A clash of new and old forms of capitalism exposes the anarchy and wastefulness within our rotten system, writes Chris Bambery
Cars have never excited me but the car industry and its role in global capitalism is always intriguing. Firstly, we have Donald Trump promising to bring auto jobs back to Michigan. On a visit to Flint, just after Ford announced it was moving all its small car production from there to Mexico he famously remarked: "It used to be, cars were made in Flint and you couldn't drink the water in Mexico. Now, the cars are made in Mexico and you cannot drink the water in Flint.”
Just how can Trump deliver to those who voted for him in the likes of Detroit and Flint? It ain’t going to easy. Secondly there is something interesting going on in the race to produce the first successful driverless (or autonomous) car. Again I’m not wildly excited about the technology itself but the antagonism between the competing corporations tells us a lot about how capitalism operates, and how wasteful and destructive it is.
The race to build a viable driverless car has been described as a “crowded and intensely competitive field.” Larry Burns, a professor of engineering at the University of Michigan and a former GM executive who is advising Google explains on just how much is at stake: “If a first-mover captures a 10% share of the three trillion miles [driven in the United States] per year and makes 10 cents per mile, then the annual profit is $30 billion which is on par with Apple and ExxonMobil in good years… so, the potential is huge.”
What has really transformed this race is the way high-tech corporations like Google and then Apple have entered this race, beginning in 2010 when Google produced seven Toyota Prius hybrids (only part driverless). Its entry into the market and its link up with a Japanese car maker set alarm bells ringing in the Detroit head offices of the big three US auto makers: General Motors, Ford and Chrysler.
Those Detroit executives recalled they had been caught out before and paid a hefty price. That was in the 1980s when Japanese imports secured domination of low cost cars sold in the US and European models made by BMW, Mercedes and Jaguar took the top end. There is also a fear that Google and Apple might become unstoppable, as those same executives gaze into their iPhones.
In September 2015, 25 companies were working on autonomous vehicles. By November 2016 that numbered 33. These included not just high-tech companies but Uber and its rival Lyft. The new kid on the block, Silicon Valley-based Tesla, has also caused ripples in Detroit. They, along with their European and Japanese competitors, have decided to enter this new market and began sniffing around potential link ups with high-tech firms. In March this year GM spent $1 billion buying up a small self-drive start up called Cruise Automation.
That opened the floodgates: Toyota linked up with Uber; Volkswagen spent $300 million investing in a ride sharing company, Gett; Google entered into partnership with Fiat Chrysler; and Apple invested $1 billion into China’s Didi Chuxing. This was all in just one month. GM responded by investing $500 million in Lyft.
This was also a cut throat business. Back in 2013, Google’s investment wing had put $258 million into Uber. Now it is competing with Google directly in producing a self-driving car. Uber has also dropped its link with Toyota. The attraction of driverless taxis for Uber is glaringly obvious; it removes the cost of employing human drivers.
But the point is that despite 33 companies working on autonomous vehicles only a handful are going to succeed in a establishing a market. A huge amount of what has and what will be spent will be wasted because there is no guarantee who is going to break through. There will also be major casualties because there always is.
Returning to Trump’s promise to repatriate jobs. During the presidential campaign he criticised Ford for transferring production of its Focus model from Michigan to Mexico, promising to impose a tariff on any entering the US. But the Focus cars currently made in the US have half of their parts made elsewhere: 20% in Mexico but with engines and transmissions coming from Europe.
Conversely, Honda currently assembles its CR-V model in Mexico, but 70% of the parts come from the USA and Canada. Production is scheduled to be transferred to Indiana. Car production is spread across North America and unscrambling that will be very difficult.
Trumps promise also fails to take into account that over the last two decades car production within the USA has shifted from Michigan and Indiana to the US South where misnamed Right to Work laws make union organisation very difficult. In 2003 22% of US car production was located there, by 2013 it was 54 %. Much of that is down to new plants established by European and Japanese corporations.
As recently as 2003, just 22% of the total U.S. output in automotive factory emanated from the 22 Right to Work states. The share of US auto production located in those 22 states grew from 39% to 54% between 2003 and 2013. Two years ago Michigan and Indiana passed Right to Work laws.
There is still a huge concentration of the industry there but it is now part of a production corridor running south from the Mid-West to the Gulf of Mexico. So if Trump was to deliver on his pledge he would have to relocate jobs from Mexico, but also from Alabama and Mississippi. I can’t see that happening.
There are real winners and losers from the globalisation of the car industry. A visit to the ravaged cities of Detroit or Flint will confirm that. But that is down to giant corporations which dominate the industry, including the US ones. It’s also been about weakening the once powerful United Auto Workers labour union. They have fallen back into trying to ally with the bosses, accepting poorer wages and pensions as part of the bargain.
Reversing this is the key to securing well-paid jobs in Michigan, not relying on boardroom shenanigans and Donald Trump.
Chris Bambery is an author, political activist and commentator, and a supporter of Rise, the radical left wing coalition in Scotland. His books include A People's History of Scotland and The Second World War: A Marxist Analysis.