Three Big problem

According to the fact about Three Big (GM, Ford and Chrysler) which on pages 78-79, we know that year 2008 and year 2009 are hard year for the U.S auto industry. In this blog, I am going to focus on
some causes and how to aid.

The book told us that the cost of GM to health care per vehicle is about $1500 in 2008. In contrast, Toyota cost around $200 per vehicle. Definitely, it made the labor cost  a lot of differences. That made Three Big has less comparative advantage on their labor cost and on their goods.
According to  Stolper-Samuelson theorem(on page 78), their goods costs more foreign competitors.
So we have to say, the cost of health care take a port of responsibility to the thing which affects comparative advantage.

However, the experience of Ford also told us the U.S business can compete with countries who offer national healthcare. "As for Ford, its market share increased and the firm returned to profitability at the end of  2009."(Globalization Drives Changes for U.S. Automakers) In 2009, Ford put its new product, New Fiesta, into the market. The new Fiesta has a very low mpg and a low price but a high level of safety factor and a good looking. It changed the profile of U.S. vehicles which all cost fuel too much. That means innovation, technology and other comparative advantages also can make U.S. business compete with foreign business which got national policy advantage.

In addition, loan to auto resource business, increasing the tariffs of auto industry, reducing the tax of auto industry, encouraging the auto innovation and developing new auto technology and encouraging create new manufactory in low labor cost countries (encouraging means rewarding ) can also make U.S. auto industry more competitive.