The American auto industry’s self-destruction

During the 1968 presidential campaign, Democratic nominee Hubert
Humphrey walked the long assembly line at Ford’s sprawling River Rouge
plant trailed by Michigan dignitaries, Ford officials and the traveling
press. It was a surreal scene out of “Modern Times,” a cacophony of
noise and motion in what was still considered one of the wonders of the
mechanized world.

As the then-vice president of the United
States passed each station on the long journey down Henry Ford’s
legacy, workers turned from their assignments momentarily to greet him
before rushing to catch up with the developing creations as they moved
along to ultimate completion.

Viewing the scene as it moved
along, Newsweek’s John Lindsay, one of the most erudite and savvy
political writers of his day, put it all in practical perspective: “I
would hate to be one of the poor guys (not his real word) who buys one
of those cars.”

As wise as he was, even Lindsay probably didn’t
realize that he had touched on a problem that would play a significant
role in the decline of the American car. In those days, Detroit was
selling everything it made. But years later, as poor quality for
ever-higher prices began to erode the dominance of U.S. car builders, a
major contributing factor was worker absenteeism and lack of management
control, bolts that didn’t get tightened properly or parts that were
left out and a dozen other oversights because someone didn’t show up.

The warning that one should never buy a Detroit car made on Friday or
Monday was a devastating indictment and, before long, it was applied to
the rest of the week. Japanese cars, made by robots and dedicated
non-union workers, were considered far more reliable. By the time the
American companies had taken frantic measures to solve the problem and
at least semi-repair the image, the foreign manufacturers had
established a presence in the U.S. market that has grown steadily. The
damage had been done.

In the wake of announcements by Ford and
General Motors that they are drastically retrenching their operations
in almost desperate efforts to save their companies, I couldn’t help
thinking about that day at River Rouge and Lindsay’s prophetic words.
It would be silly oversimplification to attribute the loss of market
share to this one problem. Bad management decisions; excessive demands
from the United Auto Workers for steadily increasing wages and fringes;
worker retirement packages approved to keep labor peace and a
remarkable misjudgment on product selection all have contributed to the
decline. Putting too much emphasis on sports utility vehicles at the
expense of new development, including hybrids, has hurt.

This is
not an anti-union diatribe. But no one yet has figured out how the
union employer with the burden of past management decisions and
inflated wages and fringes through multiyear contracts can compete with
those making the same product without the same encumbrances. The
demands of $30 an hour plus fringes are debilitating enough, but when
added to the horrendous burden of pensions and medical benefits for
retirees, the result is disastrous. While leaving the sophisticated
theories to the economists, it still is possible for the layman to
predict with some assurance that unless Ford and GM can win concessions
from their workers, their decline will continue.

Life without
these great companies and their contribution to the technological
leadership of the nation would be difficult to imagine for those of us
who learned to drive on the Model A. Although it is true that because
of expansion by the foreign makers in this country, the total number of
those employed in the auto industry remains constant despite the
downsizing of the American companies, it isn’t quite the same. Some of
that money certainly remains here but a whole lot of it goes across the
water. When World War II arrived, the huge industrial capacity of
Detroit helped save the world. Who will pick up that slack in another

There is some irony here. In the late ’40s and early
’50s when the Toyotas and Nissans had little or no distribution system
in this country, American car dealers convinced their manufacturers to
permit them to sell these brands along side their own, giving these
competitors an unparalleled opportunity at little expense. Very shortly
they were flooding the U.S. market while at the same time restraining
the sale of American cars in Japan.

When it is all said and done, it would be unthinkable not to have a Ford in the nation’s future.

(Dan K. Thomasson is former editor of the Scripps Howard News Service.)