What’s next for the car industry? Apr 21, 2008



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What’s next for the car industry?

Apr 21, 2008


Every automobile on the roads of the world reflects a long and complex chain of industrial production and energy usage. Yet we live in a world where many of the highest quality resources and energy supplies have already been exploited and lower quality resources are more expensive to extract and exploit, if they are even available. So the world’s automobile industry is in the midst of a revolution in both resource availability and energy consumption. 
What it takes to build a car

Today the automobile business is vast. It is a global industry that has evolved by leaps and bounds in the 100 years since Henry Ford made his famous remark in 1908 about building “a car for the great multitude.” The worldwide customer base includes at least a billion people — spread over six continents — who have income sufficient to buy a car or small truck.


According to figures assembled at the MIT Sloan Automotive Laboratory, there are about 700 million automobiles and light trucks in the world. About 30 percent of those vehicles are in North America. 
Every car requires steel, aluminum, copper and lead. Each car requires rubber, plastic, and myriad of other petroleum and natural gas by-products. And there is much else in the long industrial ladder of automobile production. Just think in terms of the energy that goes into processing materials, fabricating parts, building components, assembling a finished product, and all the transportation along the way.
In addition to the basic energy and material resources that go into manufacturing an automobile, the sheer number of vehicles reflects a lot of fuel tanks to fill with gasoline and diesel. And this does not even touch on the energy and resources that go into building road systems.
The last 25 years

The oil shocks of the 1970s — in both price and availability — spurred improvements in auto energy efficiency within the US as well as worldwide. In the US, the increase in fuel efficiency was related to rising costs for gasoline, as well as government mandates for higher fuel efficiency dating from the late 1970s.


On average over the past 25 years, the typical power train of gasoline-fueled automobiles in the US has improved in efficiency by about one percent per year according to data gathered by MIT. One percent improvements may not appear to be much, but the compound improvement in the typical US automotive engine over 25 years has been about 30 percent.
There has been even more progress in the fuel efficiency of diesel engines over the past 25 years. Diesel power trains are no longer the sooty, “knock-knock” devices that they were back in the days of disco. Most cars sold today in the European Union (EU), for example, are powered with clean-burning, fuel efficient, smoothly running diesel engines.

In fact, the demand for diesel fuel in Europe is such that EU refineries routinely ship surplus gasoline to sell into the North American market. And in North America the relatively low prices for gasoline throughout the 1980s and 1990s discouraged the use of diesel engines.


So there have been significant improvements in automobile power train efficiencies over the past couple of decades. But have these improvements translated into any overall reduction in demand for fuel? No.
In 2007 motor fuel consumption in the US was as high as it has ever been. (Although according to the American Petroleum Institute, demand for motor fuel may be at a plateau due to price increases at the pump in 2006 and 2007.) In the past 25 years we’ve seen more people driving more cars for more miles. But compounding the fuel issue, the cars that people are buying and driving tend to weigh more and offer higher performance.
Is a car-dependent culture sustainable?

As I’ve said over and over again, we live in a world of peaking oil output, and of energy and resource scarcity.


It helps to view the age of the automobile - and its future - as a systemic whole. And some social critics are out in front of the broad discussion, with a sharp focus on the automobile and what it has brought us as a society. James Kunstler, for example, author of highly regarded books such as The Geography of Nowhere and The Long Emergency, believes that the car-dependent suburban build-out of the US may be “the greatest misallocation of resources in all of human history.”

That is, in an era of expensive energy and scarce resources, a car-dependent culture has no real future and is in fact a hindrance to progress in other directions. That is quite a viewpoint, well-presented by Kunstler in his writing. It’s depressing, but it sure gets your attention.


Criticism of the automobile culture is not confined just to social commentators like Kunstler. Another remarkable indictment comes from no less an automotive insider than Prof. John Heywood, the director of the MIT Sloan Automotive Laboratory. He has stated that “cars may prove to be the worst commodity of all.” According to Prof. Heywood, cars are “responsible for a steady degradation of the ecosystem, from greenhouse emissions to biodiversity loss. What’s worse, even if we improve vehicle efficiency, turn to fuel hybrids or make rapid advances in hydrogen-based fuel technologies, the scale for slowing down the degradation may run to the decades. Turning the curve won’t be easy.”

People are going to have to do things differently

You can agree or disagree with the broad themes of Jim Kunstler or John Heywood. But there’s no argument with one of Prof. Heywood’s points. Wherever we are going, it will not be easy to “turn the curve.” Looking forward, some people believe the oil just is not there to fuel cars in the future in the way that we did it in the past. So a lot of people are going to have to do things differently. . . .



In addition, auto designers are coming up with new ways to eliminate weight and drag. (At higher speeds, up to 70 percent of the energy used to turn the wheels on a car goes just to push the air out of the way of the chassis.) The auto industry is looking towards different sorts of fuels, and moving towards what is called fuel-flexibility. 
Hopefully this will lead us to a great new investment in the car of the future.

Adapted from Byron W. King for Whiskey and Gunpowder as reprinted in MoneyWeek. 2 April 2009 .
Questions for Investigation



  1. How has resource availability influenced industrial growth? Use evidence from the automobile industry to support your answer.




  1. How did decisions of entrepreneurs influence the growth of industry in America during the early 20th century? Use evidence from the automobile industry to support your answer.




  1. How did decisions of entrepreneurs like Henry Ford and others in the automobile industry differ from decisions made by earlier industrialists? How might the fact that automobiles are sold directly to consumers have influenced these decisions?




  1. How did the growth of industry affect migration within the United States? Use evidence from the automobile industry to support your answer.




  1. How did the growth of industry affect immigration to the United States? Use evidence from the automobile industry to support your answer.




  1. How did growth of industry affect the interactions between workers and the owners? Use evidence from the automobile industry to support your answer.




  1. How did the growth of industry affect Michigan’s economy? Be sure to identify a time period under study and use evidence from the automobile industry to support your answer.




  1. How did the growth of industry affect labor relations in Michigan? Be sure to identify a time period under study and use evidence from the automobile industry to support your answer.




  1. How did the automobile industry change the nature of American society? Consider where people live and work (land use) and how the automobile provided a new meaning to freedom.


Websites for Case Study Research
General Information

Automobile History. History.com. 3 April 2009 .
“Automobile History – Part 1 – The Early Years.” Great Achievements. 3 April 2009 .
Ford Model T – 100 Years Later. YouTube. 3 April 2009 .
The History of the United States. The USAonline.com. 3 April 2009 .
Industrializing America. America’s History in the Making. Annenberg Media. 3 April 2009 .
Lampard, Eric Edwin. U.S. Industrialization. 3 April 2009 .
Sugrue, Thomas J. “Becoming a Motor City: Immigration, Migrants, and the Auto Industry.” From Motor City to Motor Metropolis: How the Automobile Industry Reshaped Urban America. Automobile in American Life and Society. 2004 .
The Showroom of Automotive History. The Henry Ford. 3 April 2009 .
Resource Use and the Environment

“History of Automobile Body and Chassis.” Car-Body Design. FTM Studio. 3 April 2009 .


Melosi, Martin V. Introduction. “The Automobile and the Environment in American History.” Automobile in American Life and Society. 2004 .
- - -. “Environomental Cost of the Automobile Production Process.” The Automobile and the Environment in American History. 3 April 2009 .
Natural Resources. 3 April 2009 .
Henry Ford

“The Assembly Line and the $5 Day – Background Reading.” State of Michigan, Department of History, Arts, and Libraries. 3 April 2009 .


Ford Motor Company. Idea Finder. 7 April 2009 .

Gartman, David. Tough Guys and Pretty Boys: The Cultural Antagonisms of Engineering and Aesthetics. The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 6 April 2009 .

Henry Ford. The Assembly Line. Massachusetts Institute of Technology. 3 April 2009 .

“Henry Ford Changes the World, 1908.” Eyewitness to History. Ibis Communications, Inc., 3 April 2009 .
“Henry Ford’s $5-a-Day Revolution.” Ford Motor Co. 3 April 2009 .
The Life of Henry Ford. The Henry Ford. 2 April 2009 .
The Rouge : An Overview PowerPoint Slide Show. The Henry Ford. 6 April 2009 .

Shestokas, David J. “The Wisdom of Henry Ford.” The Economic Crisis and its Origins. 3 April 2009 .


Village Industries Program. Ford Motor Company. 7 April 2009 .
Migration in America

“Detroit’s Great Migration.” CBS Media and WKBD. 3 April 2009 .


Martin, Elizabeth Anne. “Detroit and the Great Migration, 1916-1929.” Bentley Historical Library. University of Michigan. 2 April 2009 .
Sugrue, Thomas J. Motor City to Motor Metropolis: How the Automobile Industry Reshaped Urban America. The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 3 April 2009 >.
Immigration to America

The Factory. Labor Matters. School of Industrial and Labor Relations, Cornell University, 2009. 3 April 2009 .


Virtanen, Keijo. ”The Influence of the Automotive Industry on the Ethnic Picture of Detroit, Michigan, 1900-1940.” Publications of the Institute of General History. University of Turku (1977). 3 April 2009 .
Sugrue, Thomas J. Motor City to Motor Metropolis: How the Automobile Industry Reshaped Urban America. The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 3 April 2009 >.
Interactions between Workers and Owners

Meyer, Stephen. Introduction: The Degradation of Work Revisited: Workers and Technology in the American Auto Industry, 1900 – 2000. Automobile in American Life and Society. 2004. 2 April 2009 .


- - -. “Labor in the Craft System.” The Degradation of Work Revisited: Workers and Technology in the American Auto Industry, 1900 – 2000. Automobile in American Life and Society. 2004. 2 April 2009 .
- - -. “More of the Same: The Rise of Sloanism and Flexible Mass Production.” The Degradation of Work Revisited: Workers and Technology in the American Auto Industry, 1900 – 2000. Automobile in American Life and Society. 2004. 2 April 2009 .
Organizing the United Auto Worker at the Rouge PowerPoint Slide Show. The Rouge Tour. The Henry Ford. 6 April 2009
The Workers. Labor Matters. School of Industrial and Labor Relations, Cornell University, 2009. 3 April 2009 .
Effect on Michigan

Burton, Clarence M. The City of Detroit (1701-1922). 3 April 2009 . See pages 533-536.


Henry Ford. Detroit Historical Society. 3 April 2009 . (Slide 4)
“The Making of Modern Michigan.” Michigan State University Library. 3 April 2009 .
Organizing the United Auto Worker at the Rouge PowerPoint Slide Show. The Rouge Tour. The Henry Ford. 6 April 2009 .
Sugrue, Thomas J. “Living in the Motor City: Autoworkers, Race, and Urban Geography.” From Motor City to Motor Metropolis: How the Automobile Industry Reshaped Urban America. Automobile in American Life and Society. 2004. 2 April 2009 .
- - -. “Motor City: The Story of Detroit.” The Historian’s Perspective. Gilder-Lehrman Institute. 3 April 2009 .
- - -. Motor City to Motor Metropolis: How the Automobile Industry Reshaped Urban America. The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 3 April 2009 >.
Virtanen, Keijo. ”The Influence of the Automotive Industry on the Ethnic Picture of Detroit, Michigan, 1900-1940.” Publications of the Institute of General History. University of Turku (1977). 3 April 2009 .
Wright, Richard A. “Chapter 3 – How Detroit became the Motor City.” A Brief History of the First 100 Years of the Automobile Industry in the United States. The Auto Channel. 3 April 2009 .
Changing American Society

The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 3 April 2009 .
The Automobile. Powered to Transform Society. Labor Matters. School of Industrial and Labor Relations, Cornell University, 2009. 3 April 2009 .
“Early Adventures with the Automobile.” Eyewitness to History. Ibis Communications, Inc., 3 April 2009 .
Henry Ford. Detroit Historical Society. 3 April 2009 . (Slides 1 and 2)
“The History of the Automobile.” 3 April 2009 .

Melosi, Martin V. The Automobile Shapes The City. The Automobile in American Life and Society. University of Michigan, Dearborn. The Henry Ford. 2004. 3 April 2009 >.

Rubric for Case Study

Attributes

4

3

2

1




Answers the question presented

The presentation thoroughly and accurately answers the question presented.

The presentation answers the question presented.

The presentation attempts to answer the question presented but does not clearly do so.

The presentation does not address the question presented.

Uses evidence to support ideas

The presentation clearly uses relevant and accurate evidence to support the ideas presented. The evidence consists of information from the automobile industry as well as from at least one other industry for comparison.




The presentation clearly uses relevant and accurate evidence to support the ideas presented. The evidence consists of information from the automobile industry.

The presentation clearly uses evidence to support the ideas presented. The evidence consists of information from the automobile industry and is more accurate and relevant than not.

The presentation uses little evidence to support the ideas presented. The evidence consists of information from the automobile industry but is either not accurate or not relevant.

Presentation style

The presentation is creative and engaging. It follows a logical sequence and all group members participate. All group members demonstrate a sophisticated understanding of the topic.




The presentation follows a logical sequence and all group members participate. All group members demonstrate an understanding of the topic.

The presentation mostly follows a logical sequence and most group members participate. Most group members demonstrate an understanding of the topic.

The presentation does not follow a logical sequence and there is uneven participation of group members. Most group members do not demonstrate an understanding of the topic.

Background Material

Interstate Commerce Act

As the United States continued to industrialize in the second half of the nineteenth century, Americans became more and more concerned about the unfair competition created by monopolies. In particular, railroads were able to control their markets and manipulate rates to their own advantage. A number of states, including Ohio, had unsuccessfully attempted to regulate railroads before 1887. Ohio had created a state commission to report on railroad and telegraph rates as early as 1867, but this commission did not have any authority to change rates or to order the railroad companies to change their policies. Early efforts to bring some form of regulation to the giants were made at the state level, but those measures were later struck down by the U.S. Supreme Court.


As a result of the failure of states to regulate railroads, the United States Congress passed the Interstate Commerce Act in 1887. The Interstate Commerce Act created the Interstate Commerce Commission, the first true federal regulatory agency. It was designed to address the issues of railroad abuse and discrimination and required the following:

  • Shipping rates had to be "reasonable and just"

  • Rates had to be published

  • Secret rebates were outlawed

  • Price discrimination against small markets was made illegal.

Unfortunately, the Interstate Commerce Commission also faced limitations during the late nineteenth and early twentieth centuries. The commission was only authorized to investigate companies whose business crossed over state lines. If the railroad only operated within one state, the Interstate Commerce Commission did not have any authority over it. The commission also found that the courts usually ruled in favor of the companies when cases were prosecuted. A total of sixteen cases made their way before the United States Supreme Court between 1887 and 1906, and the court only upheld the commission's decision in one of those cases.



From:

Interstate Commerce Act. U.S. History.com. 6 April 2009 Interstate Commerce Act. Ohio History Central. 6 April 2009 .



The Sherman Antitrust Act of 1890


Original Text

In My Own Words

Sec. 1. Every contract, combination in the form of trust or otherwise; or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.




Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.




Sec. 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any States or States or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.



The Sherman Antitrust Act of 1890


(continued)

Original Text

In My Own Words

Sec. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the courts shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition and before final decrees, the court many at any time make such temporary restraining order or prohibition as shall be deemed just in the premises.




Sec. 5. Whenever it shall appear to the court before which any proceeding under Section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.





Sec. 6. Any property owned under any contract or by any combination, or pursuant to any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one State to another, or to a foreign country, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law.




The Sherman Antitrust Act of 1890


(continued)


Sec. 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefore in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.




Sec. 8. That the word "person," or "persons," wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, and the laws of any State, or the laws of any foreign country.












Trust Busting Cartoon

roosevelt_hunt_medium

"The President's Dream of A Successful Hunt" Clifford Kennedy Berryman, 1907.




The Expedition was Passed.” America’s Story. Library of Congress. 6 April 2009 <http://www.americaslibrary.gov/cgi-bin/page.cgi/jb/progress/monopoly_3>.




Cartoon Analysis Worksheet


Level 1

Visuals

Words (not all cartoons include words)

  1. List the objects or people you see in the cartoon.

  1. Identify the cartoon caption and/or title.

  2. Locate three words or phrases used by the cartoonist to identify objects or people within the cartoon.

  3. Record any important dates or numbers that appear in the cartoon.

Level 2

Visuals

Words

  1. Which of the objects on your list are symbols?

  2. What do you think each symbol means?

  1. Which words or phrases in the cartoon appear to be the most significant? Why do you think so?

  2. List adjectives that describe the emotions portrayed in the cartoon.

Level 3

  1. Describe the action taking place in the cartoon.

  2. Explain how the words in the cartoon clarify the symbols.

  3. Explain the message of the cartoon.

  4. What special interest groups would agree/disagree with the cartoon's message? Why?

Cartoon Analysis Worksheet. National Archives and Records Administration. 6 April 2009 <http://www.archives.gov/education/lessons/worksheets/cartoon.html>.

Quotations about Economic Concentration

Quote #1:

1898 was the beginning of great industrial organization....Within a period of three years following, 149 such reorganizations were effected with total stock and bond capitalization of $3,784,000,000....The success of these [re-]organization led quickly on to a consolidation of combined industries, until a mere handful of men controlled the industrial production of the country....

No student of the economic changes in recent years can escape the conclusion that the railroads, telegraphs, shipping, cable, telephone, traction, express, mining, iron, steel, coal, oil, gas, electric light, cotton, copper, sugar, tobacco, agricultural implements and the food products are completely controlled and mainly owned by these hundred men....With this enormous concentration of business it is possible to create, artificially, periods of prosperity and periods of panic. Prices can be lowered or advanced at the will of the "System."

--- Robert LaFollette, 1908 (An American politician who served as a US Congressman; then as Governor of Wisconsin from 1901-1906; Republican Senator from 1906-1925; and ran for President of the United States as the nominee of the Progressive Party in 1924).



Quote #2:

The effort to restore competition as it was sixty years ago, and to trust for justice solely to this proposed restoration of competition, is just as foolish as if we should go back to the flintlocks of Washington's continentals as a substitute for modern weapons of precision....Our purpose should be, not to strangle business as an incident of strangling combinations, but to regulate big corporations in a thoroughgoing and effective fashion, so as to help legitimate business as an incident to thoroughly and completely safeguarding the interests of the people as a whole.

--- Theodore Roosevelt (President of the United States 1909-1912, Ran as Progressive Party candidate in 1912).


The Pullman Strike

During the late 19th and early 20th centuries, Americans witnessed many strikes.  Their causes varied.  Sometimes economic grievances--low pay, and, especially, long hours--led to strikes.  Sometimes the conflicts were more subtle, as managers tried to increase their control over the work process. Usually, the basic issue was the right of workers to have unions and to engage in collective bargaining. Typically, strikes ended when the government applied its power against the unions. One strike in particular, the Pullman strike of 1894, was especially important in American perceptions of "the labor problem" of the time.  The Pullman strike brought Eugene Debs national attention, and it led directly to his conversion to socialism.  The events of the strike led other Americans to begin a quest for achieving more harmonious relations between capital and labor while protecting the public interest.

The company's manufacturing plants were in a company-owned town on the outskirts of Chicago. Pullman publicized his company town as a model community filled with contented, well-paid workers. The Pullman workers, however disagreed, especially after the onset of the economic depression that began in 1893.  During that depression, Pullman sought to preserve profits by lowering labor costs. When the firm slashed its work force from 5,500 to 3,300 and cut wages by an average of 25 percent, the Pullman workers struck. The American Railway Union (ARU), led by Eugene Debs, was trying to organize rail workers all across the country. The Pullman workers joined the ARU, and Debs became the leader of the Pullman strike.

The ARU enjoyed wide influence among the workers who operated trains.  To bring pressure on Pullman, the union asked trainmen to refuse to run trains on which Pullman sleeping cars were attached. The union told the railroads that their trains could operate without the Pullman cars, but the railroads insisted that they had contracts with the Pullman Company requiring them to haul the sleeping cars. The result was an impasse, with railroad workers in and around Chicago refusing to operate passenger trains.  The conflict was deep and bitter, and it seriously disrupted American railroad service.


“The strike ended with the intervention of the United States Army. The passenger trains also hauled mail cars, and although the workers promised to operate mail trains so long as Pullman cars were not attached, the railroads refused. Pullman and the carriers informed federal officials that violence was occurring and that the mail was not going through. Attorney General Richard Olney, who disliked unions, heard their claims of violence (but not the assurances of local authorities that there was no uncontrolled violence) and arranged to send federal troops to insure the delivery of the mail and to suppress the strike. The union leader, Debs, was jailed for not obeying an injunction that a judge had issued against the strikers." [Quoted from Mansel G. Blackford and K. Austin Kerr, Business Enterprise in American History (3rd. ed.; Boston: Houghton Miflin, 1994):183-84]

Source: The Pullman Strike. Multimedia Histories. Ohio State University. 6 April 2009 .

Case Preparation Sheet




1. What did the defendants do? List the facts of the case. Use your textbook and the handout on the Pullman Strike to assist in your description.



2. How exactly did they break the law? Refer to the Sherman Anti-Trust Act.


3. What flaws are there in the prosecutor’s case?


4. Were the actions of the defendants justifiable? Make an argument to support your side.



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