Geography Reference
In-Depth Information
terms of a particular product, like the motor car, which will also illustrate the
weakness of the model. This innovation begins its stage I with experimentation,
in Germany, Britain and France, in the 1880s and 1890s. New products were
invented and tried on a small scale, with no profit-making at this stage. Many of
the early inventors, who combined with or had already been carriage-makers and
makers of bicycles and other engineering products, failed to make satisfactory
machines or were bankrupted before they could become established in the
market.
In stage II, from around 1900, firms began to grow and the early car
manufacturing industry became established in a few European countries. Some
of this early spread was that of ideas and processes to new firms, while some was
expansion by the very earliest firms. Daimler, for example, the German motor
company, set up in Austria in 1902 and sold patent rights to the British Daimler
company in 1890, licensing Panhard to produce in France from 1891, and in New
York licensing another Daimler Company from 1888 (Maxcy 1981).
In the later part of this stage, in the 1910s and 1920s, the USA became a major
producer, effectively creating a second centre for expansion with two major
firms, Ford and the companies that would link to form General Motors. From
this new base, firms set up branch plants in Britain and elsewhere in Europe—the
first Ford and General Motor plants in Europe are from this time. In the three
years prior to the First World War, the USA already produced 78 per cent of
world car output, and in 1929, 84 per cent of a peak level of world production.
Apart from expansion, this stage saw the emergence of a differentiated industry,
as Ford and General Motors became the largest mass producers and
multinational enterprises, while some of the European manufacturers became
small-scale producers of quality cars as a definite policy.
Stage III, after the Second World War, involved disintegration of the formerly
spatially and vertically integrated industry. Production methods and components
became increasingly standardized, allowing lower cost production for the mass
market and its dominance by a few, up to 20, large firms. This standardization
also allowed labour-intensive operations, notably assembly, to move out to
LDCS because of the lower costs; as competition bites hard and profits go down,
this is a cost-reducing strategy. Movement out was also to overcome national
tariff barriers by producing what were ostensibly locally made cars, although this
is not a central part of the model.
In stage IV, cars are made in many countries, and all sections of the industry
are widely distributed. The pace of innovation slows, although in the car industry,
contrary to Vernon's standard model, there are continuous changes in process as
well as product which make the car a more lasting product than some less
complicated ones. Continuous innovation around a complex product means that
some centres of the industry have remained so for a long time. Apart from
spreading out to most of the world as a set of independent producers, there is also
some attempt at globalization, i.e. the manufacture of a world car or global car
