American Business History for Motor Vehicle Assembler

Contained in this essay is a business history for one of the first motor vehicle assemblers in the United States. Several aspects of the company and the entire industry would be discussed herein.

The company’s organizational structure was at that time hierarchically arranged, with lower management and job levels reporting to top ones—all the way to corporate governance.

The company had a 5000-labor force; most were located in the assembling facilities as assemblers. Marketing employees were scattered all over the country and therefore gave the company a national outlook. Other than employees, the company had a network of associates that provided vital services and support.

Like many other motor vehicle assemblers in the United States, this one, too, was initially located in Detroit, Michigan (Robert, 2005, p. 96). Among the reasons for locating in the Midwest was high concentration of various parts suppliers in the region, which helped reduce the cost of transporting to other areas. In addition, the high concentration of vehicle part makers and assemblers resulted to development of highly skilled population, whose employment increased company productivity.

The three resources needed to run the vehicle assembler included parts and accessories, skilled labor and energy. All three components were widely available in the region and in abidance. In addition, company founders understood that increased demand for respective products would call for more of the three inputs and therefore chose to locate in Detroit, a city famed for its ability to provide industrial environmental support to motor assemblers (Nelson & Stephen, 2001, p. 147).

As mentioned earlier, parts and accessories were sourced from independent suppliers although the company was manufacturing some. Labor was readily available and the company embarked on retraining employees as a way of improving assembling skills. Power was bought from independent producers who had proved reliable on that front.

The initial capital to start the business was $650 Million that was raised from banks and share offering. The company founders first embarked on seeking bank loan on which they raised about $250 Million. The industry’s potential to create money for investors led to several wealthy individuals seeking to provide capital for the company, on which another $150 Million was realized. These amount was however not enough capital, which led to founders floating shares in New York Stock Exchange. Investors from all walks of life applied for the stock. In fact, company shares were over subscribed by over 100 percent.

The final products (motor vehicles) were supplied to customers through company owned dealerships in major cities (Stephen, 2003, p. 54). The company was also encouraging individual entrepreneurs to establish own outlets to market company products.

Discounts and other incentives resulted to establishment of privately owned dealership all over the country, and thus gave the company a national outlook. The company was finally able to reach its target market—all Americans hungry of enjoying the newly found mobility (Haruhito & Kazuo, 1995, p. 108).

The motor vehicles were competitively priced in order to appeal to the target market. To publicize the products and create differentiation from competitors, the company was undertaking campaign tours throughout the country; privately owned dealerships were provided with assistance in marketing around respective jurisdictions.

Despite the many benefits of mobility provided by motor vehicle, the company and the entire industry were concerned with fatal accidents, which resulted to legal considerations on assemblers’ liability (David, 2004, p. 18). Industry participants thus embarked on warning customers on the dangers and the need to be careful when operating motor vehicles.

References

David, A. (2004). The Genesis of American Mass Vehicle Production. Baltimore: JHU.

Haruhito, S. & Kazuo W. (1995). Fordism Transformed. New York: OUP.

Nelson, L. & Stephen, M. (2001). On the Line. Urbana: UoI.

Robert, A. (2005). History of  US Auto Industry. Albany: SUNNY.

Stephen, M.  (2003). Competition Management in US Auto Industry. Albany:  SUNNY.