Consolidation across the American economy is one of the most discussed results of the down-turning economy. While economic gurus aren’t predicting a return to national monopolies, Americans will definitely have fewer choices to make by the time the economy turns the corner in the next year or two. Most industry watchers agree that this across-the-board contraction in U.S. markets will have a positive effect, both for industry and the consumer. Consolidation is expected to force industries in all sectors of the economy to become leaner and more efficient while improving product quality and customer service.
Times have changed since the breakup of the monopolies that controlled the American economy and workplace in the 1800s and early 1900s. It’s been a quarter of a century since the government split apart the Bell Telephone System, America’s last remaining monopoly, and some would say, opened Pandora’s Box. The plethora of phone options and short-lived providers that followed gives credence to the current view that too much competition is not always a good thing. Customers became annoyed by the constantly changing phone rates and service options. Many of the new companies were unable to maintain promised service levels and failed. While there is still healthy competition in the telecommunications industry today, there are fewer big players and each one is stronger. Consumers may have fewer products to choose from, but products are more dependable and reliable.
The U.S. auto industry is undergoing a similar consolidation. True, if GM can’t stop the bleeding, the Big 3 may become the Big 2 which would be a considerable loss to U.S. industry. But on the plus side, each of America’s auto makers is pruning out the dead wood. Low-profit lines like Hummer and Saturn are on the chopping block. Labor contracts are being renegotiated to more reasonable and sustainable levels. Detroit is finally releasing its grip on “bigger is better” and embracing a fuel-efficient future. When the dust settles, industry experts expect the U.S. auto industry to be leaner, meaner and more competitive with foreign auto makers.
The same healthy consolidation is expected to happen across most sectors of the U.S. economy. Stay tuned Wednesday for more on this subject.