Impact of Foreign Competition

• Foreign Competition


  Technologically superior rivals in Germany and Japan competing with American companies
• Foreign Competition

  Led to increased unemployment and a trade deficit
• By 1978-79 the annual US trade deficit was around $40 billion
• Automobile Industry


  Inexpensive and well-made Japanese car imports were extremely attractive to American consumers
• Japanese Companies had 23% of the US Automobile Market by 1981
• Sales of American cars fell

  Manufacturers continued to produce 'gas guzzlers' that used a great deal of fuel, while Japanese cars were smaller and more economical
• Chrysler lost billions and needed a controversial $1.5 billion Government bailout in 1980
• Number of permanent jobs in the automobile industry fell from 940,000 in 1978 to 500,000 in 1982
• Car Manufacturing in Detroit- unemployment reached 24% by 1980
• American reactions to Foreign Competition

  • Attacked Toyota's with sledgehammers
  • United Auto Workers asked President Carter to restrict Japanese car imports
  • Sported 'Buy American: the job you save may be your own' bumper stickers
  • Many American Companies moved production abroad or bought finished products form foreign manufacturer for whom labour was cheaper and less assertive
• The US remained the world's most affluent society with a far higher GNP than its nearest rivals