I am comfy, reclining in my chair. It’s not a power-actuated Connolly-wrapped throne, but it supports me well enough, like the bench seats of American cars of yore. It’s so easy, sipping a coffee, commenting on the honor of an automotive world passing by. I’m enlightened by Edison’s accomplishment, a light bulb born of endless attempts, scribbling down the wretched life stories of Detroit, seeing the sad eyes of jobless people. I can not print down my tears on the keyboard, nor teleport the saltiness of its character.
I sigh, as millions do, the silent exhale of despair. I mentally walk the doomed path through the pages of the American car industry’s history. I look left and see union arrogance, indignation, intransigence and bully boy tactics. I look right and see management arrogance, incompetence, denial and destruction. I see missed opportunities and senseless distractions. I see pigs at a trough, oblivious to the abattoir's long shadow.
I consider the symptoms of the disease of disinterest, that’s leaving this once holy industrial landscape void. I see the smallest of nits. I taste, I feel, I smell those tiny gaps of a job left undone. A childish slip: those half a dime per square meter cheaper fabrics, those grayish knobs and squeaky rattles from unresolved underpinnings. I remember stories of mechanical failures born of apathy, whose correction was never offered freely, with humility.
I recall the early transgressors on Detroit’s turf, and admire— as millions came to do— their persistence. I celebrate their dedication– even as I decry the home teams’ inability to see past their fat paychecks and generous perks. How much effort would it have taken to respond, to stiff-arm the opposition, rather than laugh as they sprinted towards the end zone, and then, eventually, scramble to catch-up?
The resulting migration started as a trickle, and ended-up a torrent. In an aftertaste of a cheap, high octane alcohol, some still give in and forgive. In a never ending hangover, these supporters crawl out from the dust of zero rebates. Propelled by amnesia and increasingly willful ignorance, the cycle repeats itself. But the crowd shrinks, like a sweater washed too many times at too high a temperature.
Relative to itself, Detroit’s gains are, now, enormous. And yes, their pickup trucks are still the gold standard. But there’s no escaping it: gas guzzlers are like beached whales that cannot return to sea. And dozens of factories are closing. Jobs are disappearing. An industrial waste land, a new rust belt, is aborning.
I wish I could remind Detroit that customers choosing transplanted metal ain’t aliens or Cold War spawns. They were— are— hard-working Americans who depend on their transportation for their quality of life. And the workers who can no longer earn their living from these keepers of the faith are real people too. Management dashed their workers’ expectations of a better life on the rocks of their scotch and soda. There’s only one thing more cynical: their union collaborators.
Where is the discussion of this diaspora? Doesn’t the country know that the domestic automotive industry is still a major economic engine? Can’t they hear it faltering, misfiring? The fat cats can be forgiven. It is their nature. But what of the rest of us? Are we content to let these captains of industry run aground? Can we not see that we will, inevitably, pay for the lifeboats?
Eventually, as Detroit’s Big Three sink beneath the waves, an entire country will despair. Entire communities will be left with anorexic paychecks and bulimic monthly payments. On the wider level, without a viable industrial base, Americans march forward, wading the more and more shallow wadis of service industries, hanging the legacy luggage to our children who will carry on the entitlements and interest payments for the Rising Dragon and their Sakura neighbors.
We should fret and fume, not shrink and shrug, at the apathy and awkwardness whenever fingers get reluctant on the first obstacles of detailing or finalizing an assembly line. We should rip those wires out from game consoles and recreate a can-do garage culture. We should get those comics books out of schools and teach our children not to believe in promises, but the sweat of their own brow. We should tell them that success comes from five percent genius endlessly polished by perseverance.
Perhaps not. Perhaps we should stand back and let society learn the truth of the old maxim: the more painful the lesson, the more important it is. And just let it go. Knowing that we have met the enemy and now, in southern transplant enclaves, he is us. Hoping that a new Detroit will emerge from the ashes of its own incompetence. A Detroit that can renew its contract with the American dream, and wipe the tears from its supporters eyes.
This editorial was perfect. Excellent post!
It is a sad state to be in.
Well said, jurisb…
Detroit is beginning to respond, but they need to figure out how to make small, fuel efficient cars in this country that are not painfully, obviously lackluster efforts.
The Big Three need to work smart to get there (making little profit on the way), but they have to start now.
Well done.
I too live in a declining UAW town – I wish I had some magic to change those attitudes..
We can’t really do anything about it. The execs and their board of bystanders are determined to ruin these companies.
If I may be very selective in my quotes from this very great editorial;
“…arrogance…”
“…arrogance…”
“…never humility…”
This, friends, is the source of all the world’s harm.
Yep, Detroit needs to jump on this right away.
In “Rude Awakening,” Maryann Keller’s fine 1989 book about GM’s decline, she described Roger Smith’s 1983 address to the General’s big triennial management conference. Smith pulled no punches in his exhortation that GM had to change, and change fast. “The automotive market has become a global market. Demand has shifted away from our traditional strengths into areas where foreign manufacturers now hold significant advantages. To meet the intense competition we face from abroad, we need to do things differently.”
Smith defined the mission: “The mission reads like this: ‘The fundamental purpose of General Motors is to provide products and services of such quality that our customers will receive superior value, our employees and business partners will share in our success, and our shareholders will receive a sustained, superior return on their investment.’ ”
And he listed eight top objectives:
“1. Achieve superior product quality.
2. Strengthen employee relations.
3. Improve asset utilization and cost structure.
4. Improve our competitive position.
5. Expand our business opportunities.
6. Increase our technological capabilities.
7. Increase our market share.
8. Improve management effectiveness.”
Sounds like Management By Objectives, doesn’t it? A quarter-century should be enough time, so–Hey, GM, how’s that working out for you?
General Motors, Ford and Chrysler are near financial collapse because their executives made shortsighted decisions. They built uninteresting automobiles, did not develop new engines and transmissions, worried more about Wall Street than design and engineering, allowed quality standards to lapse, mistreated customers and made costly union concessions.
The Diminishing-3 kept Wall Street happy by inflating profits and deferring costs. When the unions demanded large pay increases the companies increased pensions and retiree health benefits knowing the bill would not come due for decades. Now the piper has to be paid.
Toyota, Honda, Nissan, Mercedes and BMW operate nonunion North American plants. Their labour costs are much lower than the Detroit companies, $42 an hour including benefits at Nissan versus $70 at Ford. The newcomers have negligible pension costs because their workforce is younger, and hardly any retiree health care outlay. All are profitable because they design and build quality products consumers want to buy.
how do we know, that hitting a small girl and taking her candy is bad? How do we know that stabbing a dog is a bad deed? Swearing at your parents? Winning by cheating? doing 20 push-ups, but telling that you have done 40?
There is a universal manhood, a state of being a gentleman, that can`t be taught or transferred. You are born with it, whether crying for the neighbour in a wheelchair, telling him names, or helping him out. you are born to walk straight, and it depends on your inner backbone how much you bend towards greenback, lust or sloth. You see, the executives don`t get detention, don`t get slapped nor deprived of parachutes, and their only failure is…..the inner emptiness, that never hurts or aches, whether when workers march goodbye from factories, or their products get crucified at beancounters alter.
One thing we have to do is not directly bail out the Detroit automakers. The late 1970s Chrysler bailout was a huge mistake. Letting Chrysler be liquidated would have provided a message to GM and Ford, 25 years sooner, that they had to get serious about their competition.
Instead they were told that they, like Bear Stearns, was “too big to fail” and they would be propped up by the Government no matter how incompetent they became.
Capitalism without the possibility of failure is a parody called state socialism, a small step from fascism.
Noble sentiments JurisB. In my cynical heart, I believe that managers dont give a rat’s posterior about the wreckage they leave behind. The current quarterly bottom lines are all that matter.
As for the current state of US industry. God help us, should the Germans ever bomb Pearl Harbor.
Nice editorial. I always remember David Halberstam’s “The Reckoning” ( http://www.amazon.com/Reckoning-David-Halberstam/dp/0688048382 ) which, although twenty years old, still rings true.
What I remember best was the sure fire career dead end in the big three was to be an engineer. All of senior management were marketing hucksters or bean counters.
50merc: Thanks for the recommendation of “Rude Awakening”, I’ll have to read it. It seems they never learn.
‘The fat cats can be forgiven. It is their nature.’
Forgiven for selling the soul of American automotive industry for the love of Texas oil men’s money?
Forgiven for the wilful – woeful – oversight that gas prices will always head upwards and are (and were) important?
Forgiven for not remembering the oil crisis of the 70’s and it’s effect on the US auto industry back then?
I agree with you on every front but I don’t think the leaders, or their financial supporters, should be forgiven for selling the US short.
A truly awesome editorial. Your comments are valid not just for the automotive industry but for our society in general. If the lack of personal honour, honesty and a genuine concern for each other is contributing to the demise of this industry then it is also threatening the very fabric of our western world view. What will happen to detroit is inevitable but is it inevitable for our society? I hope not.
There are 4 factors that keep the American auto industry in business AT ALL:
a] Most government agencies, from federal to local, are required *by law* to buy American-made vehicles.
b] Many rental car companies are required, by various means, to stock their fleet with American-made vehicles.
c] Certain Americans are so moved by patriotism and or the big economic picture, to refuse to buy foreign-made vehicles.
d] American manufacturers still make darn good trucks.
If you take away a, b, and c, American manufacturers would have been gone long ago. If you take away the sales figures from a and b, Toyota (and maybe others) have better sales numbers than any American nameplate.
Hmmm….
Bob Eaton – Engineer
Robert Nardelli – Engineer
Alan Mulally – Engineer
Bob Lutz – Engineer
Perhaps the rejoinder to this is that having an MBA along with an engineering degree is a big help. I can go with that.
Brillliant editorial! The teachers union, and every “public employee” union should read it and then read it and the read to make sure they absorb it. The golden goose – The USA – will soon be on life support.
The only one of the big three that is definitely down for the count is Chrysler. IMHO that reality has a lot more to do with German mismanagement than anything else.
Ford and GM are taking it on the chin and may indeed go down for the count. Overall though, I would say that the three biggest elements impacting them are…
1) Health and pension costs
2) High gas prices
3) Too many brands
The folks who are managing these companies only can do so much with those three challenges… unless their are structural changes that address the ways in which they can compete.
In GM’s case, I think they have done an excellent job with expansion in the developing markets of South Asia. They also did a good job with creating a midsized vehicle that, despite their cost disadvantage, is arguably as good or better than a Toyota Camry. I like a lot of what GM is putting out in NA as well, but in a world where $100/barrel oil prices is a daily reality, most of their high profit vehicles will simply not sell.
Ford’s weaknesses are product design and brand positioning. Their quality has greatly improved and I wouldn’t be surprised at all if Ford ends up eventually offering some of the best engineered vehicles in the industry. Their European lineup has been historically quite strong. Too bad about the Euro though. It may come to pass that Ford NA simply sticks to the products that reflect their core strengths (trucks and SUV’s, RWD cars) but that would take at least eight years given the currency exchange rates and Ford’s building capacity for the North American market. They don’t have the time to make that work.
Unfortunately their brand positioning is just plain terrible. Two luxury brands that are trying to compete in segments that they simply have no business being in. Three mainstream brands that consistently run over and cannibalize each other, and a complete unwillingness to upgrade a certain model that is obviously becoming increasingly important to their success (Ranger). Other than the Mustang, Ford doesn’t really offer any vehicle that can be considered to be the best in a given class. That’s a truly scary predicament given that their NA operations will have the oldest lineup in the industry until 2011.
Chrysler is just dead. D-E-A-D dead! They will be either bankrupted and/or sold for pieces within the next 18 months. Very sad really. They had the highest profit margins in the industry the year before Daimler bought them out.
I can hear the catcalls booming out of the rafters when I say this, but the one thing the Big 3 needs more than anything else at this point IS legislation. If they could find a way to override the franchised dealer laws that effectively eliminate their ability to phase out brands. If their pension and health care obligations were at comparable levels to their competitors (which are heavily subsidized by their governments), then you would have a far more equitable fight than what’s taking place right now. The big three would be able to shed the excess baggage of decades past and focus their energies on building one great car vehicle rather than three to five mediocre ones.
To blame the employees of these companies today for the sins and greed of their predecessors is, at least from where I stand, idiotic. There has to be a structural change in HOW these companies are allowed to conduct their business and it needs to reflect the need to compete globally.
If the powers that be push for that, it will have an enduring effect on our long-term economic health. Instead of an automotive world where most overseas manufacturers get a nice head start on every competition that involves hundreds of thousands of American jobs. You’ll have one where all competitors have the opportunity to compete on the merit of their products.
As for the underlying talent within these folks, sorry folks, but I just don’t believe that the ‘foreign’ manufacturers are that good and the ‘American/Detroit’ manufacturers are that bad. I do believe that the disadvantages can be largely addressed without the loss of our manufacturing base but it requires far more than just criticism and laying the literary wreaths.
kudos and give it up to Mr. Farago for having the b**** to publish our friend jurisb. Probabbly one of the most villified commentators on this site.
Anyhow, don’t worry about it. For example, brazilian steel companies are buying up and modernizing and making feasible old american and canadian steel and iron ore companies. Just don’t expect them to pay as much as the former american bosses! But (as expressed somewhere along the thread) latin americans, chicanos, cucarrachas, whatever insult is the flavor of the day, are still part of the western world. So we will all be saved. With a tequila twist, perhaps.
What really amazes me is that the preceding article, about cupholders no less, gets so many comments, while response to this one has been tepid at best. Reminds me of ostriches…
End of rant
Steven, I definitely agree with you that Chrysler will go down. We can only hope that serves as a wake-up call to GM and Ford. Maybe they’ll acknowledge the fact that they’re not invisible anymore, and shareholders will demand progress, not fluffed up numbers. Hopefully, a similar reality check will happen at the UAW.
Edit: Brazil, I think the lack of comments has less to do with interest and more to do with the fact that this was posted on a Saturday. I don’t expect to see new articles on weekends. Though it is always a pleasant surprise. The weekend podcast a few weeks ago was awesome.
Ford and GM are taking it on the chin and may indeed go down for the count. Overall though, I would say that the three biggest elements impacting them are…
1) Health and pension costs
2) High gas prices
3) Too many brands
They do have higher health/pension costs, yet that isn’t really their biggest problem. Consider the Civic and the Focus.
Civic – $15,010, Focus – $14,395 and that’s just comparing MSRP. You know Ford is going to throw cash on the hood. And yet, which car is selling more?
When people buy cars they rarely (read never) ask what the manufacturer’s health and pension costs are. The reality is that people willingly pay more for the Civic because it’s a lot better car.
In the end all the talk of union costs is just an argument about who should get how much of the earnings from the pie that’s being sold. But in the end Honda is selling more pie, at a higher price. It’s better pie. Product is what it’s all about.
I agree about gas prices. Detroit just doesn’t have competitive gas sippers (who could possibly have foreseen higher gas prices? Those lucky lucky Japanese just took a wild guess :-)
Too many brands? I’m not sure. Probably too many given the sever financial restraints, but they could have more than one brand if they could just get past the “rationalization” of product .e.g all the same with different grills.
As an aside, this editorial suggests the problem extends beyond the auto industry, and that’s right. A friend and I were discussing power equipment. He asked how Briggs and Straton were going to stay in business if everyone buys Honda powered equipment. I replied that it comes down to this -My Honda engines start on the first or second pull. The B/S and Stihl equipment I’ve used requires me to pull and pull and pull ….. If I have to try 20 times to get the engine to start, I’m not buying. It’s all about the product.
If they could find a way to override the franchised dealer laws that effectively eliminate their ability to phase out brands. If their pension and health care obligations were at comparable levels to their competitors (which are heavily subsidized by their governments), then you would have a far more equitable fight than what’s taking place right now.
-Steven Lang
Are you saying that there’s nothing within the control of the big 3 management that could be effective in pulling them out of their own death spiral?
“They do have higher health/pension costs, yet that isn’t really their biggest problem. Consider the Civic and the Focus.
Civic – $15,010, Focus – $14,395 and that’s just comparing MSRP. You know Ford is going to throw cash on the hood. And yet, which car is selling more?”
That’s exactly the problem. The cheaper the market segment is the greater the disadvantage the Big Three will have over a subsidized competitor like Honda.
“In the end all the talk of union costs is just an argument about who should get how much of the earnings from the pie that’s being sold.”
Earnings??? Not in the North American market. It’s interesting that you mention that though because in Europe there were strict quotas instituted to help the European manufacturers (and their unions) adjust to the Japanese Big 3 competitors. It took an awful lot of quotas and substantial outsourcing of plants and suppliers for their situation to improve. Even then some of them had to consolidate and buy each other to keep the ships afloat.
“But in the end Honda is selling more pie, at a higher price. It’s better pie. Product is what it’s all about.”
And you know what? That’s the funny thing for me. Most of the Japanese products are simply unexciting… as well as most of the American ones as well. My tastes are definitely on the European side of the ledger but with the Euro so damned expensive, I’m probably not going to see as many competitive products from the EU. At least in the North American market. A shame really, because many of the Ford Europe, Opel, and Vauxhall offerings are arguably better than what the Big 3 offer here.
Our market has always been one where price seems to be king (or a close queen), quietness and detachment are seen as a virtues, and weight doesn’t matter (so much). That’s completely out of whack with the majority of consumers around the world.
That’s the part of our market that I don’t see getting addressed until the price of gas goes to at least $5+ a gallon. It sickens many of us to realize that there are 3200 pound vehicles in Europe that can get the equivalent five star front and side ratings. While we have to pony up to a porky little beast that’s often 1000+ pounds more to get to the same level of safety. Sorry, but there is something seriously wrong with that reality.
I would have loved it if the EU decided to peg the Euro to the dollar, but no. They were too smart to subsidize the debt ridden activities of our government. Not that a few of their governments are any better (Greece, Italy), but at least they tried to instill some fiscal austerity into their monetary policies once the damage said.
What can we say at this point? We already know what the ending will be. That’s why my money has remained in non-US currency. It’s the patriotic thing to do since the bastards who are making the printing presses work overtime, and obviously don’t give a damn about it. As far as I’m concerned they’re the very same ones who turn their heads away when the local plants close or the sub-prime subsidized real estate market goes belly up.
This “We’ve got ours so screw them.” mentality is what’s really destroying this nation. Our auto industry, and the lack of support given to it, is a brilliant example of that attitude. From the way certain dealers treat their customers, to the way Washington D.C. reacts when the manufacturers complain of a substantial cost and market disadvantage. The folks who rely on trust and reasonably fair competition are more or less ignored in favor of the debt collector du jour.
It’s not the American way. But it’s certainly the way it is today. Feel free to ask the Fed or our ‘retired’ Generals. On second note, don’t even bother with the Fed. Ask a currency trader or any of the Arab countries that are quietly establishing their own currency so that they don’t have to deal with a flawed one.
“Are you saying that there’s nothing within the control of the big 3 management that could be effective in pulling them out of their own death spiral?”
No, and thanks for the question. I’m saying that the three issues I mentioned above have to be resolved if any of them will have a chance in hell in the North American market.
1) Health and pension costs
2) High gas prices
3) Too many brands
Whether these three will be resolved by technology, labor negotiations, bankruptcy or legislation is anyone’s guess. Chrysler will most likely be bankrupt. Ford and GM may be able to get it done. The talent within these companies is absolutely massive and their bottom line stretches far beyond our market. But they will almost definitely need better allies in government and some type of unusual event for them to build up their profits and marketshare in North America.
Thank you, jurisb. Outstanding work.
Part of the reason it is a better car is because Honda can put more money into the CAR itself and still make a profit, while any Big Three vehicle must also carry a portion of their health care and pension costs. With smaller vehicles, where the profit margins are thinner, that handicap becomes truly onerous.
The UAW admitted that these costs are a handicap when it agreed to take on health care costs (by setting up a VEBA) and accepted work-rule changes in the plants. The current operating costs of the Big Three put them at a serious handicap, and the UAW knows it. It didn’t agree to these changes because it wants The National Review or The Wall Street Journal to write nice things about the union and its leadership.
The UAW realizes that the Big Three’s circumstances are truly dire; these companies cannot succeed if they must rely on trucks and SUVs for profits; and current health care costs and work rules are hampering their ability to make profits on the smaller vehicles they will need to survive in a world of $4-a-gallon fuel.
Will these changes, in and of itself, be enough to save these companies? No, but it gives them some badly needed breathing room and a better chance for survival. What Big Three do with this breathing room is up to them.
Unfortunately, I agree that Chrysler is basically finished; the only question is who will buy whatever is left from Cereberus. It seems obvious that Cereberus doesn’t have a clue about how the automobile business really works, and it isn’t about to invest the money necessary to return Chrysler to a competitive position. In this market, a company that falls too far behind will have a terrible time catching up to the competition.
GM has glimmers of hope – the new Malibu, CTS – along with fine updates to old stalwarts – Corvette and the GMT-900s. Unfortunately, for every Malibu, there seems to be a G6 and a LaCrosse lurking in the background. And I’m not convinced that GM’s quality is all that much better. My mother-in-law’s 2005 Malibu was built after GM’s recent “Road to Redemption” ad campaign. At 45,000 miles, the clunks and rattles coming from the front end, along with the finish wearing off key interior pieces, show GM’s redemption on the quality front is not quite finished.
And I have this nagging feeling that the Volt will end up being either a big disappointment or a complete fiasco.
Ford? The quality is getting much better, but now it must make similar gains in styling, performance and economy. But at least Alan Mullaly isn’t promising us the moon, or shooting from the hip at competitors. He is also making real changes to the corporate culture. The question is whether time – and Ford’s money – will run out before those changes bear fruit.
Steven Lang: Our market has always been one where price seems to be king (or a close queen), quietness and detachment are seen as a virtues, and weight doesn’t matter (so much). That’s completely out of whack with the majority of consumers around the world.
Do those people use their vehicles as we do, or drive them for as many miles as we do?
I spent the two weeks driving around Germany in a VW Polo sedan. After those two weeks, I fully understand why superior control of noise, vibration and harshness is a GOOD thing.
We regularly (at least once a month, ofter more) drive three hours to visit family members. That is three hours over limited-access highways (Pa. Turnpike) and two-lane country roads. In Germany, a three-hour trip is considered a big vacation. A booming engine and taut suspension are fun for a short trip, or on the autocross, but not for three hours over Pennsylvania’s mountains and byways.
Steven Lang: It sickens many of us to realize that there are 3200 pound vehicles in Europe that can get the equivalent five star front and side ratings. While we have to pony up to a porky little beast that’s often 1000+ pounds more to get to the same level of safety. Sorry, but there is something seriously wrong with that reality.
How much do those vehicles cost? Even before the recent decline in the value of the dollar, size-for-size, every European vehicle was more expensive than its North American counterpart. I remember visiting an Opel showroom in Germany in the summer of 2004, and pricing an Opel Astra five-door hatchback. Converted into dollars, the sticker price came close to $28,000.
Over here, that vehicle would rot on the showroom floor at that price. If GM could get $28,000 for a Cobalt-size vehicle, and $24,000 for an Aveo-size vehicle, I’m sure that it could pack more advanced engineering into both vehicles.
Also remember that many Europeans do not BUY their vehicles outright. They receive them as a job perk (as a substitute for more pay, to avoid high income taxes). Of course the manufacturer can charge more for a vehicle, when the paying “customer” (i.e., businesses) can afford to pay more.
And American vehicles generally have air conditioning (it’s a necessity over here, especially in the Southern half of the country), which also adds pounds and cost. That isn’t a necessity in Europe, particularly in the northern countries.
Steven Lang;
Thanks for your replies, I appreciate your insight though I don’t get how any of of the avenues you mentioned; “Whether these three will be resolved by technology, labor negotiations, bankruptcy or legislation is anyone’s guess.”are within sufficient control of management to lead to domestic market competitiveness for the big 3. In essence, it sounds to me like you’re ‘passing the buck’ for big 3 execs.
Though I agree entirely that those 3 issues are of significant importance, equally critical is the manner in which the manufacturers relate to their employees, their suppliers, and most valuably their customers.
Too often decisions appear to be made for the sake of short-term gain which is great for shareholders, who invest themselves in and out of the company on a whim. However it is contrary to all the best interests of the business itself. I would argue that if it were possible for management to anticipate a benefit 100 years away from money spent now, that expense should be green-lighted without hesitation.
Such foresight is of course impossible, but they can get nearer to achieving such advanced enlightenment by cementing those business relations in decades of earnest effort, respect for others and yes, humility.
The imports didn’t gain their significant market presence overnight, and they cannot lose it overnight because they have proven through good and bad times to deliver on their promises, stand by their products and be fair in their business practices.
I’m just not sure that the American ‘more/sooner’ business model can even grasp that concept.
My mother and I were going to the local Kmart for some stuff before we went to a local Blakes Lotaburger (kinda like Whataburger if you don’t live around New Mexico). A Ford dealership was nearby and I decided I wanted to see the Ford Mustangs they had on sale.
They had a real pretty red one, but right next to it was one of the new Focuses. I admit, I didn’t like the styling the first time I saw it on Edmunds, but it looked pretty good in person. I didn’t even get to sit in it, but the interior looked good, the exterior looked relatively nice if with a few uglies in the lights and overall it seemed like a fine, basic economy car.
I’ve always liked Ford. My mother drives an Escape and an F-150 and I drive a Mercury Mystique. I suppose it seems like we just haven’t seen good Japanese cars, but I once had to drive a rental Toyota Corolla and I can honestly say it was the worst car I’ve ever seen–cheap interior, boring exterior, smelly and just generally a mess. I just didn’t like it. My friend owns an extremely old Corolla, which is even worse. She loves it, but I’d rather have the Focus I saw on the dealer’s lot than either of those cars or the new Corolla, and might even be a better value than the current Honda Civic considering a lesser price. Why? Because my other experiences with the Corolla sucked.
My point is this: A lot of people judge American cars by the rentals they’ve driven, or by their friends’ cars, and justifiably think they suck. Because they do. They’re rentals. They’re cheap and trashed all to hell by the people that own them, because these people don’t give a shit about the car. As just one more example, my mother drove a rental Focus and hated it because it was so cheap, inside and out, with all kinds of problems, no trunk light, etcetera etcetera. And my uncle (a union manager) has a Chevy Impala with a terrible plastic interior. But that’s the story with any cheap base car like my uncle’s or my mom’s rental Focus or my friend’s Toyota or our rental Toyota.
If you were to show one of these Toyota or Honda loyalists a higher-priced Focus or Cobalt with better-than-base interior brand new, I’ll bet a lot of them would like it. They remember the old rentals they’ve had and how terrible they were, not realizing that these cars are built to be cheap and terrible, and meant to be thrown away.
Probably an issue that is well underestimated is immigration and how it affects one of the biggest Big 3 cash generators- patriotism. In nature, the higher the risk of premature death of a baby, the more offsprings the mother will have. that gives her a chance at least to keep one child, if the rest of them perish. Also, working in an agricultural area, an entity needs labour force that works on their own fields. Modern white man society has managed to deal with these problems by modern medicine and intensified farming, that doesn`t require too many hands.So, death rate is down, farming productivity is up, and birth rate is down. yet most of the immigrants come from countries, that deal with these problems, or still have it, thus they have larger families. The point is that immigrant families tend to grow at faster rate than American ones.
At the end i would like to point out, that immigrant families are less likely to be American- patriots, and less likely giving Detroit 3 any advantage or priority when choosing a new vehicle.So, the same weapon that was used to drive down costs, or sustain tax paying labour force, in the long term is doing the adverse- killing the local industries. of course the companies that make high-precision , high quality products don`t give a damn about patriotism. And ,damn, why should they?
to The luigiian.If we analize honda Civic as being japanese, and Focus as American, them we have to zoom in a bit. Civic is designed by japanese engineers on a japanese built platform by japanese quality standards and stamped by japanese industrial robots whether komatsu , matsushita or fanuc.Ford focus is a japanese mazda3 platformed german engineered compact car, built and designed by german engineers.
how many japanese profit from Civic? Industrial robot manufacturers, steel suppliers, designers, engineers,janitors that clean Honda factories and carpenters that make tables for Executive board main office and economy of Japan ,receiving taxes and profits from Honda. How many Americans profit from imported focus????? Zillion times less.
And if American cars are equal to japanese or better, then take into account what happens with honda engine after 100k and what happens to an average American car. See those tiny details ruin American cars, plastic gears in power windows, leaking gaskets, shoddy weather strips, heat affected shape of plastic panels, wobbly buttons in radio, rattling underpinnings etc. See, people are scared from unpredictable costs of fixing failed american cars. American should go actually in inverted commas.
The Luigiian
As just one more example, my mother drove a rental Focus and hated it because it was so cheap, inside and out, with all kinds of problems, no trunk light, etcetera etcetera. And my uncle (a union manager) has a Chevy Impala with a terrible plastic interior. But that’s the story with any cheap base car like my uncle’s or my mom’s rental Focus or my friend’s Toyota or our rental Toyota.
As I pointed out in my review of the Impala LS, “if you want to judge an automaker’s prowess, check their basic models. Scope the ones with standard engines and base interiors that hide in the back of the lots. A few miles behind the wheel tells you more about the manufacturer’s passion for product than anything their spinmongers could ever publish… Instead of engineering a world-class product, they’re content to produce something that’s not even more than merely adequate. Then they try to dress it up in expensive trim packages and million-dollar ad campaigns and pass it off as something special.”
And that’s mirrored in what you said: “show one of these Toyota or Honda loyalists a higher-priced Focus or Cobalt with better-than-base interior brand new, I’ll bet a lot of them would like it.” Why should a consumer have to pay extra to get something in an American car to bring it up to par with the base offering from a foreign nameplate? And if you have to do that, what does that leave you to deduce about the rest of the cars, where there are no upgrades available?
True, the American manufacturers are starting to recognize that mediocrity won’t cut it any longer and do something about it – witness Malibu, CTS and Fusion. Unfortunately it may be a case of too little, too late. Decades of lackadaisical product development and so-so quality left a bad taste in the mouth of the American car-buying public. Someone offered them a better alternative for the same price, and they went for it. And to carry forward the restaurant analogy I used in the Impala review, if you got food poisoning when you ate at a particular restaurant, you’d be disinclined to eat there again no matter how many food critics rate them with four or five stars or how many of your friends didn’t get sick from dining there.
That’s exactly the problem. The cheaper the market segment is the greater the disadvantage the Big Three will have over a subsidized competitor like Honda.
Subsidized how? They build cars in Ohio. Their workforce is younger so they have fewer pension obligations. Their workforce is also non-union, so wages are lower. The difference isn’t big enough to cause the 2.8 to go out of business, if they had competitive products. Sure, they’d make less per car, and be able to invest less per car, but I’m not at all convinced that this is their biggest problem. It’s simply product. Toyota and Honda continue to gain sales, the 2.8 continue to loose market share. Many of the 2.8 models are cheaper than their transplant competitors – yet the transplants outsell them.
After bankruptcy, and the destruction of the unions, when the 2.8 have lower labor and pension costs than the transplants, I wonder what excuse they’ll use to explain their continued loss of market share?
Ford and GM are not loosing money on the Focus and Cobalt. They may not make as much profit per unit as the Corolla or Civic, but they make a profit. And the 2.8 always have all those profits from trucks and suvs to invest in small car programs. They choose not to do this. Ford thinks we’ll buy the same Focus we bought ten years ago.
The Focus isn’t really that bad a car – it’s just that it’s not up to par with the competition. Other than a bad face lift, Ford has let it rot on the vine for a decade.
Ford is doing the same with the Ranger. (Please don’t try to tell me they don’t make any profit on the Ranger) My ’98 Ranger looks almost the same as an ’08 model. This is Ford’s one class leading product and they are making plans to kill it off, and sell a re-badged Aussie import. Instead they should have been updating it through the years. How is a decission like this driven by labor costs? It’s not cheaper to make cars in Australia.
The 2.8’s biggest problem is product. And there is nowhere to hide. Truck sales are going to continue to go down as gas prices go up, and the Tundra is goning to take some Share from the F150 and Silverado. Meanwhile GM seriously expects buyers to consider a re-badged Daewoo instead of a Fit or Yaris. (Please don’t try to tell me there is no profit margin on a car built at Korean labor rates)
Don’t get me wrong, I’m not saying the 2.8 don’t need to pay attention to labor/pension costs, I’m just disagreeing that this is problem #1 on the list.
The best way to explain the problems with American industry is to quote Ron White – “You can’t fix Stupid”.
“Probably an issue that is well underestimated is immigration and how it affects one of the biggest Big 3 cash generators- patriotism.”
I work in metro Detroit. While it’s true that the auto plants are full of domestics, I see a lot of younger people driving Kias and Hyundais. Not a lot of immigrants in Westland, so I guess even the sons and daughters of plant workers are not “patriotic”.
Andy D :
As for the current state of US industry. God help us, should the Germans ever bomb Pearl Harbor.
I think I can calm your fears a bit.
Although we source many parts from other countries, the USA still manufactures its own military planes and ships. We make our own ordinance and targeting systems, too.
Patrick :
One thing we have to do is not directly bail out the Detroit automakers. The late 1970s Chrysler bailout was a huge mistake. Letting Chrysler be liquidated would have provided a message to GM and Ford, 25 years sooner, that they had to get serious about their competition.
Instead they were told that they, like Bear Stearns, was “too big to fail” and they would be propped up by the Government no matter how incompetent they became.
Capitalism without the possibility of failure is a parody called state socialism, a small step from fascism.
This is so right. As you say, the Bear Stearns bailout was bad economic policy and the various proposed mortgage bailouts will be just as wrong.
If people (and corporations by extension) know that they will not have to pay for their irresponsible decisions and marketing mistakes, then they will just make more of them.
geeber, that was one of the most informative responses I have ever read. Period. It’s worthy of an editorial and I hope to see it on the TTAC front page sometime soon. Great job!
GM has glimmers of hope – the new Malibu, CTS – along with fine updates to old stalwarts – Corvette and the GMT-900s. Unfortunately, for every Malibu, there seems to be a G6 and a LaCrosse lurking in the background. And I’m not convinced that GM’s quality is all that much better. My mother-in-law’s 2005 Malibu was built after GM’s recent “Road to Redemption” ad campaign. At 45,000 miles, the clunks and rattles coming from the front end, along with the finish wearing off key interior pieces, show GM’s redemption on the quality front is not quite finished.
“And I have this nagging feeling that the Volt will end up being either a big disappointment or a complete fiasco.”
I have the same feeling. But if GM and/or Toyota can market a successful mainstream plug-in hybrid it will completely transform the industry and our economy. If they could sell it for under 30k and it has an electric only range for at least 50 miles, it will likely sell over a half million units. I think GM understands the potentialities involved in this product and I hope that they are given the financial and PR credit they deserve if the Volt comes to fruition.
“Ford? The quality is getting much better, but now it must make similar gains in styling, performance and economy. But at least Alan Mullaly isn’t promising us the moon, or shooting from the hip at competitors. He is also making real changes to the corporate culture. The question is whether time – and Ford’s money – will run out before those changes bear fruit. ”
Best synopsis I’ve ever read about Ford’s situation.
i6….
“In essence, it sounds to me like you’re ‘passing the buck’ for big 3 execs.”
Nope. I believe that those three issues are critical to their survival and it will likely take more than just what can loosely be termed ‘clock building’ to get it done.
Someone has to ring the bell of urgency involved with those issues, and it will take far more than Big 3 management for it to be heard. Also, the main reason why suppliers have been consolidated is because of the substantial cost disparity between the domestics and the overseas manufacturers. To say that Americans can’t or haven’t built a competitive small car is completely bogus. Toyota in particular had their proverbial clock cleaned for 20 years with the Tercel and Echo before the Yaris finally gave them a good footing in this market.
Luigiian….
I agree with you. Rental cars are often the most abused and least outfitted vehicles that a manufacturer will sell. Fleet vehicles also qualify for this… but most of them aren’t driven by more than a few folks.
Frank…
The best representation of a car’s efficacy in the marketplace is their highest volume model. A late 1990’s A4 with a cloth interior, no sunroof, no Quattro, and an automatic transmission is going to be far different to drive than the typical mainstream version. As a partial defense to your position I do see more vehicles on the low end that are equipped with features that used to be available only if you moved up. But overall I believe the volume sellers represent the best version of a given car, since they cater to the core customer for that product.
Dynamic 88…
Honda is a Japanese company and most of their plants, employees, shareholders, assets and liabilities are based form there. As such they heavily benefit from government/taxpayer supported universal health care, a labyrinth of regulations and distribution related oligopolies that reduce competition, and the variety of MITI (Ministry of International Trade) programs that cater exclusively to their needs. A lot of overseas governments understand the need to promote and protect their core industries in order to become a developed and successful economy. Ours simply does not.
I easily look at over five hundred vehicles a week and my experiences are that their is a lot more variance within a given brand’s product line than there is between domestic and Japanese/Korean/German etc.
Kia Optimas from the earlier part of this decade tend to be pretty decent overall. A Kia Rio from the same time period is pure garbage.
Altimas and Maximas from that era tend to have good quality. Titans and Armadas are absolutely horrid. Not to say that you can’t find a good one amongst the thousands, but these vehicles tend to have serious quality issues.
LeSabres, Regals and Centurys tend to be fine and actually wear well. Rendezvous and Rainier models tend to be defect ridden.
You can go down the list and find any manufacturer
that has well designed and well-built models, and those models that simply don’t cut it. To say that one car doesn’t cut it because of the proverbial badge is simply ridiculous. I know that’s not what you’re saying. But that’s what a lot of car buyers do on both sides of the proverbial fence.
Steven Lang :
Good points but remember that Halberstam’s book was published in the mid-80’s.
Re: “If their pension and health care obligations were at comparable levels to their competitors (which are heavily subsidized by their governments), then you would have a far more equitable fight than what’s taking place right now.”
Not true for Canada. Health care costs are payed for by employees through taxes while U.S. health care costs are payed by the shareholders (and customers). There is no government sugar daddy handing out freebies, no free lunch. If it’s that big a concern for the autoworkers, let then take a pay cut and maybe their after tax income will be similar to Canadian autoworkers.
I agree that GM and Ford are creating some good new cars but they are large to medium size. I prefer a small car for fuel economy and handling (i.e. our Mazda3) but they appear unable to produce such a car profitably.
Several of y’all completely missed the point on the pension/healthcare issue: Honda’s better pie means they charge more money for the car and get it. If Ford made an equally good pie, they’d be able to charge that higher price; leave less cash on the hood; and make a profit (and THEN we could cry about how their profit was smaller than Honda’s because of their higher costs).
To blame those higher costs when you’re not even interested in making an attractive car for small car buyers is absurd. To be fair, Ford hates small car owners less than do GM and Chrysler.
Honda is a Japanese company and most of their plants, employees, shareholders, assets and liabilities are based form there. As such they heavily benefit from government/taxpayer supported universal health care, a labyrinth of regulations and distribution related oligopolies that reduce competition, and the variety of MITI (Ministry of International Trade) programs that cater exclusively to their needs. A lot of overseas governments understand the need to promote and protect their core industries in order to become a developed and successful economy. Ours simply does not.
You have to be careful in assuming that all “universal” plans are set up the same way. In Japan a company the size of Honda is probably paying 50% of the cost of their employee’s health care. Possibly more.
Most of Honda’s US sales are of cars built here. They are paying health care for their American employees, same as the 2.8. Costs may be lower because their workforce is younger, and they may require the employee to pay a larger share of it themselves.
The 2.8 don’t need protection. They need to do a better job of making good products. The market quite clearly is making it’s choice.
I do believe the 2.8 can rescue themselves. Lower labor costs aren’t going to do the trick. No one buys a car based on the manufacturer’s labor costs.
To the commenters here, it would worth going back and reading Brock Yates editorial here two months ago: “Grosse Pointe Blank”
https://www.thetruthaboutcars.com/brock-yates-grosse-point-blank/
“Go back 40 years, when I scribbled a story that put me on the Motor City hit list: “The Grosse Pointe Myopians.” The sub-title pretty much outlined the premise: “Accustomed to silver-lined visions, the auto elite refused to see any gray clouds.”
“Detroit can fire scattershot numbers to justify practically anything, including slumping sales. However two vivid facts remain after all the ledgers have been shuffled; the domestic automobile industry is not growing as rapidly as expected and imports are making shocking inroads into the American market.”
“Remember now, those words were written close to a half-century ago. Nothing, not a damn thing, has changed. Sales continue to slump as the Europeans take more of the upscale market and the Japanese and Koreans (and soon, the Chinese) chisel away at the center and bottom of the market.“
But if GM and/or Toyota can market a successful mainstream plug-in hybrid it will completely transform the industry and our economy.
Part of the Big 2.x’s problem is bombastic management culture like we see here — hyping the next Moonshot! project that grabs attention in the management suite and gets another empty-suit corporate politician promoted. Meanwhile, it’s career limbo to tend to the non-glamourous, long-neglected important task of improving the myriad of design, engineering and manufacturing processes that make for satisfying cars rolling out the door.
I’d rather see them focus less on the next overhyped ‘Revolutionize the industry!’ dog and pony show we’ve seen way too many times before — the “Push the Japs back into the sea” Pinto and Vega, the X-Cars, J-Cars, 1981 Escort, K-Cars, Roger Smith’s robotics revolution, 1994 Neon and the rest. I’m starting to feel like Charlie Brown trusting Lucy to hold the football this time.
Hey, Big 2.x, focus on building a car with the engineering, quality, driveability, attention to detail, reliability and durability of a Honda Civic. It shouldn’t be that hard with the depth of talent in your organizations. You might actually turn a profit because you could sell it at Civic prices instead of heavily-discounted Focus/Cavalier prices.
When you’ve proven you can accomplish this, without constant whining about UAW/health care/pensions/exchange rates/sunspots, and not before, work your way up to more ambitious tasks. Show us you can get the details right first. It may not be mega-profitable in the short term, but most worthwhile endeavors require an eye for the long view. You cannot viably continue to run a manufacturing industry with multi-year product development cycles when you are tunnel-visioning about next quarter’s earnings.
For decades you’ve abused the trust of millions of Americans who consequently left you to drive imports. But you might be surprised how many would flock back to the home team if you gave them a good reason embodied in a product rather than jingoistic TV commercials.
Part of Detroit's problem now is that, for valid reasons or not, many consumers have crossed domestic brands off their shopping list. If people are not even willing to look, the 2.8 are dead in the water. Reading many of the comments posted here make it clear that quite a few buyers have closed minds to even considering a test drive with anything "domestic". No doubt some are tempted to respond with stories about how poor an experience they had in the past. And they may very well might have. But the tone is such that you would think that only Detroit could possibly commit such blunders. Lets be honest here. There are many foreign nameplates that have worse reliability, some MUCH worse. Just look at the entire Mercedes Benz line. (remember we are talking reliability here, not quality of materials, fit and finish). MB now produces some of the most unreliable cars made today. If you really cross shop makes, you will find some very good cars with domestic names. Yes,there are still some turkeys, but to dismiss, say, GM across the board make no sense. Buying a car to be "patriotic" is foolish if the car itself is a POS because blindly buying something that is junk prevents the market from forcing improvements. Japanese competition has been the best thing that has happened to Detroit even if that meant some serious short term suffering. However, if nobody is willing to look, the suffering becomes long term or fatal. In our household, we look at all vehicles in a given segment and buy the one that we feel is overall the best, even if it costs a bit more. The end result is that in the last six vehicles purchased, two were Ford products, one was GM, one was Toyota, one was Infiniti, and one was BMW. The latest was a new Cadillac CTS which for us beat out the G35. I wonder how many people who purchased a G35 even bothered to look at the CTS. Not many, I am willing to bet. The 2.8 have produced some very good models to entice people to "flock back" to. Very few Toyota owners will bother to try.
Back to the Civic v Focus question…
geeber:
Part of the reason it is a better car is because Honda can put more money into the CAR itself and still make a profit, while any Big Three vehicle must also carry a portion of their health care and pension costs. With smaller vehicles, where the profit margins are thinner, that handicap becomes truly onerous.
Amen. That’s why the SUV boom of the 90’s was such a huge distraction for Detroit. They made profits on trucks and left the small car market to the imports. And it wasn’t just management – GM suffered wildcat plant strikes in the mid 90’s when they tried to make certain plants more productive.
The labor agreement just signed is a great step – but it’s about 8 years late…
As many others here note I was excited to see that jurisb was given an opportunity such as this. I have always found his postings intriguing. A bit, uh, apocalyptic in tone maybe, but he does a fantastic job of drawing our attention to the major long-term problem here…the loss and willing devaluing of American engineering knowledge and capability.
Zoom Zoom. How many American flagged transports are there currently? Do you know how long it takes to build a ship? Actually, because the numbers of civilian shipyards are prolly down very low. How long is it gonna take to build the infra structure needed to build the ships? Train the workers? Wabbout the the steel? You arent gonna pick that up at the local Walmart. Sure, you can bomb an attacker back to the stone age, but how are you gonna supply troops?
Steven Lang: Honda is a Japanese company and most of their plants, employees, shareholders, assets and liabilities are based form there. As such they heavily benefit from government/taxpayer supported universal health care, a labyrinth of regulations and distribution related oligopolies that reduce competition, and the variety of MITI (Ministry of International Trade) programs that cater exclusively to their needs. A lot of overseas governments understand the need to promote and protect their core industries in order to become a developed and successful economy. Ours simply does not.
Steven,
I am a big fan of yours, but I have a few bones to pick with this one. Firstly, if Japanese universal health care is such an important cost factor, why don’t more companies move operations to Japan? Maybe because Japan isn’t so cheap to do business in. Which is why GM is moving engineering functions to places like Korea and China, not Japan.
Secondly, saying that Honda derives advantage from having MITI on its side is kind of ironic, since it was MITI that tried to prevent Honda from entering the auto business in the first place. This sounds like the Hillary campaign claiming they are ‘helping’ Obama and the Democratic party by staying in the race to vet their rival. With friends like these…
Finally, to claim that the US does nothing to promote or protect core industries is to turn a blind eye to this government’s coddling of the Energy, Drilling, Farming, Defense and Health Sciences industries.
Maybe your point is that the US does little to protect the US auto industry. Have you seen the tax on imported pickups? All the money poured into ‘research’ that goes direclty to domestics’ bottom lines?
Sorry, but the uneven playing field excuse is just that: an excuse.
Management dashed their workers’ expectations of a better life on the rocks of their scotch and soda.
I don’t know if you borrowed that, or made it up yourself, but it’s brilliant.
Nice to see your thoughts arranged in paragraphs, jurisb! No offense, but I find most of your comments a little difficult to read without paragraph breaks.
Brilliant work Juri — your writing sounds like it’s from an imaginary JP Donleavy novel wherein an auto expert empties his heart. I have commented several times I am a fan of your special style of expression, and I am really glad RF is confident enough to publish this.
Next editorial (please): Juri SB on what comprises a really good car interior.
Could someone re-post this with all the adjectives and references to tears deleted, so that I can read it?
The British have managed to function as a society dispite losing virtually all home-grown car manufacturers to foriegn ownership (or closure).
We will, too.
Because as mentioned above, Chrysler is KAPUT, and I use the German word advisedly. They helped to cause Chrysler’s demise.
Interestingly enough, Chrysler execs lied and pulled the rug from under American Motors workers by closing the big (and very old) Kenosha and Milwaukee plants almost immediately after buying up AMC/Jeep in 1987. After making empty promises about keeping the plant open.
Also, DaimlerChrysler yanked the rug from under their “partner” Mitsubishi a few years back, without thinking through the idea that perhaps just perhaps, if they held a safety net for Mitsubishi “this time”, Mitsu might be there for THEM to hold out a safety net “next time.”
So it’s kind of like kizmet or karma to have Daimler do pretty much the same thing to Chrysler that they did to Mitsubishi – get rid of it as fast as possible and write it off as a bad job (after ruining it) – and it’s also interesting to see how Chrysler is now going to be treated by it’s next buyer in much the same way that Chrysler treated AMC when Chrysler bought it.
Sometimes the hammer gets melted down and becomes the nail, doesn’t it?
Nice editorial. A Shakespearian story of despair that touches a Pistonhead’s heart. It speaks to the matter that despite how much we complain, question, ridicule and dismiss our hometown teams, we all have a soft spot because it represents something pure and genuine of our history. It’s a proven shame that the dream and innovation of our automotive forefathers lies sacrificed at the temple of the almighty dollar and stoked egos.
@jurisb: At the end i would like to point out, that immigrant families are less likely to be American- patriots, and less likely giving Detroit 3 any advantage or priority when choosing a new vehicle
I would love to see some real numbers behind this assertion. In my area, it is the first generation immigrants who are the most American product-patriotic. As the euphoria wanes in the subsequent generations, other factors determine buying.
So, if you have real, serious numbers to support that, please show them.
While there’s very little to dispute in Jurisb’s essay, it’s not the whole story. It’s become American to fix blame for problems that are of a larger making, and certainly the management cadre, boards and even the shareholders of the Detroit 3 are culpable for the current straits of our domestic automaking industry. But the truth of the matter is that if all that were fixed magically in a day or a weekend, repair would still be many years away.
We, the individuals who comprise the United States, have the power and ability to improve this situation right now, but we lack the will. Or perhaps in the aggregate not enough people care. Patriotic purchasing is a blunt instrument that has both beneficial and ill effects. It is a source of stalwart revenue for the Detroit 3, but it’s a one-legged stool even for the consumer because patriotic buying does not blend in enough market pressure to stimulate the right behaviors by manufacturers. On the other hand, individuals who peer over a damaged auto manufacturing landscape from the ivory tower of laissez-fair market capitalism are ignoring social factors that are in their self-interest to influence or moderate through actions that might seem irrational to adherents of that market-driven mindset.
Whether we like to admit it or not, as individuals our purchasing power and the discrete decisions we make on how to use it shapes the world we live in. Today, Americans in many areas of life are forfeiting the power granted them to sculpt their world through the social and commercial leverage of their buying power.
Forget about automobiles for a moment. Wal-Mart got to be, depending on criterion of measurement, one of the largest corporations on the planet despite some bitter opposition to the consequences of its narrowly-defined efficiency. Yet in towns all over America that were sharply divided over the desirability of hosting Wal-Mart in their locale, the portion of a local population that resisted the chain’s expansion in an effort to preserve the character of their community could usually be found shopping in the new Wal-Mart that was built after overcoming legal obstacles to its construction.
We saw this movie before in consumer driven markets, notably in televisions. By the mid-1960s, our domestic TV manufacturers had become complacent. They dominated the channels of distribution, settled on a fading aesthetic for their packaging, stagnated technical design, and had become accustomed to inbred innovations that helped them jockey each other for market share. The basic design of Sony’s Trinitron picture tube was an American invention, but RCA, Westinghouse, Sylvania, GE, Muntz and others didn’t see the need to adopt it, so the idea went to Sony, clever and insightful enough to adopt it for further development and commercialization.
For about a decade, Sony TVs really were better than what the domestics were offering, and some of the Americans were quickly winnowed out of the market. Domestic response to Sony’s challenge came late and only incrementally. But by the late 1970s, RCA for one began bringing TVs to market that had more natural color and more visual film-like depth than Sony’s more cartoon-vivid Trinitron. But to no avail. By then, for too much of the market, a Sony Trinitron was cooler. It had the brand cachet to easily overcome any flickering recognition that a former champ had fielded something superior. RCA was sold twice; its design and manufacturing facilities in the US folded, and it’s now just a vacant brand unrelated to its past.
Consumers had the option to help them claw back, but not enough cared. I recall at the time hearing people admit that an RCA TV had the best picture, only to then hear, “…but I’d buy the Sony…” And so they did.
Also at the time, many Americans, especially elites on the coasts, commonly responded, “Who cares whether we make TVs?” Yet display technology became a wealth driver on its own but by then we had forfeited our ability to play. When we lost the manufacturing, we also lost much of the vaunted R&D. Sure, our video processing expertise resides inside Chinese, Korean and Japanese displays, but the social bridge manufacturing provides is mostly absent in that sector, in the US.
At a pure economic level, the logic for comparative advantage is sound, and if Americans are no longer in the carmaking business, we’ll nevertheless move on and prosper as we escalate the strata of economic maturity. And make no mistake, a “domestic” industry comprised of nothing more than transplants is not the same as the United States still being significantly in the business of making cars. Transplants are an echo of a forfeited industry, with truncated social, jobs, vendor, financial and management leverage compared to equivalent domestically-owned counterparts.
However, the world has other operators than sterile economics. The human factors of politics and social well-being, community, cohesion and aggregate spirit underpinning nation rather than state cloud the clean logic of economics. Manufacturing is an instrument for assimilation in an immigrant nation. It is a pillar of middle-class sustenance. Blithely accepting the loss of manufacturing truncates social cohesion and accelerates bifurcation of our society between haves and have-nots. In short, we should care enough to chart out an individual response that is somewhere between patriotic buying and free-market ignorance of social factors.
That middle path is to buy competitive Detroit 3 vehicles whenever and wherever possible, beginning now. Now, and irrespective of what’s perceived as cool, or sliver qualitative differences. We can be supportive of companies striving for Herculean change by buying their most competitive vehicles. We can be punitive of bad effort by hastening demise of poor product through shunning it. And we could be a lot noisier about communicating what we want from these vendors.
Since 1980 when I bought my first *new* car after years on the used market, I’ve purchased 17 cars for myself and spouse. 3 were imports, 1 was a transplant and 13 were Detroit iron. All have been completely reliable except for the first (which was British and which even then never left me stranded) and most have been driven into six digits on the odo at departure from my garage. The majority were purchased at prices close to the national average new vehicle purchase price for the era they were procured. My first American new car was purchased in 1983, so for 25 years and counting, I’ve demonstrated in the real world that an American interested in underpinning his country’s manufacturing economy could buy competitive products that performed reliably, were durable, and entertained while doing so.
Yes, many will say they don’t have the time to be a more engaged consumer. They have other priorities. We don’t owe companies anything special — they owe us the best products and business practices. Many will say, “…screw ’em; those bastards sold me / failed to fix my (Cimarron) (Pinto) (Chevette) (Celebrity) (Escort) (Focus) (Tempo) (Taurus)….they deserve to die!”
That’s sentiment, not rationale. We, collectively as consumers of automotive products, are as guilty of apathy and nearsightedness as the executives and unions we point the finger to. The United States has never been a craft culture. Craft is a subculture in the US, not mainstream. We have been a volume culture in manufacturing, going back to the Conestoga Wagon, gunmaking and the cotton gin. Our products have been audacious yet attainable, for the most part. Pricing has been artificial, not cost-based. Of course products have to work. They have to deliver sustained value. Still, the executives we decry for boneheaded insulation from real markets or for nickel-and-diming desirability out of otherwise appealing concepts are no more guilty of losing sight of the big picture than are consumers who resist the idea of their purchasing power having social leverage. Companies must field competitive products, but we as citizens and consumers have responsibility to field a competitive culture on the world stage. THAT is a ceaseless project.
Whether it’s public schools starved for funding, too few police on the streets of Los Angeles, high-fat foods, stupid corn ethanol subsidies, or a crumbling domestically-owned carmaking business, the blame that’s easily identified elsewhere does not absolve individuals of their neglect to wield their purchasing power for greater good. The failure in the executive suites of Michigan, at Tesla, at Countrywide, Sears and Bear Stearns, et al, reflects the concomitant failure of individuals in our consumer culture to think holistically about life and the effects of personal conduct.
Chevrolet has a hit on its hands in the HHR. Add in (reviled here) Cobalt sales and it’s clear that the platform works for a substantial number of people. Further, it can be argued that America loves the Cobalt, just more so in the form of an HHR. An HHR or HHR SS would easily meet the needs of most buyers in the small ute market. Americans can simply elect to buy more of them and fewer small utes from Toyota, Honda, Suzuki, Hyundai, etc. This is just one example of many.
Americans will buy somewhere between 14.5 – 15.5mm new cars this year. That’s a lot of potential leverage. If Americans really want a domestic automaking business in our socio-economic mix, we can ensure it stays, beginning right now. In a country with a rich history of vociferous minorities driving broad scope pervasive change, the only conclusion to be drawn is that not enough people care about this issue to get involved. We collectively think product is king, that our choice reflects upon us, that social status is bought, that our need for affinity compels bias. Meanwhile, I’ve been proving it’s possible to get reliability and satisfaction in automotive purchasing while doing my best to shape the world I live in with the tools of influence I have at hand.
Phil
Phil: Well said. I really do think that the good domestic products are overshadowed by the crappy ones or by ghosts of transgressions past. You would think from reading some people’s opinions that domestic automatically equals bad, foreign always equal great. Detroit is partially to blame for this. Instead of continual progress, we get good efforts mixed in with poor ones, new “Way Forward” restructuring on a regular basis. Every time they encounter problems they blame the UAW for most of them. Detroit is like a kid eating cookies instead of veggies. When confronted with the tough long term choices, they always try to take the easy short term solution. Hence good SUV’s and a mixed bag for cars. This is not just the auto industry; this is the classic corporate American business model. Sad, isn’t it?
phil Ressler- Can you imagine how big or small would Wall-Marts profits be, if they had to sell only domestic products?
Domestic manufacturers have no vision, tey have no abilities to sacrifice short term profits for the sake of company`s future. What took so long for Nissan to crank out Gt-R? Now you see the waiting was worth it, when you see GT-R beating crap out Veyron at Nurburgring. What takes toyota so long to bring Lexus LF-A to market, considering they have the biggest R&D cash in the automotive world? See, they have a vision of being the best, being at the top. they are not obscured by the first greenbacks they could get from selling that coupe. How do you tame down that ravaging storm for dollars within Americans, who get blinded and then hit by Toyota tundra and left on roadside to be picked up by emergency Chapter 11?
Jurisb,
I don’t have any agenda to have a market exclusively supplied by domestic vendors. Walmart is the most efficient retail distribution organization in the world, and that facilitates a mixed, diverse products market. There is benefit to them bringing that capability to market. But there too is cost. Consumers can exercise more power regarding the mix of benefit and cost we enjoy and incur.
Domestic manufacturers have no vision, they have no abilities to sacrifice short term profits for the sake of company`s future.
This is the kind of declaration that draws fire to you here. The absolute dismissal of capability among US automakers is misinformed and simplistic. GM and Ford are clearly sacrificing short-term financial performance to create a viable future for themselves while climbing out of a deep hole. GM could simply license Toyota’s DSD format and try to boost market share as a frame-maker, in the way that Boeing and Airbus integrate engines from GE, RR, etc. into their jets. But instead they are funding several alternative propulsion technologies in an effort to create an engineering-based future. GM pioneered metal hydroforming in large scale auto manufacturing. They developed via Delphi the innovative magneto-rheological active suspension dampers that Ferrari has seen fit to adopt. Just a few examples. BMW uses some GM automatic transmissions. The Corvette is admired worldwide as an engineering platform and for its manufacturing jointly enabling profitable production of stellar vehicle performance at the world’s most accessible price. It’s just that these abilities are not uniformly applied to the Detroit 3’s overall businesses. That’s a management inadequacy that is correctable, not intractable.
What took so long for Nissan to crank out Gt-R? Now you see the waiting was worth it, when you see GT-R beating crap out Veyron at Nurburgring.
By the way, a GT-R outperforming a Veyron is less of a feat than you imply. Like almost everything else automotive developed under German supervision, the Veyron is an overweight pig, with cost-no-object engineering largely applied to overcoming its 4200 lbs. of unimaginative mass, along with managing the air load imposed by its velocity objectives. Nice car. I’ve seen two on the road here in Los Angeles and admired its maneuverability at speed through canyons, from behind. But honestly for a over a million bucks a copy, I’d be a lot more impressed if Bugatti had fielded a structurally strong 240mph performance car weighing 1800 lbs. Nothing over *TWO TONS* riding on four automotive tires impresses me. GT-R is a gold star for Nissan. It also happens to come halfway through the product cycle for its competitors. I fully expect Nissan, Toyota, GM, et al to be able to engineer such a car if they want to. Eventually the Koreans, Chinese and Indians will too. There are no real engineering secrets in that world — only choices, the tyranny of economics, imagination and will.
Lexus LF-A is so far an exercise. When (if) it gets to market, we’ll see what it represents. GM’s ZR-1 is coming too. None will be without their adherents and fans.
You’re right though. Toyota has the advantage of a huge accumulated cash horde. Microsoft has that advantage too in its world, yet that treasury doesn’t prevent even small companies from innovating underfoot, outrunning and outmaneuvering Microsoft in specific sectors within software, entertainment, and tech-enabled media. American consumers retain the ability and choice to effectively curb Toyota’s treasury advantage by steering their dollars in the direction of the Detroit 3. Certainly, management of those companies then have to make good on the gesture if such a consciousness materialized. It may not.
Nevertheless, if Detroit rouses its energies to mount a comeback, it will be propelled much more by imagination than money. American manufacturers have to stop building imitation Toyotas and Audis. To reclaim their market, the Detroit 3 must build dramatic, engaging, future-oriented vehicles in the confident, optimistic American idiom, that sheath practical advanced technology and accessible value. While they’re marshaling those products, the near term challenge is building a bridge to that future via the best of existing products and marketing — along with an interested, engaged, committed consumer population.
Phil
Phil, you are playing out too many `if`s , and too many `we could`s. The same `if`s were applied to tube manufacturing, LCD manufacturing, wristwatch industry, forklift industry, household electronics industry, train manufacturing, truck manufacturing, modern motorbike industry, computer manufacturing, industrial robot manufacturing. Guess what, now you could write an editorial with zillion `if`s standing to the bed of cash bleeding Motorola, tapping on her shoulder with `you must`, `we could` and `if only`.
Phil, if American manufacturers had vision, they would pour money into R&D and product diversity and quality and make sure every dollar is spent properly.
If Boeing had vision they would commit to building Blended Wing Body airplane, not come up in the last minute with a Dreamliner, making chaotic phone calls to Fuji Heavy , if they will be able to stamp wings.if Harley Davidson had a vision, they would pour money into improving diversity, technology and fit and finish, not wasting money on adds, or asking government to save her ass by prohibiting `certain volume engine displacements` to be imported.If Apple had a vision they would not stand like Narcissus enjoying their i-pod ads, but pour money into new and new product development. If Gm had a vision, they would start building their own platforms, so in future they would have an expertize, upon which to train next gen engineers.if Ford and Gm had a vision, they wouldn`t have bought the hybrid technology from toyota and honda, but developed it independently.
Phil it is not a one day tornado, it is a gradual debasement of US manufacturing basis, that brings US middle class along. The president is not flying Sikorsky anymore, Army Refuelling Tankers aren`t Domestics anyomore and are replaced by Airbus variations. Even military choppers get slowly replaced by Eurocopters. So one by one, a company by company, US manufacturing backbone gets dismantled. Why is it wiping out middle class? Because to build an engine you need an engineer, and he will not work for 10$ an hour. To sell an engine , 10$ an hour employeee is OK. At the same time engines get sold, profits roll in and executives get the same millions whether they manufacture engines or sell them, the difference is the lower echelon, where 5 sales clerks selling Yamaha engines get 10 bucks, or 300 Evinrude engineers get 25$ an hour actually engineering engines.
Phil,
You brought up an interesting point about immigrant assimilation and manufacturing. I have to ask, do the UAW controlled plants still perform this function for our society?
As a Texan, I can tell you that illegal immigrants are not being assimilated very well, because they do not mix much with the rest of us as much as the legal ones do. IMO, we really need to vastly increase legal immigrants, and slow to a trickle the illegal ones. Unfortunately, the PC types twist any attempt to reduce illegal immigration into a racist jihad while the press willingly helps.
IMO, the labor laws in Michigan and many other states will prevent Detroit from rising from it’s own ashes. We will likely see the rise of another American car company, but it will be in a right to work state.
Steven Lang: Thank you for the kind words.
I would love to read an editorial on your insights gleaned from the auction market…which vehicles from various manufacturers hold up best in the real world.
M1EK: Several of y’all completely missed the point on the pension/healthcare issue: Honda’s better pie means they charge more money for the car and get it. If Ford made an equally good pie, they’d be able to charge that higher price; leave less cash on the hood; and make a profit (and THEN we could cry about how their profit was smaller than Honda’s because of their higher costs).
Taking your analogy further, Ford must pay the health care costs and pensions of the RETIRED bakers, and its current bakers were laboring under work rules that put Ford at a competitive disadvantage. The new contract should help, but under the old contract, Ford had less money for the ingredients because it had to put more money into other costs that Honda did not have.
M1EK: To blame those higher costs when you’re not even interested in making an attractive car for small car buyers is absurd. To be fair, Ford hates small car owners less than do GM and Chrysler.
You’re right that the domestics have been less than enthusiastic about small cars than the imported nameplates. But the cost handicap did a lot to dull their enthusiasm.
Of course, the proper route would have been for the union and the company to work on reducing this cost handicap while the market was booming. Instead, both union and management waited until now, and it may be too late.
If Boeing had vision they would commit to building Blended Wing Body airplane, not come up in the last minute with a Dreamliner,
The equivalent Airbus model is years behind the Dreamliner because it was rejected
if Harley Davidson had a vision, they would pour money into improving diversity, technology and fit and finish,
Harley, if nothing else, targets their market with perfect accuracy. A “Nipped out” Harley would bomb in the marketplace. The buyers want the stone knives and bearskins technology just as it is.
Ford and Gm had a vision, they wouldn`t have bought the hybrid technology from toyota and honda, but developed it independently.
Ford’s development of Hybrid technology is NOT Toyota’s. You can research that right here on this site.
Army Refuelling Tankers aren`t Domestics anyomore and are replaced by Airbus variations.
Not yet: Boeing is challenging the award of the contract to Airbus.
America still has great engineering and R&D, but corporate America doesn’t want to manufacture here. It is interested in cheap labor so those on the top can make extra profit for themselves. This is especially true in consumer grade products. Where America still has a strong presence is in “cost no object” products. Scientific equipment, medical equipment, top notch audio (think Mark Levinson, you know the stuff that Lexus buys). In these arenas America holds her own. Jurisb, your tone makes it sound like America has nothing left to offer the world. Such a pessimistic attitude is patently unfair. Yes, most of America’s manufacturing wounds are self inflicted, but the course can be changed. To do that, corporate policy must change first. It will be necessary to put long term goals ahead of short term prosperity; basically a complete change of the corporate mentality that has caused this crisis to begin with. Not easy, but critical.
Thanks geeber. I worked on that exact topic matter a couple of months ago. I examined the trade-in’s at a large regional used car dealership (4000+ per week) to see what percentage were traded in with over 150k (implying a durable product and customer satisfaction) vs. those that were traded in with less than 100k (implying a negative or unsatisfying experience.)
It wasn’t considered to be a good fit at that time. Maybe now would be a better time for it.
What’s inevitable is that I know alot of people of cannot afford (without large financing) to buy new vehicles these days. These are not people in danger of losing their homes but people whose incomes have been slow and steady but who just don’t make enough to buy a new car every 3 years.
We make a good living but there is no way I’d spend that kind of money either ($25K).
I’ll be content to keep on driving what we’ve got and fixing them if they break. 150K+ on each.
When it does come to time to buy something else – when we HAVE to – we’ll buy something used and well cared for and not likely anything domestic b/c used car ownership requires some resemblance of quality to be worthwhile and Detroit isn’t in that business yet from what I see in my friends’ and family’s cars.
Drive a VW to 200K and deal with a list of small things myself at low cost or buy a domestic at 100K miles and face blown engines and dead transmissions. Easy choices…
What’s inevitable is that I know alot of people of cannot afford (without large financing) to buy new vehicles these days. These are not people in danger of losing their homes but people whose incomes have been slow and steady but who just don’t make enough to buy a new car every 3 years.
We make a good living but there is no way I’d spend that kind of money either ($25K).
I’ll be content to keep on driving what we’ve got and fixing them if they break. 150K+ on each.
When it does come to time to buy something else – when we HAVE to – we’ll buy something used and well cared for and not likely anything domestic b/c used car ownership requires some resemblance of quality to be worthwhile and Detroit isn’t in that business yet from what I see in my friends’ and family’s cars.
Drive a VW to 200K and deal with a list of small things myself at low cost or buy a domestic at 100K miles and face blown engines and dead transmissions. Easy choices…
FWIW we are very seldom Wal-mart shoppers. We’d like to 100% domestic buyers but the products just arent’t there anymore. When they were available (when I was a kid) the gadgets were often a generation or more behind the imports. I was a kid of the 1980s.
I think we Americans are just too distracted by our relatively comfortable lifestyle. Maybe a little worried that we might be weird if we take our specialty too seriously (thinking about our ideas and designs a little 24/7).
I’m not sure that the future of American automobiles isn’t in some Tesla-like startup in a place like Silicon Valley.