By on October 29, 2008

Paul Ingrassia’s essay in The Wall Street Journal takes a stab at a question which has preoccupied me for years. How the hell did the American automotive industry, which once was the model of industrial might for the world, become a sickly embarrassment? Generally, blame is apportioned amongst these areas: management, labor unions, government, customers and bad luck. Ingrassia comes down pretty hard on management, with a supporting role for the unions.

Ingrassia opens by pointing out the scant media attention paid to the opening of Honda’s new 200k-Civics-per-year factory. The Indiana opening stands in stark contrast to Motown automakers’ seemingly endless factory closings and layoffs (i.e. paying union workers not to work).

“This situation doesn’t stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit’s woes. As car sales plunge — both in the U.S. and in Detroit’s once-booming overseas markets — it’s becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue. All three companies, once the very symbol of American economic might, need new capital, but their options for raising it are limited.”

But how did we get here? Product is the key. Ingrassia provides a good list of American post-war hits including the GTO, Caravan, Taurus and Explorer. All were segment busters– and not a one of them was created in the last 17 years. The Explorer launch of 1991 was Detroit’s last breakthrough product. But why?

“In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.”

Ingrassia gives the transplants props for making allies out of their US workers. In the 1970s, it was still popular to blame the quality problems of American cars on the workers who built them. Honda tiptoed into these scary waters in 1979, opening of a small motorcycle assembly plant in Ohio. Workers were initially frustrated by their task of building a few motorcycles and then taking them back apart to evaluate quality and figure out how to make it better. But they learned the Japanese way. Motorcycle manufacturing proved to Honda that American workers were not the problem.

By 1982, Honda Ohio was cranking-out new Accords. And they never looked back. Two years later, Toyota opened NUMMI joint venture plant in Fremont, California, which still builds Corollas, Tacomas and Pontiac Vibes.

“Meanwhile, in the same year that Honda started building cars in Ohio, General Motors asked the UAW for wage concessions to help ease the company’s financial straits. But on the same day that UAW members voted approval, GM Chairman Roger B. Smith unveiled a new formula that made it easier for him and other executives to earn bonuses. It was a historic blunder.”

Amen to that. Even so, those hit products of the late 1980s and the truck boom of the 1990s allowed Detroit to prosper. But only if you measure success in terms of profits, rather than share. Slowly, calmly, inexorably, the transplants continued eating Detroit’s lunch. By the beginning of the new millennium, Detroit was oblivious to the enemy within its gates. Motown was flush with cash, embarking on a global buying spree.

“In June 2000, GM’s confident new CEO, Rick Wagoner, invited journalists to a resort in Italy’s Alpine lakes to describe a corporate future of ‘fewer cars, more trucks,’ as the Detroit Free Press wrote. Ford’s CEO Jacques Nasser upgraded the décor on the corporate jets and removed the company’s blue-oval logo from the outside of corporate headquarters while the Ford Taurus — once the best-selling car in America — was falling further behind the Toyota Camry and the Honda Accord.”

Easy money in trucks hid the rot within. Who cared that the Taurus had gone from #1 retail vehicle to rental car hell? One Lincoln Navigator made the profits of twenty or more Tauri. But just a few short years later, Katrina sparked the first fuel price run-up in decades. Not much later, the combined forces of growing demand and commodities market shenanigans sent fuel prices in a steep climb which has only recently started to turn around.

Suddenly, the truck boom went bust. The Emperors of Detroit were revealed in all their naked glory. (Well, at least to those outside the gates.) Now, with gas prices are coming down, credit markets have imploded. In these tough time, a Detroit management has long played badly with suppliers, employees and customers suddenly needs all the help it can find. BUT you have to build strong partnerships in the good times to tap into them when the going gets tough. Oops. All those management bonuses for cost-cutting related profits and “hard-headed negotiating techniques” [irony alert] don’t look so good anymore.

What now? Ingrassia gives a slight edge to Ford in the question of who has the best chances to make it out of the nightmare alive; Chrysler is toast already. GM is nearly out of cash. Unfortunately, no one told the feds that only fools rush in.

The dramatic denouement of this sad saga– David Halberstram’s long-predicted Reckoning, will be postponed for the forseeable future. But no matter who– if anyone– emerges from Detroit’s penultimate debacle, the simple truth is that Detroit has no one to blame for their plight but themselves.

[Click here to read Ingrasia's essay]

Get the latest TTAC e-Newsletter!

58 Comments on “Editorial: Between the Lines: How Detroit Drove Into a Ditch...”


  • avatar
    GS650G

    And just what did they do with American dollars? Bought into foreign automakers, started home loans, squandered money on Exec pay. Think about that the next time someone tells you to Buy American because it helps the US. Looks like it helped other countries more

  • avatar
    jwltch

    Really good article. Thanks for posting it, otherwise I would never have read it.

  • avatar
    Blunozer

    Good read.

    Its amazing the level of hubris shown by the Detroit execs. Excessive executive compensation, ignoring their customers, and pursuing short term profits over long-term market share.

    It shows just how big these companies are that it took this long for the house of cards to fall.

    I hardly blame the unions. Workers only want to share in the good fortunes of the company. If the high-level execs are pimping out Lear Jets, don’t ask the guy on the factory floor to take a pay cut.

  • avatar
    Paul Niedermeyer

    John, Thanks for posting this excellent article along with your insightful comments. I woke up this morning thinking that a historical perspective editorial was needed right about now, but you’ve spared me the effort.

  • avatar
    geeber

    Interesting article, but he misses a few points.

    The article includes this example: “For all the Pinto’s infamy, perhaps no car better captured America’s decade-long haplessness than the pug-ugly AMC Gremlin, which debuted in 1970 and died — mercifully — in 1980. The Gremlin’s shape, fittingly, was first sketched out by an American Motors designer on the back of a Northwest Airlines air-sickness bag.”

    Actually, the Gremlin is NOT a good example of Detroit’s malaise at that time, because it was produced by a company already on the ropes in the late 1960s.

    AMC needed a small car to compete with the imports and the upcoming Pinto and Vega. Dick Teague cleverly lopped the back end off of the Hornet to create the Gremlin, which the public perceived as a new car, completely different fom the Hornet. AMC thus basically got two cars for the price of one. And the Gremlin’s basic mechanicals were actually pretty sturdy (if outdated) for the time.

    If anything, sketching the rough outlines of a car on the back of an envelope, and then using a common platform to create two distinct car lines, are two examples of the flexibility and inventiveness that have been sorely missing from Detroit in the last few decades.

    A better example is the Chevrolet Vega, a much more ambitious car produced by what was still the largest, most powerful auto company in the WORLD at that time.

    GM had all of the ingredients necessary to make a world-class small car, but corporate politics and arrogance meant that every time GM made a decision about the Vega, it made the wrong one. John DeLorean chronicles the entire depressing Vega development saga in his book, On a Clear Day, You Can See General Motors. I just finished reading it this week (picked up a used copy at the Fall Carlisle show), and it is still distressingly relevant today.

    Mr. Ingrassia also puts too much emphasis on labor relations, while missing other important factors – the blurring of brand identities, and the failure to quickly identify and correct the root of quality problems, for example. And he misses that the Detroit companies have widely varying relations with the union, and some (Ford, primarily) have done a much better job of managing this relationship.

  • avatar
    indi500fan

    For those with a deep interest in the history of the US car industry, I highly recommend this book:

    Lowenstein, Roger (May 1, 2008). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis.

  • avatar
    John B

    John: I’m glad to see you referenced The Reckoning. I read it close to twenty years ago and it is still fresh in my memory – largely because I see the same hubris in the N. American industry. Your local library should have a copy, if not:

    http://www.amazon.com/Reckoning-David-Halberstam/dp/0688048382

  • avatar
    taxman100

    So let me make sure I understand this.

    The U.S. industries in auto, steel, consumer appliances, electronics, truck, tire, rubber, computer, plastics, small engine, etc. have all been moved overseas, or replaced by foreign companies, because of bad management?

    If that is true, we better blow up every business school in the United States and start over.

    At least we still build airplanes, but even that will be gone in twenty years.

  • avatar
    Bunter1

    Good article.

    I actually noticed SUV sales were softening the spring before Katrina. The party was already winding down.

    Then the (gas price) cops came in and broke it up.

    The signs of change were already there for anyone that wanted to see.

    Bunter

  • avatar
    GS650G

    It’s not just bad management shipping jobs overseas, it’s the oppressive government regulations, excessive litigation, taxes, and mandates on private enterprise. The government wants to tell companies who to hire, what to make, when to make it, and what to do while taking large amounts of the profits. In short they want it all ways.

  • avatar
    whatdoiknow1

    OK, enough with the BS.

    Any person who has studied business and economics can tell you that there is a optimal size a company can NOT grown beyond before it will begin to become ineffective.

    The USA auto industry spend the first half of the 20th century consolidating itself into an uncompetitive mess and sent the second half living off of the rather short term success that that consolidation brought them.

    The writing was on the wall for the US auto industry when we had reduced ourselves to only 3 players while Japanese maintained 8 or 9 and Europe also had a good 8 or 9 native players PLUS GM and Ford.

    It was the death on Hudson, Packard, Studebaker, and eventually AMC that lead to serious lack of innovation and competition that caused our industry to sour by the 1970s. Like it or not AMC was the last American auto company trying to compete based on innovative products; Pacers, AWD cars, etc.

    Giant corporations become entities onto themselves and are no longer able to be responsive to the demands and desires of the costumers.

    Ask any Toyota fan today how they feel about the latest Toyota prodcuts in the USA and you will here many answers about how Toyota is no longer listening to what the loyal fans are asking for and are only looking for the next sale coming from that unknown non-toyota driver that they want to convert.
    This same problem is effecting Mercedes Benz today also. By chasing after the easy money MB has been destroying it reputation and the franchise built upon it.

    In a different industry, IBM (in the 1970 and 1980s) is also a good example of what happens when a company is too bloated to respond rapidly to a changing market. The difference with IBM is that they actually made so very hard choices and changes that have allowed them to survive and prosper.

    Both Toyota and MB need to be very careful. They are both moving away from the attributes that made those companies market leaders but are still willing to exploit the image and reputation. While you might have seen me write nice things about Toyota in other post I must admit that I will NOT buy any current Toyota on the market today with the exception of maybe a Landcruiser which I have ZERO use for. The same can be said for MB, todays MBs are not like the MBs I have always desired in the past.

    While I am might not be in a showroom today shopping today, my point of view is sahred by many and when we do go shopping these companies need to know that they have lost what was most likely a definite sale. The sales they are making with the POS cars they are selling today are NOT the same as the sales they weer making on the excellent cars of yore. A current “new” Toyota shopper is very much in danger of coming away from their Toyota experience saying “no big deal” or heaven forbid ” My friend’s Hyundai was actually a nicer car than my Toyota”! This needs to be couped with the amount of owners of older Toyota cars that will say “ill” when they go to trade in on a new one.

    When folks (with money) have no desire to trade 12 year old Camry for new ones there is a very BIG problem.

    OK, back to the Big3, GM, Ford, and Chysler are all BUSINESSES, in business to make money. Blame the UAW and the US goverment all you want but that is rather silly.
    For any business, if it is NOT selling products that people want, it is going to FAIL!
    The big3 made a very bad decision to make cheaper cars than the imports and hope that price and volume would win the day. This was born out of a philpsophy that American are supposed to buy new cars every 3 to 4 years, and we wanted “flashy trash” over “solid substance”.
    The pickel is in the 1970s and 1980s Americans were perfectly willing to buy more expensive American made cars IF they were desirable and reliable.

  • avatar
    Ken Elias

    At the end of the day, it’s always leadership – and that’s what has been lacking in Detroit. Finance guys generally don’t do a good job with consumer product companies since they lack the visceral understanding of what drives consumer behavior. Instead, they look at financial metrics – down to cost of parts and saving pennies where possible in order to drive profits. Those familiar with Detroit know how looking to save a few cents on a part has led to problems costing millions – and loss of trust with customers.

    Good post John.

  • avatar
    nikita

    The U.S. industries in auto, steel, consumer appliances, electronics, truck, tire, rubber, computer, plastics, small engine, etc. have all been moved overseas, or replaced by foreign companies, because of bad management?

    If that is true, we better blow up every business school in the United States and start over.

    Bingo! Short term, as in next quarter, profits as the only business priority has killed many US industries. The founders of GE, Boeing, Microsoft, and even Ford were product people, not financial numbers wizards. I wonder what business schools in Asia teach? Even US engineering schools have become weak in teaching design in favor of theory only.

  • avatar
    AKM

    “Never confuse a Bull Market for brilliance” as they say….

  • avatar
    KixStart

    GS650G writes, “It’s not just bad management shipping jobs overseas, it’s the oppressive government regulations, excessive litigation, taxes, and mandates on private enterprise. The government wants to tell companies who to hire, what to make, when to make it, and what to do while taking large amounts of the profits. In short they want it all ways.”

    Toyota and Honda don’t seem to suffer much from all this government oppression.

  • avatar
    jimble

    US automakers dug themselves into an ever-deepening hole with deferred compensation agreements (retiree healthcare, pensions) starting in the 50′s. When foreign competitors without this baggage entered the market in a big way, Detroit should have tackled the problem head-on, by renegotiating their labor agreements or maybe by lobbying for socialization of retiree benefits on par with other industrial democracies to level the playing field. Instead they just whined about unfair competition, cut product development budgets, and continued to defer their real costs of doing business. Now it’s simply too late — the hole is too deep to climb out of.

    To those who blame government regulation I say bullshit. Look at VW and BMW, which have built and maintained extremely successful and technologically sophisticated operations in one of the most heavily regulated business environments on the planet.

  • avatar
    kken71

    Thinking about the Detroit blockbusters . . .

    My parents had a 95 Explorer (still do, actually) but replaced it with an 05 Pilot.

    A friend’s parents had an 86 Taurus. Now they have an Accord.

    My friend has a 65 GTO, but his daily driver is a TL and he wouldn’t be caught dead in a new domestic car.

    I don’t know anyone who has ever owned a Caravan, but I know lots of people who have Odysseys (including myself) or Siennas now. If the Caravan were the only minivan on the market, they’d probably have one.

    Notably, Chrysler sold lots of 300s (the current model) and PT Cruisers, and Ford, the current Mustang, because their styling protected them from direct competition from Japan.

  • avatar
    ex-dtw

    “But no matter who– if anyone– emerges from Detroit’s penultimate debacle, the simple truth is that Detroit has no one to blame for their plight but themselves.”

    Ahhhhhhhhhhhhhhhhhhh……………….!!!!!

    So, even though the editorial seems to agree with Ingrassia’s thesis, only Detroit is to blame. Yes, if “Detroit” includes “management, labor unions, government, customers and bad luck”, which I doubt it does.

    So let’s take it back to basics. Unions is offically sanctioned as a monopoly supplier of labor by the government. So can we just skip the laying of blame on unions and move directly to blaming the gov’t for allowing them to exist as an interference in free markets?

    Bad luck comes and goes. It is never ever-present and yet we have had 40+ years of decline.

    Is it really the fault of customers? Only if you don’t believe in markets. Customers are the feedback mechanism letting you know that you are making correct business decisions. Unless some inexplicable force is causing them to take actions that under normal circumstances they wouldn’t take – a “distortion in the force”. What could that be, hmmmmm…..

    So we are basically left with Management and Government.

    Management? Management has made bad decsions, many, many bad decisions.

    But as Holman said in his piece earlier, there is a direct correlation to increasing government intervention and poorer corporate returns. Correlation is not causation but how else can you solve for multiple company stewards equally returning the same piss-poor result.

    Government has only ever added to the burden of compliance, created distortions in market feedback, and in general screwed with businesses ability to make rational decisions.

    So in the end, this is just another example of what happens when people think more government regualtion is what is called for. The destruction of entire industries.

  • avatar
    Honda_Lover

    I agree with the idea that the pension bubble will be the next one to burst. It’s killing America.

  • avatar
    John Horner

    @geeber: I agree with you. Ingrassia puts most of his eggs into the labor relations basket while giving short shrift to many other strategic and tactical blunders. Horrendously poor management decision making is, however, at the root of most of these issues, including said narrow minded labor relations.

    I also agree with you that the botched Vega project was a far bigger screw up than the Gremlin. AMC, and Rambler before it, knew that building efficient smaller vehicles made sense. The Gremlin was an excellent vehicle for what it was, and certainly cost less than 1/10 the investment which birthed the Vega. But, AMC never got to sufficient economies of scale, and being sucked into the pattern bargaining scheme with the UAW didn’t help either.

    One can only wonder how things would have turned out had Chrysler shut down in the 1970s and AMC survived instead. Renault’s bailing out of the AMC “alliance” killed AMC at a time of great weakness. In an alternate universe Renault-AMC moved forward instead of folding the tent and the history of the auto business takes a different course. In that universe Renault-Nissan never happened and a strong trans-atlantic partnership becomes the model for 1980s automotive industrial development.

  • avatar
    John Horner

    The transplants face all of the same regulatory hurdles as the domestic manufacturers do, and they don’t have the lobbying force the domestics employ in Washington. Government regulation is not what caused the decline and fall of the 2.8.

    “If that is true, we better blow up every business school in the United States and start over. ”

    I couldn’t agree more. The mindset being taught to MBAs is at the root of most of these problems. Short term oriented and me-first motivated is the way these people think.

  • avatar
    Justin Berkowitz

    @John Horner:

    I agree with you about the bad MBA mindset. In particular, stock options are a horrible perverse incentive for executives. When executives have a financial stake in the company it can and often does impact their judgment negatively.

  • avatar
    ex-dtw

    @John,

    Unfortunately, while it may be technically true, in actuallity, it is not true.

    Govenment medalling in business has legacy costs that are built up over years. The Wagner act introduced costs that have been built up over years.

    The tax structure that encourages companies to provide healthcare. Born out of the need to pay people more but unable to, due to governemt controls, companies turned to richer benefit packages. We are still dealing with that mess today.

    This is pure social engineering that has led to legacy costs for the domestic automakers that transplants do not have to deal with. That is government medalling and could be quite easily argued the root of the downfall.

  • avatar
    ex-dtw

    Stock options are perverse? MBA Mindset?

    Stock options and corporate governance are complex issues, one with unique sets of advantages and disadvantages.

    Simple arguments such as “stock options bad” reflect a lack of understanding of the tradeoffs/benefits of governance and the separation of ownership and stewardhsip.

    Additionally, the “pressure for immediate gratification” can more directly be tied to pressure from Wall Street than to shortsighted planning on behalf of executives.

  • avatar
    Justin Berkowitz

    @ex-dtw:

    You’re right. But my simple argument doesn’t necessarily reflect a lack of understanding, merely a lack of time to write what could be a dissertation about the tensions at play here.

    Have you read Barry C. Lynn’s article in the November’s issue of Harper called “Abolish Stock Options”?

  • avatar
    Casual Observer

    http://blog.heritage.org/

    General Motors wants to merge with Chrysler. Doesn’t sound so bad, right? Turning Detroit’s Big Three into the Big Two might be just the remedy for an ailing U.S. auto industry. Maybe not. But that’s not the problem. The problem is how GM is proposing to merge with Chrysler – they’re asking me and you to pay for it.

    Chief Executive Officer Rick Wagoner is leading the plea to Congress and the Treasury for $10 billion to complete the merger with Cerberus Capital Management, the owner of Chrysler, that would assist in integrating their operations and help shut down plants, and pay laid off workers and pension plans. This is on top of the provision of $25 billion in federal loans for automobile manufacturers to develop more efficient and cleaner vehicles The Energy Independence and Security Act of 2007, signed into law by President Bush last December.

    The Wall Street Journal reports:

    “GMAC LLC, the big lender co-owned by General Motors Corp. and investor group Cerberus Capital Management LP, is seeking to become a bank holding company, a move that would allow it to gain access to a piece of the government’s $700 billion financial rescue plan, according to people familiar with the talks.

    As part of those discussions, Cerberus, which also controls auto maker Chrysler LLC, has sought to swap most of its Chrysler holdings for a larger share of GMAC, the home and auto lender. Cerberus now controls 51% of GMAC to GM’s 49%.

    It now appears the GM-Chrysler talks are being structured specifically to ensure Cerberus and GM can take advantage of financial bailout programs offered by the Treasury Department and the Federal Reserve, those people said.”

    This screams ridiculous. Yes, the auto industry is struggling – GM reported net losses of $15.5 billion for the second quarter with the third quarter not looking much better. U.S. Senator Charles Schumer (D-NY) said, “Nobody wants to see the auto industry go under.”

    This is true; nobody wants to see any industry fail. Yet, profits and losses tell are very telling for businesses. To put it simply, it informs businesses of what works and what does not work. Over the years Detroit’s made a number of good business decisions but they have been overshadowed by the bad ones.

    Detroit’s dependence on big, non-fuel efficient vehicles was its own doing. Downsizing is also difficult for Detroit’s big three. Taxpayers shouldn’t be responsible for Detroit’s bad decisions.

    Furthermore, a number of companies today could make the case that their respective industry is vital for the economy and begin requesting billions of dollars in federal handouts for mergers and bailouts. If the U.S. economy is headed toward a recession, it is likely that a number of businesses will struggle and possibly fail. Having the government step in to prop up these businesses distorts the market and will inevitably lead to more handouts, more bad policy, and more bad business decisions.

  • avatar
    geeber

    John Horner,

    As someone once said, companies get the labor force that they deserve. GM treated the union as parents treats spoiled teenagers – they are annoying to have around, but they can’t get rid of them, so they just throw more money and benefits at them to keep them quiet and producing.

    That works when a company has 50 percent of the market, and all of its major competitors have to deal with the same union.

    As for the union, like a lot of teenagers, it hasn’t quite figured out that the parents can only pay for those wonderful things if they are making money, and, right now, mom and dad are broke, and have been for the past few years.

    Regarding executive compensation – If I recall correctly, stock options were touted as a SOLUTION to high executive paychecks in the 1990s. They were also supposed to improve executive performance (since stock price is linked to the health of the company, the executive team would therefore do what is best for the company to increase their own compensation).

    The real problem is the entire American approach to business and training executives. It’s most apparent at the auto companies, because GM, Ford and Chrysler are household names, and it’s easy to compare their products to products from companies with different corporate cultures.

    I worked at a nationally known long-distance carrier in the 1990s. I saw young, eager trainees being cycled through various positions to gain “knowledge” of the business. Every 1-2 years, they were moved to another position. All of these trainees were college graduates.

    There were several problems with this approach, and I’m sure that these problems are also apparent at the Detroit Three:

    *The trainees were all college graduates. They looked better and more polished than people who repaired the lines or actually answered the phones. But this sent a message that knowledge about the nuts-and-bolts of the business was less important than the right resume and “look.” Polish and pedigree won out over experience. (Interestingly, David Halberstam chronicles this in The Reckoning, when he charts the decline in status of people who ran the plants and engineered the cars at Ford as compared to the bright young MBAs that were hired by Robert McNamara and his protege, Ed Lundy.)

    *The path to more money and prestige was in shuffling paper and telling others what to do, not in actually producing anything or providing the particular service.

    *Because people were never in a management job for very long, they never took ownership of the job, and never had to accept responsibility for how they performed, unless their mistakes were horrendous. They moved on before all of the chickens came home to roost from their decisions.

    *The constant cycling of people in various jobs meant that plans and strategies were constantly changing, as the new person felt that he or she had to make his or her mark with a new idea or strategy, instead of building on the old one.

    *There was more emphasis on looking good for senior management than on actually solving customer problems.

    *Upper management had limited knowledge of how the business operated where “the rubber meets the road,” and wasn’t particularly interested in learning.

    *Lower-level employees took their cues from upper management, and were pretty much in it for themselves (i.e., a paycheck, health benefits and a pension).

  • avatar
    Justin Berkowitz

    ex-dtw:
    Govenment medalling in business has legacy costs that are built up over years.

    Corporations benefit from a variety of odd laws that allow them to exist as the unique entities they are. When you get benefits like the entire corporate tax code, separate courts, separate civil procedure, D&O insurance, and the corporate veil, I think the government has every right to ask for something in return. It’s basic social contract theory.

    This is pure social engineering that has led to legacy costs for the domestic automakers that transplants do not have to deal with. That is government medalling and could be quite easily argued the root of the downfall.

    With all respect, that’s the same bad argument that Detroit’s executives have been making for several years.

    I seriously disagree that these could be “quite easily argued the root of the downfall.” I’m not aware of any law on the books from the postwar period that required the Big 3 to offer huge pension plans or lifetime healthcare.

    The first and foremost reason for the fall of the big 3: no planning. Plain and simple. You are talking about three companies that were making money hand over fist as recently as September 10, 2001.

    They made bad business decisions time and time again, had bad products, invested money poorly, and selected the wrong market segments upon which to rely.

    Why did they first introduce 0%, anyone-with-a-pulse loans, the crack to which they’ve become dependent upon to sell cars? Right after September 11, 2001, because they were too focused on short term sales and profits to let the economy run its course and recover.

    Many of the people that made these bad decisions, like Bob Lutz, have been hugely enriched by the process of screwing companies over (as he helped to do to Chrysler in 1998) and still work in the industry.

    You would be hard pressed to find three companies in any one market that were managed as badly as GM, Chrysler (in all three iterations) and Ford.

    Did the government help? No, not at all. But this buck-passing, especially to the federal government, doesn’t help either. It just underscores the widespread disinterest in accountability in American business.

  • avatar
    ex-dtw

    Justin,

    Fair enough, and no, I haven’t read the article but will be sure to look it up.

  • avatar
    Zarba

    Another great book ,in hindsight, is Taken for a Ride, by Bill Vlasic and Bradley A. Stertz

    It chronicles Daimler-Benz’ takeover of Chrysler, protraying the Americans a patsys and Jurgen Schremp as a genius.

    So who REALLY got taken for a ride on that deal?

    Certainly not Bob Stempel and Bob Lutz.

  • avatar
    ra_pro

    @ex-dtw

    The corporate governance may be a complicated issue what is not complicated to see is the fact that while American product desirability and quality declined greatly over the past 20-30 years as seen by continuous huge trade deficits, the executive compensation increased, well, I don’t even know how much, 10 times, 20 times, in short enormously. Yet per capita income of the vast majority of workers hardly increased at all. We might again say that the reasons for this are complex but the results speak for themselves. While the American products are becoming less and less competitive around the world, the captains of industry are raking in ever larger piles of money. Not so long ago millions of dollars was a handsome reward for the bosses, today that’s pocket change for many. And we are not even talking about the good Captains, the successful ones, whose companies are creating products that people all over the world are clamoring for. Nowadays it’s the failures that are paid these humongous sums, Fiorinas, Wagoner’s etc. America as such is becoming to resemble General Motors, out-worked, out-thought and over-compensated.

  • avatar
    ex-dtw

    @Justin,

    To your second post we will have to disagree.

    Why did they first introduce 0%, anyone-with-a-pulse loans, the crack to which they’ve become dependent upon to sell cars? Right after September 11, 2001, because they were too focused on short term sales and profits to let the economy run its course and recover.

    Were they too focused on short term-profit or rather forced to move metal at all costs due to labor contracts?

    Flexibility is the lifeblood of any business, regardless of size. From the small business owner that has the ability to hire, and fire, as the normal cycles of business rise and fall. The simple inflexibility of companies that NEED to continue to pay employees forces unpleasant decisions.

    The majors had a plan for dealing with this with white collar jobs, specifically contract workers, but for production they basically have to “keep the lights on”. It is cheaper to sell cars at a loss than not sell any at all.

    Problem is that that obviously degrades longterm prospects and begins the downward spiral.

    Now if you are a manager at a large company faced with that decision how do you handle it, especially when the street will crucify for missing earnings by a single penny per share and labor won’t cut you any deals because “it really ain’t that bad yet.”?

    Face down Wall Street you say, well funny thing is those are the guys lending you money for day to day operations. And heavens forbid you trigger loan provisions and increase the cost of capital.

    As for bad management, we have wiped out more wealth in the American airline industry in a couple of years than was ever made in it. How is that not worse and yet similar problems seem to plague both industries.

    I am not downplaying bad product decisions but to consider events outside of the historical impact government has played in this tragedy is to have, IMO, a myopic view of history.

    It really breaks down like this: can all the managers that have cycled through these companies really have been that incompetent.

    And before everyone chimes in “well obviously” this includes all the people that were successfully running companies based in other markets that were brought in to “fix” these companies.

  • avatar
    tech98

    To the excellent book recommendations (DeLorean, Halberstam) in this thread, let me add Brock Yates’ The Decline and Fall of the American Automobile Industry. Written in 1981, it’s another book from that era that seems sadly prescient today. It covers the many misfires in the J-Car project, and the arrogant, isolationist Louis XIV executive culture at GM.

    Detroit never seems to learn from its long history of repeating the same mistakes over and over; the result is the slow destruction of giant enterprises through perverted management incentives and over-focus on short-term financial results to the detriment of all else. The sick culture has driven out the people who care about the products and the long-term survivability of the companies in favor of spreadsheet grifters and glib empty-suit corporate politicians.

  • avatar
    Mekira

    @John Horner

    But how did we get here? Product is the key.

    –Products designed with only the populace of Wayne County, MI in mind. That’s why they’re where they’re at now.

    @whatdoiknow1

    Ask any Toyota fan today how they feel about the latest Toyota prodcuts in the USA

    –It really is too bad that Toyota doesn’t offer the US many of its products that they sell in Japan. JDM Toyotas are much unlike their North American counterparts…they’re actually kind of HOT! Play around with this page: http://toyota.jp/carlineup/bodytype.html

  • avatar
    Joe ShpoilShport

    How did the mighty fall? By not caring.

  • avatar
    r1hawk

    Seems to me the 25% tariff on imported truck destroyed the US auto industry. Without this portection, the industry would have been force to compete in the car market. With the tariff, they were able to put station wagon bodies on truck and sell them like hot cakes by calling them SUV’s. They were much more profitable then cars and had (at least early-on) no foreign competition. When the price of gas destroyed the SUV market the US auto industry died!

  • avatar
    John Horner

    To those who put the main blame on government I must ask, what about the heavy involvement of the Japanese government in the industries of Japan? Japan’s MITI which morphed into METI has long had an extraordinarily powerful roll in the details of how the various industrial companies of Japan have developed. Oddly enough, that government interference did not hold the Japanese back from becoming arguably the best run automotive companies in the world. Likewise, Volkswagen is a highly productive automotive company, and it has long been partly government owned and includes union leaders in the board of directors. How many US industrial companies include a strong union voice at the board of directors level?

    Sometimes government is the root cause of certain problems, but not always. There is a certain conservative ideology which blames government interference for everything and extols the virtues of laissez-faire capitalism at every opportunity. The primacy of said worldview seems to be rapidly receding.

  • avatar
    billc83

    @Tech98 -

    I can not recommend Brock Yates’ book enough!! Though written a quarter of a century ago, it remains startingly relevant; it’s scary even. I’d most certainly place it as the foremost read for anyone interested in the post-war automotive industry.

  • avatar
    Landcrusher

    A single point of failure will never be found, and the MOST responsible element doesn’t necessarily need to be found. Fixing it wouldn’t necessarily cure the patient either.

    Many of the posts here make the mistake of using the transplants’ similarities as reason to contradict someone elses pet theory. It is wrong to do so.

    First, the transplants don’t have to always outrun the bear of government, the economy, or anything else. They just have to be faster than the ones in the rear. Second, what is deadly to one company doesn’t necessarily have to be so for the others.

    In the world of BIG big business, it’s perfectly wise to employ a strategy of simply outrunning your competitors until your competitors get eaten BEFORE turning around to kill the bear.

    Let’s say I want to blame the WHOLE thing on the UAW (I don’t, but I put a lot of the blame on them). First, the UAW has failed to get their noose around the transplants’ necks. Second, even if they did, the transplants could simply play along until the UAW killed the domestics, then shoot the UAW. If the UAW wants to force the point with the transplants, the transplants will simply close the factory, and send the jobs back to Asia.

  • avatar
    ttilley

    Who cared that the Taurus had gone from #1 retail vehicle to rental car hell? One Lincoln Navigator made the profits of twenty or more Tauri. But just a few short years later, Katrina sparked the first fuel price run-up in decades.

    On a national basis, sure, Katrina sparked the first fuel price run-up in decades. Here in northern CA, I’d already seen repeated cycles of fuel price run-up followed by crash, followed by run-up, followed…etc. Since at least the late 1990s.

    I think that even the “national basis” argument cuts Detroit’s management too much slack. I certainly believed that what I was seeing regionally would eventually spread. Why wouldn’t it? The Clinton administration even released oil from the Strategic Petroleum Reserve in a successful effort to forestall what might otherwise have been a national price run-up. That, alone, should have been a wake-up call in Detroit. Instead, GM bought Hummer.

  • avatar
    Geo. Levecque

    This article should be required reading for anyone connected with the Vehicle Industry in North America! Its great and gives a lot of clear explanations of everything, thanks to the author for bringing it forward to the pages of TTAC!

  • avatar
    John Horner

    I put the main blame on management because they are the ones who have been calling all the shots (and signing the union contracts). They made the strategic and tactical decisions which led to this nightmare. Detroit’s management has had an out-sized influence in government policy for decades thanks to their well paid lobbying effort. Management decided to punt on cars in the late 1990s and put all the chips on trucks. Management paid itself extraordinarily well and ever more while taking money, jobs and benefits from the workers at every opportunity.

    In fact, I can’t think of any major decision visa-vis their North American businesses that the Detroit 2.8 made in the 1990s which were both wise and smart; assuming the goal was to build and sustain enterprises which would thrive for the ages.

  • avatar
    ex-dtw

    There is a certain conservative ideology which blames government interference for everything and extols the virtues of laissez-faire capitalism at every opportunity. The primacy of said worldview seems to be rapidly receding.

    I agree with this post and find that simple fact a genuine shame.

  • avatar
    zerofoo

    Some car company CEOs:

    VW – Martin Winterkorn – Engineer
    Daimler – Dieter Zetsche – Engineer
    Honda – Hiroyuki Yoshino – Engineer
    Toyota – Katsuaki Watanabe – Economics
    BMW – Norbert Reithofer – Engineering/Marketing
    Porsche – Wendelin Wiedeking – Engineer
    Mazda – HISAKAZU IMAKI – Engineer

    GM – Rick Wagoner – Economics
    Chrysler – Robert Nardelli – Engineer
    Ford – Alan Mulally – Engineer

    It looks like Ford and Chrysler finally figured out that you need an Engineer to run a car company. Hopefully they didn’t figure that out too late.

    GM, on the other hand, seems to be blissfully ignorant about their CEO. GM needs a strong engineer to lead that company out of this mess….but it may already be too late.

    -ted

  • avatar
    geeber

    To those who put the main blame on government I must ask, what about the heavy involvement of the John Horner: Japanese government in the industries of Japan? Japan’s MITI which morphed into METI has long had an extraordinarily powerful roll in the details of how the various industrial companies of Japan have developed. Oddly enough, that government interference did not hold the Japanese back from becoming arguably the best run automotive companies in the world.

    The involvement of MITI in the automotive sector was a double-edged sword. MITI initially discouraged Honda from adding vehicles to its motorcycle lineup. Honda charged ahead DESPITE the opposition of MITI to its entry in the automobile market.

    The Japanese edge in the automotive sector is the result of cultural factors as much as anything else.

    The Japanese are very meticulous and detail-oriented – an approach that works well with automobiles.

    They place great emphasis on details in the fit-and-finish of not only automobiles, but packaging and wrapping – a quality that other cultures can readily appreciate.

    Their need to extract the most from small spaces (which comes from living on a very crowded chain of islands) is a useful trait when designing tiny, small and compact cars. This forces them to be clever in design and engineering.

    Note, however, that these Japanese traits don’t quite translate so well in the expensive sports car, full-size truck, luxury sedan and larger SUV segments. Japan still doesn’t dominate those segments, despite throwing a lot of time, effort and money at them.

    I’m a Honda fan, but I readily agree that Hondas become less impressive the larger and more expensive they become. Who really wants a Ridgeline…?

    John Horner: Likewise, Volkswagen is a highly productive automotive company, and it has long been partly government owned and includes union leaders in the board of directors. How many US industrial companies include a strong union voice at the board of directors level?

    Again, cultural factors come into play here. Germans are very meticulous. I noticed a huge difference in the cleanliness and order of public spaces and parks when I visited Great Britain, Italy and Germany in the space of two weeks in the summer of 2006.

    Even driving methods were different among the various countries. Germans are MUCH more disciplined behind the wheel than the Italians and English.

    These traits carry over to their vehicles. A VW is much more buttoned down compared to a Fiat or Renault. Again, Americans can appreciate this – to a point.

    Unfortunately, German government policies undermine VW’s chances for true success in America. High domestic taxes mean that many Germans receive their cars as a job perk (to avoid a punitive income tax on higher salaries), so they are less concerned about reliability and dealer service. Both of which are hurting VW’s efforts to become a mass-market nameplate in the U.S.

    The Italian and French governments have been MORE involved in their automotive sector than the Germans have been. For many years the French government actually owned a controlling interest in Renault. Yet Italian and French cars have failed miserably in the American mass market.

    John Horer: Detroit’s management has had an out-sized influence in government policy for decades thanks to their well paid lobbying effort.

    I would disagree. The automotive industry is one of the most heavily regulated in the country. I’m not blaming government regulations for Detroit’s downfall – the imported marques had to meet the same regulations, and to some extent, those regulations kept competitors out of the market.

    But Washington’s approach to the automobile industry has been anything but laissez-faire since the mid-1960s.

    John Horner: Management decided to punt on cars in the late 1990s and put all the chips on trucks. Management paid itself extraordinarily well and ever more while taking money, jobs and benefits from the workers at every opportunity.

    Again, I would disagree, as it applies to blue-collar workers. Management, especially at GM and Chrysler, has bungled relations with the UAW by alternating between taking a hard line and giving away the store – and always at the wrong time.

    Management waited until it was too late to get serious about UAW benefit levels. And the Jobs Bank is STILL around, even after the last contract negotiation, and it was readily apparent that all three companies were in dire condition. How many other workers enjoy complete protection against layoffs, courtesy of their employer?

    A good example of how management bungled relations with the union can be found by looking at GM in the 1990s. It caved in too easily when it was time to negotiate a contract, but then it deliberately provoked a strike in 1998 by moving truck dies from a plant. Then, when it was on the verge of winning that strike, it basically caved the let the union save face!

    If anything, the UAW is one of the most spoiled and coddled institutions in the country. To read the postings of various UAW members on other auto-related sites is to enter a parallel universe. If we all think that management is out of touch with reality…

    John Horner: There is a certain conservative ideology which blames government interference for everything and extols the virtues of laissez-faire capitalism at every opportunity. The primacy of said worldview seems to be rapidly receding.

    True laissez-faire capitalism understands that there will be failures along with successes. That is how the system works – and that is WHY the system works. The failures should serve as a lesson.

    I don’t see a failure of laissez-faire capitalism in the collapse of GM. I see the market working the way it’s supposed to be working. Those providing good products survive, while those who provide bad products – or those who bet all of their chips on the wrong horse – fail.

    If anything, capitalism fails when do-gooders (McCain, Obama) try to bail out those who have landed in a mess because of their own stupidity and stubborn attitude (here’s looking at you, management and UAW).

    Of course, it’s easy to be compassionate when you are spending other people’s money.

    The failure of GM shows that the market is working the way it’s supposed to be working. The fact that management and union leaders want to be insulated from their own bad decisions, and some politicians are willing to use taxpayer money to do just that, reflects not a failure of laissez-faire capitalism, but the success of political pandering.

    I can’t wait to see the reaction when people realize that their tax dollars are paying for UAW workers to stay at home and watch Judge Judy, or for Bob Lutz’s gold-plated pension. But that’s the result of government intervention in the marketplace, not laissez-faire capitalism.

  • avatar
    rudiger

    John Horner: “I also agree with you that the botched Vega project was a far bigger screw up than the Gremlin. AMC, and Rambler before it, knew that building efficient smaller vehicles made sense. The Gremlin was an excellent vehicle for what it was, and certainly cost less than 1/10 the investment which birthed the Vega.”Yeah, the Gremlin gets a bum-rap. It was an okay vehicle for what it was: a sawed-off Hornet. It would be rather like GM or Ford sawing-off the rear end of a Nova or Maverick.

    The Vega, however, was a ground-up attempt by GM corporate at making a vehicle that maximized profit to the exclusion of absolutely every other consideration, including any kind of longevity. The Vega is a dark cloud that hangs over GM to this day, and it epitomizes all that is wrong with the company.

  • avatar
    John Horner

    “Chrysler – Robert Nardelli – Engineer”

    Nardelli has a B.S. in business from Western Illinois University and an MBA from University of Louisville. Most certainly not an engineer.

    @geeber : I agree that many of the differences between American car companies and their Japanese and German counterparts is a matter of cultural differences. I would also point out that the job of a CEO include creating and promoting the kind of company culture which leads to long term success. Costco has such a culture, GM does not. My main point in bringing up the Japanese and German counterexamples is that the decline and fall of the US based auto industry is in no way primarily the fault of excessive government involvement.

  • avatar
    zerofoo

    @John Horner:

    While Nardelli’s education was business, wikipedia writes:

    He joined GE in 1971 as an entry-level manufacturing engineer.

    He has experience in manufacturing and engineering.

    -ted

  • avatar
    Justin Berkowitz

    @zerofoo:

    I don’t mean to pick on you specifically, but I’m wondering when Wikipedia became an accepted source for info. Like, it’s often right and frequently interesting. But when I was in college I used to put fake stuff in there all the time.

    The way to put fake info into wikipedia, by the way, is not to contradict something others know to be true (i.e. the U.S. has 55 states). It’s to merely add information that’s not contradicted by anything else (i.e. Sarah Palin reports that her favorite flavor of ice cream is chocolate).

  • avatar
    zerofoo

    @Justin Berkowitz:

    Justin,

    I do understand wikipedia’s flaws. It was a convenient source for something that I already knew to be true.

    I read about Nardelli’s engineering experience in one of Jack Welch’s books (can’t remember which one right now). And Jack Welch mentioned Nardelli’s background more than once in interviews on CNBC.

    In retrospect, I probably should have said as much in my post, but I got lazy.

    Anyway – would I trust Bob Nardelli to engineer a car from start to finish? Probably not. Does he know what end of a screwdriver to hold? Yup.

    -ted

  • avatar
    John Horner

    Nardelli was not educated as an engineer, period. From the Western Illinois University website:

    “Nardelli received his bachelor’s degree in business from WIU and earned a master’s of business administration from the University of Louisville.”

    http://wiu.edu/U-Relations/connection/archive/1997/10.17.97.html

    If GE did indeed hire him as a “manufacturing engineer”, it did so without him actually being educated and trained in that discipline. Welch’s book may well be wrong. Those tomes are self-serving at best. Welch is proud of his role in gutting American manufacturing and tearing up the old social contract between successful companies and their employees. He is, in fact, part of the problem.

  • avatar
    M20E30

    While The Detroit Three did build some Bad cars in 1970′s, most were generally reliable.

    The rot really set in the 1980′s. The period of 1980-1991/2ish produced the worst cars America has ever built, and is partially responsible for their situation today. They were unreliable, ill-handling(as in unbelieveably bad, tire squeal at 20km/h),EXTREMELY pretentious, and borderline obsolete.

    I hear people taking about the first-gen Taurus as some miracle. It sold well, you say. So did the Austin Allegro.Is that a good car?

    That Taurus has to be one of the most overrated cars of all time, and has been outlived by it’s Japanese counterparts. I still see 83-91 Camry’s and 82-91 accords on a regular basis, I have not seen a first generation Taurus(The one with the rear amber turn signals) in 6 years. Unreliable Junk.

    People Remember;

    -Horrid Third-Gen F-body’s(GUIDO)
    -Poorly Built, Porposing A,G, and B bodies.
    -Pontiac J2000/Cavalier/Other Garbage.
    -The X cars.
    -Rebuilding Chrysler Engines at 17,000km.
    -The Fairmont
    -The Tempo

    Only a small sample of the domestic automotive malaise of that decade.

    Special Metion Goes to the Renault Alliance. AMC Managed to take the solid and reliable Renault 9/11 Range and turn it into a rolling joke.

    GM, Ford, and even Chrysler have come a long way since then, whether any of you would like to admit it or not. There is somewhat(SOMEWHAT) of a perception gap, and it was created by these vehicles. They have not changed enough, however. When somebody mentions GM, I picture an overheating Pontiac 6000.

  • avatar
    Morea

    taxman100 : The U.S. industries … plastics, … have all been moved overseas, or replaced by foreign companies, because of bad management?

    A small quibble here: the US plastics industry does quite well on the international scene. The US is a net exporter of plastics (as raw materials). Dupont, Dow, ExxonMobil (a major polyolefin producer not just an oil company), Equistar, Honeywell, Montell and many others are formidable players (just ask the Japanese who have never been able to crack this market to any large degree despite MITI spending lots of yen).

    From http://www.plasticsindustry.org (a trade organization)

    “The U.S. plastics industry’s trade surplus was $5.8-billion in 2006, well up from $3.7-billion in 2005. In the first seven months of 2007, the surplus, at $5.9-billion, already exceeded whole-year 2006.”

    So why is this? Why does this industry seem to buck the trend of the US failing at raw materials production and industrial management in general? (Can’t just be due to the movie The Graduate!) Why is plastics so strong when steel is so weak, an aluminum becoming weaker?

  • avatar

    Since I used to work in the town, I have to be the one a-hole to point out that the NUMMI plant is located in Fremont, CA. One “e”, not two.

    Excellent article otherwise.

  • avatar

    HtownHeff:

    My bad. Text amended.

  • avatar
    DweezilSFV

    Ingrassia used the Gremlin as a worst case example of the US automotive product because the subject he followed and interviewed for it was driving a Gremlin that broke down on his way to his first day of work at the new Honda motorcycle plant. He was two hours late.

    It’s the thread that runs through the essay as to how “Detroit Drove Into a Ditch”. Man on the street research. The guy is still working for Honda 30 years later. Building cars. But when Honda started, before they built cars they built motorcycles to test the quality of the American work force.

    That Gremlin was the car that was the pivotal experience for the guy and why it appears as a worst case example and not the Vega. He weaves this into the essay quite well and ties it all together at the end.

    And to be first to the market with a US compact AMC chopped the rear end off an AMC Hornet. Literally a hack job way to send them furriners back where they came from.

    While the Vega at least had the potential to be an innovative domestic small car
    [ OHC aluminum block, 4 body styles, sporty styling good handling Motor Trend\'s Car Of The Year always a good sign, you know ],the Gremlin came out with a 3 speed manual [with synchro on 2 and 3rd only IIRC] rubber floor mats, bench front seat and even vacuum operated wipers. A PERFECT example of the Detroit way of doing things: “Good enough for those bottom feeding pikers. We’ll get them out of these faddish small cars and back in to traditional large cars in no time if we make them miserable enough.”

    The design actually came from an AMC AMX show car [after having been sketched on the air sick bag of course. Visualize a 68-69 AMX front end and a Gremlin rear. With the hockey stick stripes].

    BTW: How did AMC make a Renault product unreliable when Renault provided the design, funding and everything else needed to build the car ? And started from scratch with the equally awful Premiere. There’s a reason why Renault stopped selling cars in the US and it wasn’t because of AMC.

  • avatar
    golden2husky

    Lowenstein, Roger (May 1, 2008). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis.….

    If the big three had maintained their market share they would be able to pay their pension obligations. A pension was part of the line worker’s pay package, just like the golden parachute was made part of the executives’ package. The workers are entitled to it. If the guy on the line has to take it on the chin, let the fat cat take it, too.

    I read “The Reckoning” many years ago. My uncle was a high level executive for United Technologies, Singer, and Champion International during his career before he departed the workforce at 53 years of age. He suggested my reading of the book because he knew my interest in the auto industry. His viewpoint was way more against the labor unions – no surprise there – but he also was open minded enough to spend many hours over the years talking about manufacturing, commitments to communities, labor relationships, etc. What a wealth of information.

    One of the serious issues that we talked about was the effect of the decisions he and others made in the boardroom that would have far reaching effects. Remember that there were plenty of towns that owed their entire economy to the health of the plant that operated nearby and, without that plant, the community would die.

    Yet, often the business model presented would result in thousands that would not only lose their jobs, but their homes would also become nearly worthless as the community died around it.

    These working class people -many older- found themselves trapped in poverty for the rest of their lives. I saw some serious irony when he would routinely toss a $100 bill into the collection plate at church on Sunday…I guess some would call that spreading the wealth around…

  • avatar
    happy-cynic

    Yeah, business schools have to go! I worked for a great company that was run into the ground by b-school grads.

    I used to live in a coal mining region, and at one time and saw the need for unions. But 60 bucks an hour for a job that takes an 8th grade education?! Come on.

    And of course management.(which has been lot’s of good posts)

    However I think was overlooked was the American consumer.
    Face it, when gas was cheap, who wanted to by a small car.

    The oversees cars manufactures had to make small cars for their home market first. So there was no motivation for Detroit to build small cars.

    The Feds could have adverted this by slapping an extra tax on gas and then give it back as a tax deduction. (there was such a plan floated, but no poll had the guts to propose it.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India