Japanese automakers and the NAFTA environment: Global context

Japanese automakers have become an integral part of the North American economy, with total investment approaching $20 billion, direct employment exceeding 40,000 and 3 million vehicles being built annually. The investment and productive capacity can be considered a function of globalization trends and/or deliberate policy initiatives by governments and firms. This paper briefly introduces the global context for a set of papers that explore how the Japanese automakers responded to the opportunities and challenges posed by the North American market. It outlines the growth of the global automobile industry and periods of foreign direct investment (FDI) by European, American and Japanese firms. The distribution of Japanese investment is shown to vary during the 1990s as production capacity is increased in each major continental market. The Japanese investment in North America is shown to have created new capacity equal to the entire Canadian automobile industry, the fifth largest in the world. New equity linkages are established among major Japanese, American and European automobile producers as joint ventures are formed or significant equity interests established. The global context is set for more detailed consideration of the policies, supply chain, production systems and environmental initiatives adopted by the Japanese automotive firms.