Foreign Investment:

Growing Japanese Presence in the U.S. Auto Industry

NSIAD-88-111: Published: Mar 7, 1988. Publicly Released: Mar 28, 1988.

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In response to a congressional request, GAO provided information on the impact of Japanese automakers' investments in the United States on U.S. auto manufacturers and parts suppliers, focusing on whether: (1) foreign investment created job losses in the U.S. automobile industry; and (2) U.S. parts suppliers had the opportunity to supply parts for U.S.-based foreign auto manufacturers.

GAO found that: (1) Japanese-affiliated automakers in the United States used fewer workers and parts than their domestic counterparts; (2) Japanese automakers imported higher percentages of auto parts than U.S. automakers because of price, quality, and delivery time; (3) although some U.S. parts suppliers have been able to sell parts to Japanese-affiliated automakers by adapting to the rigorous requirements, they are at a disadvantage because of differences in language, culture, and business practices; and (4) in 1987, there were 104 Japanese-affiliated parts suppliers in the United States. GAO also found that: (1) U.S. auto-related employment will probably be substantially lower in 1990 due to gains in worker productivity, increased use of foreign parts, and increased imports; and (2) net job loss or gain will depend on the extent to which Japanese-affiliated production displaces U.S. production.

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