Supply chains and locational adjustment in the global automotive industry

Ho Yeon Kim and Philip McCann

Policy Studies, 2008, vol. 29, issue 3, 255-266

Abstract: This paper helps to set the scene for this special issue on automotive restructuring and policy responses. It starts by providing a brief introduction to the different inventory and supply-chain management approaches dominant within the industry at different stages of its evolution, before moving on to outline the spatial implications of these different approaches. The paper then presents a transactions–costs conceptual framework for analysing key features of the auto manufacturing and supply-chain system, using a taxonomy approach. The paper concludes by highlighting the spatial and policy implications for the auto industry which arise from such a transactions–costs analysis. Interestingly, the logic of both a transactions–costs approach and a consideration of knowledge spillovers both point towards the increasing spatial concentration of higher value-added activities. This may have a number of policy implications in terms of the industrial, technology and regional policies required to support and sustain such higher value-added activities. This is also consistent with the view that globalization leads to greater spatial dispersion, as the latter tends to be dominated by lower value-adding activities, with the core locations progressively moving towards higher value-adding activities. Overall, the opposing positive and negative impacts on regional ‘winners’ and ‘losers’ will be more greatly amplified than would previously have been the case. As such, regions benefiting from the immigration of integrated supply-chain networks will tend to maintain their advantageous position in the industry over time. On the downside, regions which lose such supply-chain systems, as seen over the last two decades in many regions in the US, UK and Australia, face a challenging situation, with very limited prospects for redeveloping such systems via policy initiatives.

Date: 2008
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DOI: 10.1080/01442870802159855

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