Automotive Industry

Automotive Industry. Dynamism and uncertainty characterized the early American automotive industry. Its scores of tinkerers and entrepreneurs typically assembled rather than manufactured their products, subcontracting for parts from carriage builders, bicycle manufacturers, and machinists. Most companies catered to wealthy consumers until 1908, when Henry Ford's Model T permanently changed the industry.

Sturdy, powerful, and inexpensive, the Model T combined innovative engineering with revolutionary manufacturing methods to become the first mass‐produced car. Ford and his employees introduced economies of scale, creating the world's first assembly line by 1914. That same year, to address the absenteeism and turnover problems of the assembly line, Ford doubled his already competitive wages to five dollars a day. As other manufacturers struggled to keep pace, a wave of mergers swept the industry. Before World War I interrupted production, the industry had expanded its operations, boosted production, cut prices, and made important technological advances.

Automobiles pervaded American life in the 1920s, embodying both the tensions and the flash of the era's developing consumer culture. The decade's volatile market caused 60 percent of all auto manufacturers to fail, and the remainder—based mainly in Detroit—to struggle. While Henry Ford solidified his personal control over the Ford Motor Company, Alfred P. Sloan brought professional management, market forecasting, and basic technical research to General Motors (GM). As cheap used cars challenged the Model T in the low‐priced market, new car sales flattened after 1923 at roughly 3.6 million per year. Ford responded by further cutting Model T prices, while Sloan introduced the annual model change—an innovation Ford adopted in 1927 with his Model A.

Though automobile sales slipped even before Wall Street crashed in 1929, the Depression of the 1930s failed to break America's automotive habit. Cars outnumbered telephones and bathtubs throughout the decade, and if stagnant sales forced GM, Chrysler, and Ford temporarily to halt production in 1932, all three companies again earned profits in 1933, solidifying their dominance as waves of independents went bankrupt. The “Little Five”—Nash, Hudson, Packard, Willys‐Overland, and Studebaker—battled insolvency, watching their market‐share erode over the decade from twenty‐five to ten percent.

Hefty paychecks had always helped Detroit sustain an open (non‐union) shop, but the Depression divided management and labor. Speed‐ups, slashed wages, and layoffs generated unrest, unionization, strikes, and violence. The National Labor Relations Act of 1935 guaranteed unions the right to organize, precipitating an often brutal struggle between Detroit manufacturers and the United Automobile Workers (UAW) of the Congress of Industrial Organizations (CIO). The UAW's forty‐four‐day sit‐down strike against GM in Flint, Michigan, forced the industry to recognize the union in February 1937. Only Ford resisted, though after a strike in which the National Labor Relations Board (NLRB) intervened in 1941, Ford signed the most generous union contract in the industry.

After the United States entered World War II, Detroit became the nation's primary armaments producer. Americans temporarily suppressed their desire for new cars, but the war's end unleashed a flood of pent‐up demand. In the five years after 1945, Americans purchased 21.4 million vehicles, nearly doubling the number of cars in the country. While the UAW “set its house in order” under Walter Reuther, Americans transformed their landscape to accommodate their automobiles, constructing a 41,000‐mile interstate highway system and thronging to new suburban developments. GM, Chrysler, and Ford prospered, but of the Little Five, only Nash survived. Even well‐financed and innovative newcomers like Preston Tucker and Kaiser‐Frazer failed to crack the market, going bankrupt by the mid‐1950s.

New problems plagued the industry in the 1960s. While Ralph Nader publicized the “designed‐in dangers” of American cars, new labor tensions emerged, foreign competition grew, and Congress instituted the first national emissions controls. GM's problems were emblematic: averaging under twelve miles per gallon, its line provoked consumer dissatisfaction when the 1973 OPEC oil embargo raised gasoline prices by 30 percent. Big‐car sales plummeted as small foreign imports penetrated the market, (imports had an 18.3 percent market share by 1975), prompting the industry to pledge—and the government to require—improved fuel efficiency.

After clamoring for smaller, fuel‐efficient cars in the 1970s, Americans again embraced large cars in the 1980s and 1990s as fuel prices dropped. Foreign manufacturers that had broken into the American market in the 1970s joined Detroit in supplying less fuel‐efficient minivans, pickups, and sports utility vehicles to eager buyers. Powerful, entrenched, and increasingly global, the automotive industry by 2000 barely resembled its early predecessor, though throughout the century the industry had been instrumental in establishing patterns of life, economy, and mobility.
See also Bicycles and Bicycling; Depressions, Economic; Energy Crisis of the 1970s; Industrialization; Labor Movements; Mass Production; Motor Vehicles; Suburbanization; Twenties, The.

Bibliography

Allan Nevins and and Frank Ernest Hill , Ford, 3 vols., 1954–1963.
James J. Flink , The Car Culture, 1975.
Stephen Meyer , The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company, 1908–1921, 1981.
David A. Hounshell , From the American System to Mass Production, 1800–1932, 1985.
James J. Flink , The Automobile Age, 1989.
Paul Ingrassia and and Joseph B. White , Comeback: The Rise and Fall of the American Automobile Industry, 1995.

Christopher W. Wells