More than 74,000 General Motors workers went on a two-day strike in late September after the United Auto Workers (UAW) and GM failed to reach a contract agreement. The following month, the UAW reached a temporary contract agreement with Chrysler after a six-hour strike. In November, Chrysler said it would cut 8,500-10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 percent of its workforce, in addition to the 13,000 layoffs it announced in February. Then, the month after that, the UAW said 81 percent of Ford production workers ratified a new four-year contract with the automaker, ending negotiations between the UAW and Detroit's used-to-be-Big Three.

Productivity largely depends on how automated operations are and how well trained the work force is to use devices such as robots. Sales of robots to North American-based automotive manufacturing companies and their suppliers fueled the robot sales growth in 2007, according to the Robot Industry Association, which went on to note last month that "automotive-related sales were up 58 percent in units and 15 percent in revenue compared to the first nine months of 2006."

Despite the Big Three's investment in automation and training, foreign-managed auto producers are tough to beat. "Detroit's automakers slipped below 50 percent of the U.S. market for the first time in 2007, in July and have been fighting to say above 50 percent since," reported The Associated Press in December.

The sales anemia appears to be chronic … at least for U.S. automakers.

Fitch Ratings projects that light vehicle sales in the U.S. will fall approximately 3 percent in 2008, to 15.6 million units, "with the Detroit Three bearing the brunt of industry sales declines."

According to Edmunds.com's a year-end automotive industry review:

• Domestic manufacturers' market share dropped from 55.2 percent in 2006 to 52.3 percent in 2007;

• Chrysler's market share dipped from 12.9 percent to 12.8 percent; Ford's fell from 17.4 percent to 15.6 percent; and GM's slipped from 24.8 percent to 23.9 percent; and

• Honda's market share grew from 9.1 percent to 9.7 percent, Nissan's rose from 6.2 percent to 6.7 percent, and Toyota's climbed from 15.3 percent to 16.3 percent, respectively.

Toyota's sales outpaced Chrysler's all year and surpassed Ford's every month since May. In fact, Toyota Motor Corp. beat out GM in global sales in the first quarter of last year, selling 2.35 million units against GM's 2.26 million units. And sales figures released last week revealed that Toyota overtook Ford to become the No. 2 automaker by U.S. sales in 2007, selling 48,226 more units than Ford. GM remained the U.S. sales leader, though its sales in 2007 were down 6 percent from the previous year.

"Toyota is also nipping at GM's heels to be the world's largest automaker," according to AP.

Outside of labor and productivity, other developments affected auto sales, not the least of which was the fact that gas prices continued to top $3.00 in 2007, not to mention many consumers being hit hard by the housing market and credit crises.

Gas prices are expected to average $3.11 per gallon because a barrel of oil will cost on average about $85 for 2008, according to the Energy Information Administration. For a point of reference, it was $66 in 2006. As recently as 2003, the price of a barrel was below $25 and, almost unimaginably, below $11 in 1998. Last Wednesday, oil prices briefly hit the symbolic level of $100 a barrel.

To achieve the desired fuel efficiency, engines will have to be smaller and more efficient, so the vehicle size will shrink and the weight will decline.

Edmunds.com predicts that "sales of compact cars, compact SUVs and crossover vehicles will gain market share as consumers continue to seek better fuel economy."

"The small car sector seems ready for a truly global boom," according to TrendWatching.com.

The Smart Fortwo is one example of a new design created for fuel efficiency. The vehicle will achieve 33 city/41 highway mpg, according to 2008 EPA standards.

Ford has its hybrid SUV, and the first applications in the Chevrolet Taho and the GMC Yukon "deliver a fuel economy improvement of up to 25 percent and still allow the big SUVs to tow 6000 pounds," according to Popular Mechanics.

While fewer consumers are buying gas-guzzling trucks and SUVs, increasingly more car buyers are also buying hybrid vehicles.

The auto experts at Edmunds project both hybrid and diesel vehicles will continue to grow in popularity, "especially given new product introductions such as the Audi Q7, Cadillac Escalade Hybrid, Chevrolet Silverado Hybrid and Volkswagen Jetta BlueTec."

In an increasingly competitive global automotive industry, Detroit must improve and seamlessly integrate labor and productivity, design and components to meet consumer demand, and to reclaim and retain market share.

Earlier: Auto Industry: Revved Up or Broke Down?

Resources

Edmunds.com Looks Back at 2007 and Forecasts 2008 Automotive Trends
Edmunds.com, Dec. 27, 2007

Automakers Look Ahead to a Gloomy 2008
by Tom Krisher and Dee-Ann Durbin
The Associated Press (via The Chicago Sun-Times), Dec. 14, 2007

Toyota Overtakes Ford in US Market
by Dee-Ann Durbin
The Associated Press, Jan. 3, 2008

What Lies Ahead for Auto Industry in the New Year?
by Joseph B. White
The Wall St. Journal, Dec. 17, 2007

EIA Chief Tells Lawmakers Oil Will Average $85 a Barrel in 2008, Partly Due to Speculation
by Dan Caterinicchia
The Associated Press, Dec. 11, 2007

The Top 10 Most Brilliant Gadgets of 2007
Popular Mechanics, November 2007

UAW.org

Toyota Beats Competitors in North American Manufacturing Productivity
Edmunds, May 31, 2007

Robot Sales Up 33% in North America in First Nine Months of 2007
Robot Industry Association, Dec. 12, 2007

Automakers, Affected by $3 Gas and Housing Downturn, Predict a Weak Year
by Micheline Maynard and Nick Bunkeley
The New York Times, Aug. 9, 2007

Fitch: Financial Improvement Unlikely for U.S. Auto Suppliers
BusinessWire, Dec. 4, 2007

Starting on the Shop Floor
Dollars and Sense, 2007