The Big Squeeze

The fight for survival by age-old icons of business and culture is not limited to the US. Volkswagen and other carmakers in Germany and France question whether they can provide mass domestic employment while competing against firms with lower labor costs in Portugal, Romania, Slovakia, the Czech Republic and China. One study reports that one in seven German jobs is “directly or indirectly dependent on the car industry.” As a global company, VW sees a viable future by investing in China, and this alienates many Germans. Manufacturers of Renaults and Fiats face the same dilemma. Some pessimists predict the ultimate demise of the western European car industry within the next 15 years. But lessons can be learned from the highly publicized struggle of US firms. Production plants in the southern US perform well, even while paying wages of $25 an hour, by remaining flexible, filling orders quickly and producing high quality products. Likewise, stricter standards to reduce emissions and conserve fuel could also allow troubled firms to find market niches with new energy-efficient and lightweight-material technologies. – YaleGlobal