than the five or six ''megacompanies'' in the entire global auto industry foreseen by some back in the 1960s, Mr. Anderson predicts ''mega-linkages'' between the many more existing car companies. Nor does he expect Japanese auto companies to dominate the world auto scene. For political reasons, they will not be permitted to centralize production in Japan and export the bulk of their cars. They will be forced to move some of their production abroad.

In the mid-1970s American companies, noted Mr. Anderson, launched massive investment programs to change their products to meet the Japanese import challenge. As a result, in the last few years the rate of introduction of new cars has been three times the average since World War II. But Mr. Anderson does not see the battle as an easy one. One fact he cites illustrates this: Toyota can load a car on a boat in Japan at a cost of $4,000, which retails here for around $7,000.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.