Case | HBS Case Collection | November 2011 (Revised June 2012)

The Big 3 Roar Back

by William W. George

Abstract

The "Big 3"—Ford Motor Company, General Motors, and Chrysler—were all headquartered in Detroit, Michigan. Born between 1903 and 1928, they dominated the automobile industry in the U.S. for decades until they became complacent. In the 1970s they started losing share to better quality, more fuel-efficient foreign imports. By 2008 they were teetering, and two required federal government assistance to stay afloat. Within three years, remarkably, the Big 3 had turned around by improving competitiveness in quality, design, and cost. Ford's Alan Mulally, GM CEO Ed Whitacre, and Chrysler CEO Sergio Marchionne took different approaches to guide their respective companies to improvements in product design, quality, and cost competitiveness that led to sales increases, solid profitability, and positive cash flow. From October 2010 to October 2011, GM, Ford, and Chrysler sales increased 1.8%, 6.2%, and 27%, respectively. GM and Ford reported strong profits and better-than-expected sales and agreed to pay bonuses to unionized workers as part of new contracts. The Big 3 were gaining market share—Ford was now handily outselling Toyota Motor Corp. in the U.S. after falling behind in 2007. Many saw the Big 3 turnaround as proof that a unionized manufacturing industry could be revived through strong, decisive leadership on multiple fronts and improved union relations.

Keywords: Production; Labor Unions; Labor and Management Relations; Industry Clusters; Competitive Strategy; Auto Industry; Manufacturing Industry; Michigan;

Citation:

George, William W. "The Big 3 Roar Back." Harvard Business School Case 412-072, November 2011. (Revised June 2012.)