There's a little more to it than that, especially if you're looking at the historical example of the auto companies. Back in the 70s-90s, the Japanese were bea

There's a little more to it than that, especially if you're looking at the historical example of the auto companies. Back in the 70s-90s, the Japanese were beating the pants off the American automakers. But this wasn't because of price, at least not by the 80s. It was because the American companies weren't producing products that people wanted to buy. In the 70s, American cars were huge gas guzzlers, and with the '74 gas crisis, people wanted smaller, more efficient cars, and the Japanese sold them. By the 80s, Americans had finally figured out how to make small cars again, but they were crap, so people happily paid more for Japanese cars than for competing American cars. The Japanese cars were far more reliable, lasted longer, used less gas, looked better, were nicer in pretty much every way, so their higher cost was seen as worth it; only people buying solely based on price bought American cars. Labor rates were a factor, but not that much: by the 90s, Japanese labor rates were significantly higher than American labor rates, so to decrease costs the Japanese had opened many assembly plants in the US (but in places where they could avoid unionized labor, like Ohio and the South). The cars made here in the US still had great quality unlike cars made by the American automakers, and sold very well. Today, we still see a lot of this: various Japanese and European automakers have assembly plants here in the US to take advantage of our cheaper labor rates, but their vehicles are still generally seen as superior to American-brand cars. Basically, you can chalk it all up to management. The American cars have been undesirable because of poor decisions by upper management at these companies. You can't blame crap quality on line workers; they didn't design the car, they're just doing what they're told by managers and engineers. And engineers are constrained by the decisions made by management.