Auto Industry Structure and Resources Essay

According to Taylor (2012), profits are going to be derived from a handful of mega-companies in North America, Europe, and Asia. These companies include General Motors (GM), Ford, Toyota, Volkswagen, Renault/Nissan, Hyundai/Kia, and Fiat/Chrysler. The chart below, interpreted from Taylors article, demonst points global sales of railway car makers in 2011 and what is predicted to be the companies global sales in 2020. (Taylor 2012). This chart reflects which auto makers are at the top in terms of sales, so this could wastedively be interpreted as the companies that are the strongest within the indus discover.An intentness is a group of firms that grocery place products which are close substitutes for to each one other. Some industries are more paying than others receiv satisfactory to the dynamics of competitive structure of an industry. There are essentially five forces that determine the long-run profit big businessman of an industry threat of accession of new competitio n, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and grad of competition (Porter, 2008). Many companies within the United States and world may timbre to the automotive industry as a possible cash cow. This is due to the large inelastic demand followed with a hefty pay stumble per sale. As a confederacy interested in entering the automotive industry competition, one may find that it is easier said than done. Since 1860, there turn out been everywhere 1,800 manufacturing companies that work entered into this competitive market place within the United States. Of those 1,800 manufacturers, over 760 have gone out of business, leaving a success rate of less than 57% (Georgano, 2000). Entry into this manufacturing arena takes a huge see payment.Procuring machinery, personnel, factories, and raw materials can put a multi-million dollar price note of deckment and overhead before one sale is completed. Before these intricate pieces of machine ry start rolling off the production line, sales strategies and logistics need to likewise be considered sinking more overhead and investment into start up costs. For the manufactures that decide to exit this market, there is a large sum of invested bullion and jobs that are lost.In many situations, losing much(prenominal) a large storey of sunk costs in a plant closure tends to locomote the precursor to company bankruptcy or selling off of the company. The excess inventory, machinery, and other assets leave behind need to be sold off to try to maintain survival of the existing company. If the company has debt, income from selling off assets or the bankruptcy will be utilized to pay these debts. Either way, exiting this market can cause great financial drain and costly repercussions of the companys financial livelihood.In recent years, more manufacturers have taken the financial risk on and been able to enter into the market. The automotive market structure began as an oligopol istic structure due to the limited vendors. In this system, several(prenominal) large sellers have some control over the prices. As m progresses and more domestic and foreign manufacturers enter into the competition, a more perfect competition (many buyers and sellers, none being able to influence prices) is emerging (Business Dictionary. om, 2012) decrease elasticity within the market. Education and training, wages, and technology are three major(ip) factors which impact the quantity and/or skill level of the labor sum up in the auto industry. In reviewing the labor supply, we will divide the industry by business and front-line workers. These two general groups would require great strain in education and skill therefore, the potential labor supply for each should be reviewed separately.The front-line workers in manufacturing, production, and sales of the auto industry generally require minimal education and receive on-the-job skill training. These workers may have a high scho ol diploma and great variance in skill level for manufacturing and sales. They will receive the training needed on the job and their wages will not greatly vary therefore, the violence of changes in training and wages for those workers of the industry would be considered minimal in changes to the supply curve. For this group, advances in technology would have a greater impact.In reviewing the labor supply for the business segment of the auto industry such as business management, engineering, and marketing, this is the population of the industry which mustiness understand and glide by track of changing consumer demands, understand how to maximize opportunity for growth, how to forecast, how to market, and be mod in design and features of automobiles as technology continues to advance and the market the Great Compromiser competitive. According to the Consumer Population Survey (CPS), in 2011 the U. S.Labor Force, age 25 and older, with only a high school education made up over three and a half million potential laborers man in the same year, those unemployed with a college degree equated to or so two million (Bureau of Labor Statistics, 2012). Therefore, the total labor supply for the industry was almost six million with varying skill levels. The auto industry was defecate hard during the recession and is still coping with large structural changes. all over the past couple of years, the automobile companies have closed plants and discontinued brands and they downsized, restructured and thin out budget to bring costs more in line with sales.They also cut jobs, as many as 300,000 or more concord to some estimates. Recently, the profits of the auto industry have turned well-nigh and they are, again, do profits. There is now a shortage of workers with the right skill-set. The contend is finding the right workers with the right skills needed by the workers in the industry, oddly as more teams work globally. Because of the new technologies and operati ons, so called un-skilled workers are rarely needed now. The workers also need problem solving skills and decision making skills.Creating a workforce with these abilities requires a different approach by the forgiving resources team. Better workforce planning is essential to creating the right fit. cable carmakers are bend their attention to building automobiles that either rely less on tralatitious fuel sources or use cheaper renewable sources of energy. These green solutions will delineate consumers. As automakers are turning their attention to new technology, their talent must be able to grow with them. The shift in consumer preferences in the auto market towards hi-tech, fuel-efficient and environmentally friendly vehicles is a significant challenge to the industry.Auto manufacturers and suppliers will have to adapt quickly to the new technology and invest in research and development. Globalization has also put pressure on the auto industry and its traditional workforce. T he future demand will be that auto companies have a flexible workforce that can forever and a day learn and refresh its skills. The workforce must be able to be flexible and the industry must leverage rapid learners and be able to re-train employees and re-design jobs. This will be costly for the automobile industry but will be needed to be successful and beat the competition.There may not be a need for the unskilled worker in the auto industry, but there will always be a need for workers. Their roles will change to keep up with the technology and changing markets. Steel, plastic, aluminum, rubber, and supply are the top five materials used in the automobile production process (George P. , 2012). While some of these materials are derived from a innate(p) resource which could potentially pose risk on quantity, such as steel from iron ore and rubber from petroleum, there are forms of either synthetical or renewable resources for each as well as the ability to recycle all of these materials for reuse.None of these materials are of precious minerals and there are no real variances found in quality of such materials. For example, recycled steel, aluminum, and glass can be used in automobiles because they can be recycled indefinitely without losing their properties (RubberAsia, 2009, Hincha-Ownby, 2010, and Blue, 2012). Historically, the automotive and construction markets have remained the largest consumers of steel, with more than half of the steel produced. everywhere the past few years, china has emerged as the major consumer of steel, with the U. S. ext, followed by Japan. In 2008, the steel industry suffered a decline due to the recession. This was seen by consumers purchasing existing inventories of vehicles rather than buying new stock. The industry turned around in 2009 and continued to grow. Replacement tires are the second highest operating disbursement for commercial fleets, next to fuel (Automotive Fleet, 2011). In 2010, the cost for tires in th e passenger car segment was up 11%. Almost 60 part of the worlds rubber is consumed by the global tire industry. China is the worlds largest rubber consumer