ABSTRACT
The logic of the transition to systemofacture thus implies a significant reduction in both export-oriented foreign direct investment and offshore-sourcing by transnational corporations (TNC) auto and component firms. Both the organizational and technological characteristics of new system clearly militate against off-shore sourcing. The United States (US) TNCs have calculated that even if new trade restrictions prevent them from bringing the autos into the US, they will either be able to feed the domestic markets where they are produced or sell low-priced autos to third-country markets. In trying to understand the apparent contradiction between long-term locational logic of systemofacture and the short-term reality of offshore-sourcing by some assemblers, it is helpful to distinguish between two sets of strategies - those of the "winners" and those of the "losers". The losers are those firms which show the least ability to make a successful transition to systemofacture in sufficient time to withstand the competitive onslaught from the Japanese and other producers.
