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Lecture

GGR221 Lec 5

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Department
Geography
Course
GGR221H1
Professor
Deborah Leslie
Semester
Winter

Description
Lec 5 Industrial Restructuring, Post-Fordism and the Canadian Automobile Industry February-04-14 4:01 PM Lecture 5: Industrial Restructuring, Post-Fordism and the Canadian Automobile Industry • the history of the Canadian automobile industry 1. Automobile industry very important to Canada, key to escaping the staples trap 2. Handout: 3. GM, Chrysler, Ford was key 3 but today many others • Last several decades: a crisis in the Canadian and US automobile industry • Demise of the Fordist system of production • Rise of a new model of production, some call Post-fordism History of Auto-industry • prior to the 1960s, Canadian industry separate • even when cars made by American companies in Canada, being made for Canadian market. Why? because Canada had tariffs on automobiles and parts prior to 1960s • = two functionally separate systems but wasn't working very well • Industry began to decline- not producing enough cars in Canada with demand • Government realized manufacturing was very important • So they struck a roman commission Bladen Commission (1961) who said that problem was small size of domestic market • Solution was to rationalize entire NA auto-system- an integrated manufacturing across 2 countries • 1965 Auto Pact- "conditional" free-trade agreement • took down all tariffs- cross manufacturing for US and Canada • very strict conditions= Canadian Value Added requirements (CVA) • yes, can produce cars for US market and vice versa • equivalent value: if US companies producing X amounts of cars in Canada, need to make x value in Canada (doesn't have to be automobile) • production= market • this worked really well because industry grew! Why? • overall cheaper labour costs- free Canada health care system • value of Canadian $ began to fall- made Canada even more competitive • we got growing # of jobs over time • but also some draw backs to it (HANDOUT) ○ created spatial division of labour- all good jobs (management, engineering, R&D) located in US ○ Canada got lower skills jobs (production, final assembly plants that were labour intensive- all to take use of cheaper labour costs) • By 1970s, US Fordist system of manufacturing declines and Canada also suffers= crisis! • demise of the Fordist system of production Post-Fordism " flexible accumulation" • new regime of accumulation: characterized by a flexible model of production • vertical disintegration and economies of scope • Ford's model was vertical "integration" where you make the car and all parts • Ford was all about standardization= economies of scale • new model based on opposite- relatively smaller batches, diversified array of products • different influences: Japanese production system, Italian artisanal model (flexible specialization in fashion/ceramics), German model • new model of consumption as well: differentiated, segmented • key in post-war was to create large middle class that would consume products • today, markets are fragmented- eroding middle class and arising super class • producers/manufacturers forced to pick (elite products? lower-quality cheaper?) • segmented in tastes and market niches but also along lines of class • unequal pattern of consumption • New mode of regulation: neoliberalism New Models of Production: The Japanese Production System • How is the manufacturing changing today? One key influence in change is auto-industry in Japan • "JPS- Japanese production system", Lean manufacturing, Toyotaism • this type of industrial system is now diffuse all around the world • growth Japanese industry slow until 1930s • really wasn't any auto-industry before 1930s, Ford went into Japan to sell cars • Ford gave "birth" to Japanese industry (Nissan was supplier to Ford) • grew out of US investment in Japan • grew out of government support • 1952, MITI- Ministry of Trade and Industry designated automobiles key "industry of the future" • Government decided to invest! Lectures Page 1 • Government decided to invest! • Huge tariff wall around Japan to make it difficult for cars to be imported • "forced out" of GM and Ford • By 1980, overtook US as #1 producer • Why are they so much more productive/efficient? • state, but also a far less competitive form of capitalism existed • firms embedded in four forms of industrial organization- more collaboration/relationships • Gurupu: group of companies (usually 1 of each kind of company; bank, steel, electronics, automobile) who cooperate in different sectors (i.e. bank in your gurupu gives favourable interest rates). Ensures that investment happens on long term scale. "Patient capital"- not always wanting to see its returns • Keiretsu: different tiers of suppliers- car is made by a lot more smaller firms. First tier making breaks, 2nd tier making screws etc. Sub contracting a lot more parts but cooperating with them. Allows firm to learn a lot from other players in industry • Industry associations: automobile makers all belong to an association that are very meaningful- • "sunrise" industries that share information and collaborates • but also "sunset"- how can an industry (i.e. textiles) survive? • Cooperative groups: in each of the tiers in keiretsu, a lot of cooperation between small companies making similar products or those with similar processes • Japanese production system (lead manufacturing) • just-in-time (JIT) • Fordism was a "just-in-case"- stabili
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