Globalization Drives Changes for US Automakers

Over the past few years, the American car companies lost millions of dollars. General Motors, Ford and Chrysler can not control the increase of the health care costs which affect negatively their competitive advantages, because they increase the price of the American cars and thus, decrease the comparative advantages.

I believe that the car companies should continue to pay the pension and health care costs for workers and retirees for many reasons. First, they have to follow the law of the health-care in United States. Second, because the Big Three had benefited from the bailout provided by the administration of the president George Bush and the president Barack Obama. The main reason of that bailout was to help the American workers to keep their jobs and their benefits package. 

It will be difficult for the Big Three to compete with other countries who offer national health-care. Most of these countries do not have the same wages and health care cost. For example, the hourly wages of workers at Toyota averaged is $24 while it is $30 for workers at the Big Three. American car companies can never compete with Japanese cars because there is a huge difference in the price and also because the Japanese cars are widely viewed as the most reliable and efficient cars in the world.

I think that the American auto industry should move to other producing countries with cheaper labor costs and lower operations costs. It’s important to eliminating domestic auto production because cars can be safely outsourced since they aren’t vital to the American national defense.   

It is true that many workers will lose their jobs if the Big Three outsourced their production. However, that will push other American industries to invest in new products and new technologies with an interesting comparative advantages.