Creating an Industry as if the Planet Mattered
Chapter 1: The Automotive Industry in Crisis: Economic and Environmental Failure
WHEN IS A CRISIS? In the realm of economics and business, a crisis is rarely a single event or a happening of short duration. When a company becomes bankrupt, or when an entire industrial sector collapses, there may be one or more pivotal moments, but crisis is generally a process or a sequence of events. So it is with the crisis that engulfed the global automotive industry in 2008 and 2009. While it might be said that the industry was the victim of circumstances beyond its control, as industry leaders have been wont to claim, this explanation neglects two important factors. First, the automotive industry was itself part of the ‘circumstances’ in so many ways; and secondly, while the financial upheavals unfolding from late 2007 onward might have been the proximate cause of market collapse and hence corporate crisis for vehicle manufacturers and suppliers, the underlying causes lie buried deep within the long-standing business practices of the industry. This book is not intended to be one of the growing numbers that seek to analyse the convulsions that rippled through the global economy from 2007 onward. There are already several insightful accounts (Shiller, 2008) and doubtless more will arrive. It should be recognized, however, that in so far as the global financial crisis had its roots in massive trade imbalances, and in consumers, governments and companies spending beyond their means, then the automotive industry was undeniably part of the problem. New car sales around the world were, up to 2007, booming...
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