Cars, Capacity, and Competition in the 21st Century

Flynn, M., McAlinden, S.P., Hill, K., Alkire, K.F., Edwards, M.H. 2000. Cars, Capacity, and Competition in the 21st Century.
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Globalization challenges are particularly complex for automotive suppliers because their processes and economic situations often differ from the vehicle assemblers, as well as from one supplier to another. Suppliers’ volume requirements cover a wide range, and are frequently higher than the scale for effective assembly activity. Moreover, suppliers find production sites differentially attractive because their ratios of capital and labor costs can vary widely. This report reviews the effects of differing constraints on sourcing/production decisions for a simulated car in a model world. Our car consists of three components, and competes in a world of seven countries. The components cover a wide range of capital investment, scale requirements, transportation costs, and tariff levels. The countries represent different size markets, growth potential, and access to regional markets.