If you are under 40, its doubtful you personally witnessed the demise of a car company. I have, back when i was learning to drive there were at least 6 auto makers: General Motors, Ford, Chrysler, American Motors, Studebaker, and Kaiser- Jeep.
One of the cars I learned to drive in was a Studebaker Hawk...Studebaker had one last fling in the auto world with the Avanti, which was pretty advanced for its day. Studebaker faded away in the mid 1960's, gone by 1967.
In 1970 Kaiser-Jeep was merged with American Motors, which continued to produce Jeeps and another division, which was named AM General (who would make military vehicles.)
American Motors Corporation(AMC) produced some really different cars to stay in business, like the Pacer (known to my friends as the Spacer) along with the Javelin and Rebel. AMC was bought up by Chrysler in 1987, and Jeep was merged into Chrysler.
And then there were the BIG Three. Now they are in trouble, trying to stay alive with Federal (taxpayer) money. Senators from states with foreign owned car company plants are fighting it.
The TV talking heads are screaming (1) they had 30 years to figure it out(after the last big oil crisis) and (2) the unions are making them unprofitable.
I disagree. Things aren't usually as they seem, and this is no different.
For the last thirty years Americans have lapped up whatever creature comforts they felt like, including the need for big vehicles. American small cars don't sell as well ( in my opinion) not because they aren't built well, but generally I find them UNCOMFORTABLE. Making payments on a car you don't like is real annoying.
My honey is over 6 feet tall, and over 200 pounds- he absolutely hated his 1994 Toyota truck solely for one failure, comfort..and he had the same problem with our 1998 Chevrolet, because the ceiling was too low, and not enough leg room. Want to take more than one person with you, forget it. So we finally tried a SUV...ahhhh, headroom, leg room, passenger space.
Second point, the unions .
Business Week said "With ...Detroit Three slashing payrolls and moving retiree benefits off their books, Toyota's edge is disappearing.
Some of Toyota's U.S. plants are now more than 20 years old, and a growing number of its workers are paid the top wage of about $25 an hour. That's less than Detroit's veteran union hands make now, but a contract inked last fall will enable U.S. automakers to replace many highly paid employees with cheaper workers. By 2011, Toyota's cost advantage over Detroit could disappear. "The Japanese automakers have been here for almost 30 years," says Michael Robinet, an analyst at CSM Worldwide, a Northville (Mich.) research firm. "They'll start to have Big Three-like costs creeping in."
Toyota is worried. Two sources close to the company say that by late 2009, Toyota's 23-year-old assembly plant in Georgetown, Ky., where most workers are at the top of the pay scale, could have the highest labor costs of any auto factory in the U.S. Toyota says that with bonuses, some of its employees already make more than Detroit's unionized workers. "I think [the Detroit automakers] could easily equal us or even exceed us in terms of having lower labor costs," says Pete Gritton, human resources chief for Toyota in North America. "
COST-CUTTING
Detroit's recent four-year union deal lets automakers pay lower wages to people whose work doesn't actually involve making cars—maintenance staffers, those who sort materials, cleaning crews, and the like. These new workers will make $14 an hour including benefits, compared with $42 an hour for employees who put the cars together, says Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich.
The savings add up. General Motors (GM), for instance, has 74,500 workers. By 2011 GM will have about 68,000, and up to one-third of them will be earning the lower wage, predicts McAlinden. If GM can get all the buyouts it needs and hire cheaper labor to replace them, the company could cut its wage bill by $2.7 billion annually by 2011, he says. That adds up to $841 a car, or about half of the current cost differential with Toyota. A retiree health-care deal, which will give the United Auto Workers union $36 billion in exchange for taking over medical insurance, should save GM an additional $699 a car. That would turn Toyota's labor cost advantage over GM of $1,394 per car to a $108 disadvantage by 2011, McAlinden says.
Since Toyota has started building more plants in the US/Mexico border region, that may be an avenue they pursue more of as their US plants become uncompetitive. They currently build Tacoma pickups both in Tijuana and Fremont California, a factory shared with ...GM.
"NUMMI manufactures the Corolla and Tacoma for Toyota, and the Pontiac Vibe for General Motors"
We Americans need to get over the idea that things can be righted overnight.
My opinion is that the car companies need to look at making some serious structural change, given hat their market share is going to continue to dwindle. Does it make sense for GM to be so big? Or should they pare down to the divisions making the most money, or at least eliminate duplication? Chrysler needs to revisit their whole idea of being owned by a investment group. Fact is I suspect Chrysler and Dodge will disappear, and Jeep will either be bought by someone (Renault is said to be interested as is GM), or go the way of Harley Davidson, employee ownership. Ford is ..well Ford, Ford cars and trucks, and Lincoln-Mercury.
No easy solutions, and all will involve work. But I think we should try. We cant all work at Starbucks.
I go on political rants a lot lately, and don't discuss my personal life too much any more.
