GM also pushed electric <a><href=“http://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy”>street cars</a> to the brink of extinction in the 1940s. They also fought higher CAFE standards and the Clean Air Act. They told us that complying with either would destroy the US auto industry. Why are environmental regulations still treated like the boogeyman when its obvious that regressive business practices are what’s killing the economy?

well, according to my uncle (who fled the industry after a long career with Ford), it’s really a very simple two-part problem. 1) Executives who are not at all bright, 2) being bought and bribed by oil lobbyists with tons of spare cash and an ability to manipulate people who aren’t at all bright.

when GM inevitably cuts out lines, they don’t just lose their own money, they put thousands of dealers out of business and tens of thousands of people out of work.

The repercussions go back up the line, too: parts manufacturers, equipment suppliers, etc.

But the American automotive industry not only doesn’t innovate any more, it’s not even a leader in terms of how the American corporation is constructed.

I have been encouraged by the recent changes in Wal-Mart’s attitude: I’m not sure who got through to the CEO, but someone made him realize that the company’s practices and policies can have a greater effect on the world than many government initiatives. It gives me some hope, at least.

GM needs cheaper healthcare, but it’s virtually silent on healthcare reform.

Several years back, I remember GM being a fairly vocal complainer about health care costs and advocate of reform, but then they just disappeared from the radar screen. Any idea what happened to change the attitude?

One of the things that keeps a lot of American industries afloat is the fact that while there may be an “industry center,” there are always some major players who exist “out of the loop.” Major finance companies are in New York City, but Berkshire Hathaway is headquartered in Omaha. The film industry is centered around Hollywood, but LucasFilm and Pixar are in Northern California.

The US auto industry, unfortunately, is centered in Michigan and doesn’t have any major domestic competitors outside of Michigan. The executive culture is thus extremely insular and attitudes towards automobiles are formed on the based on the prevailing attitudes of local Michiganders. There was never enough cross-polination to get the industry out of its rut, because no one could offer a fresh perspective or felt threatened by domestic competitors who came from a different culture.

Detroit has always want to be Detroit, and they’re not going to give that up.

Tyro, I’m not quite sure why you think that there is something about Detroit that predisposes its residents to want big cars with low gas mileage.  Detroit ain’t LA.  To the extent that the Detroit area is car-oriented rather than oriented toward mass transit, you’ve got the chicken/egg order reversed.

It is worth noting that GM is doing that crash program on their current electric car, the Chevy Volt.  The problem, of course, is that they may not meet their deadline or it may not work at all.

Of course, if they hadn’t had their heads in the sand for so long, they wouldn’t be having to do a crash program at all.

Um, I don’t know which Michigan you’re all thinking of, but it’s already well done and over there.  The economy is past the shitter.  That’s the reason I don’t live there anymore.

Let’s use the music business as an analogy.  Rather than adapt to the changing business model that was clearly coming the music industry has fought tooth and nail and spent millions of dollars protecting the exisitng model, however unreasonable that was.

GM is in virtually the same boat.  They’ve decided that after decades of sucking at the government teat that model is the only one they wish to do business under.  GM obviously feels it deserves having government subsidized vehicles (enormous tax credits and exemptions for large vehicles).  Jesse, you rightly bring up the way Japanese companies function within their society but don’t make the mistake of thinking it’s American free market companies versus subsidized Japanese ones (and I’m not saying you feel that way but it’s an easy trap to fall into).  The American companies were funded by our own government money just in different ways.  And sadly, where the Japanese makers used that government leverage to develop new products that they saw emerging markets for, the Americans squandered their position collecting huge bonuses and trying to further ensconce their way of business into law.

It cannot be overstated how negligent companies such as Gm have been.  And in the end, the executives glide to gated communities with golden parachutes and off-shore bank accounts and the American consumer and worker are the ones how get screwed.  We’ve moved all of our manufacturing off-shore, and continue to do so while companies such as Toyota shift from truck production to hybrid and small car production here in the US.  The Japanese companies understand that only employed people buy new cars something which the American companies ignored a long time ago.

As sad as it is, in many ways we might be better off without GM.  It’s arguable that nothing can be done to cure this corporate culture of short sighted stupidity.

By way of disclosure and of blogwhoring, I own and write for priusownersgroup.com and have said many of these same things there.

Finally, don’t mistake for a moment my position as being one of a cheerleader for Toyota for Japanese companies in general.  I would love it if (for instance) I could have built a site around a Ford product but I couldn’t do that.  They don’t make a decent, reasonably priced, fuel efficient and environmental responsible vehicle.  If they did and made it here in the US, I’d be more than happy to dance and sing about that.

In the early seventies my father worked for American Motors in Wisconsin.  The level of prosperity and security that the auto industry offered to tens of thousands of Americans, in my opinion, has no parallel today.  These people worked very hard but were also compensated at a level that would put them well into what’s left of the upper middle class today.  That gone.  And once again, I’m sad about that.

Now paradigm changes of all kinds are being forced upon us and, as situations like this go, we don’t have a lot of good options just some pretty miserable ones.

Tyro, I’m not quite sure why you think that there is something about Detroit that predisposes its residents to want big cars with low gas mileage.

rea - I’m not sure that’s what Tyro’s argument was.  I think the point s/he was making (or at least the point I took away) was that there really isn’t much of the auto industry outside of Detroit, so they’re all fairly insular and kind of feed on each other.  The comparison to the film industry and finance companies is an apt one - the big technical innovations in the film industry over the last few decades have come from Pixar and LucasFilm, two companies that sit outside the insular clustering of film companies in Hollywood that do the “safe” thing over the innovative one every time.  Likewise, Berkshire-Hathaway being away from the insular clustering of “common wisdom” on Wall Street lets them innovate and take novel risks that the firms on the Street would never do in a million years.

So it isn’t so much a question of there being something about Detroit that makes its residents want big cars with low mileage - the residents are probably going to “buy local” as much as possible and if Detroit auto makers were putting out small cars with high levels of fuel efficiency, locals would in all likelihood buy them instead.  Instead, the auto industry is stuck in a very small-c conservative rut where risks aren’t being taken and a good chunk of the reason for that is because they’re all clustered together in the same place and feeding on the same “conventional wisdom”.

IANAE,* but I’d bet very big bux (if I had any) that at least part of the problem is that of incentives to upper management.  A big part of the upward redistribution of wealth that’s been the hallmark of the past decade’s Republican economy is that the executives “responsible” for the operations of the biggest firms get megamillion-$ payouts no matter what.  When they preside over a successful operation, we’re told this is necessary to reward their stewardship.  And when they run the firm into the ground, we’re told such emoluments are necessary to keep the experienced and capable hands on the wheel.
They’re much like some of our “Democratic” “leaders” in Congress in this regard—they couldn’t possibly care less what happens to the system as a whole, as long as they get theirs.  And since they’re the ones in charge—the deciders, if you will (and even if you won’t)—they’ll always get theirs.

*“I am not an economist”

Thanks for fixing the link. I didn’t actually follow the link in the preview.

One thing I saw today that kind of depressed me: A story on the website of Business Week (I think—sorry, I don’t have the link) that listed, as one of the “accomplishments” of CEO Richard Wagoner, his getting the UAW to accept slashes in salary and benefits. Yes, it was probably necessary, but it’s a little like listing Dunkirk as one of the major achievements of the British Army.

OT, a bit, that picture of the little girl in the pedal car brought back a lot of memories. I practically lived in one of those things when I was a little kid, and when I got older, I’d help push my little neighbors up and down the block. Do they still make play cars like that?

I’m not sure about anything decent for “normal” (non trust fund) kids…

Strictly Hot Wheels these days, eh? Well, they give the kids just as much exercise, and I suppose six-year-olds won’t really know the difference.

It’s difficult for me to talk about this.

I grew up in the Detroit area in a family with multiple generations of auto workers, so my perspective is definitely affected by that experience.  I can assure you, though, that some of the industry’s most trenchant critics were the workers themselves who understood a lot of what was going on long before their companies’ leaders did.  Or, rather, figured something should be done about it when their companies’ leaders were content to do nothing.  So I can understand where a lot of the disdain for U.S.-based auto companies comes from.

That said, some of the cheerleading for the domestic auto industry’s demise nettles me.  Yes, I know that’s capitalism.  Yes, I know who is largely responsible.  But this will only add to the problems of already hard-pressed local and regional economies.  I’m not saying that means we should just continue to do things the way they’ve always been done (obviously not), but I wonder if the sadness over those who will be hurt the most is actually going to be followed up by action (or support of action) to do something and rehabilitate the aforementioned economies.  Because I have to say that I suspect most people - left and right - really don’t give a shit and are content to see places like Detroit sink ever further.

Maybe that’s unfair of me to think that, and if so, I’m perfectly willing to be told so.

I think it’s a book called “On a Clear Day You Can See General Motors”—about 15 years ago (god that dates me) read a book on the reaction of GM to the small cars Japan started producing (and importing) to the US late 70’s early 80s.  Went down the list of how GM missed the boat, every single time.  How they had a tendency to think that the cars that *they* wanted to drive (big, squashy hunks of Detroit iron with air-conditioning and a tendency to go in straight lines, suitable for those trips up to upper Michigan and Wisconsin on camping trips) was what the *rest* of the US wanted—including all those silly,  pretentious idiots on the coasts….

I think the arrogance of the US car industry was typified by one executive, who said something along the lines: “People will always drive Buicks.  As Americans get older, they get fatter, so who are they going to go for that has the comfortable wide seats?”  (The fact is if you start off with a certain car line you’re likely to stick with it—and a lot of young people were buying cheap Japanese econoboxes.)

Oh the heck—let’s just say “clueless” and watch the continuing fiasco.

Linneaus, you’re on the money. My father was a UAW autoworker, and it was the union that enabled us to live in a decent house and my sister and me to go to college.

I think a lot of the schadenfreude regarding the automakers’ plight comes from people who hate unions and are glad to see their members put in their place. They’ll find out, sooner or later, that the bell tolls for them, too.

As someone who grew up in the Detroit area, what Linnaeus and Bitter Scribe said.

GM’s incompetence is old news. Ever since the late 70’s, when the company leadership refused to adapt and make smaller cars, they have been behind the eight ball again and again. This hits the people of Detroit especially hard because it’s a one industry town, and that industry is in the crapper. That goes double for Flint, Michigan (see: Roger and Me).

I think you’re all probably sick of hearing me pontificate on this one thing, but here I go again.

GM’s financial issues are structural-they are paying for the labor, materials, facilities and equipment needed to satisfy 6/10ths of the market, on the revenue they get from 2/10ths. As to why they only have two tenths…ten years ago, a Ford executive, who would obviously not go on-record with this remark, said to a reporter on the subject of Detroit Three market share:

“The problem is, we spent the seventies and eighties teaching the consumer the same lesson over and over again. The lesson was that we made crap. They seem to have learned.”

Privately,  many GM & Chrysler people would agree. Now that product issues are finally being addressed in various ways, they are discovering that the damage is done-even if GM had the Chevy Volt ready tomorrow afternoon, meeting or exceeding all promises, how many buyers who may have had any experience with GM electrical systems in the eighties would risk purchasing a Volt? How do you reach those people?

Had the EV-1 fiasco been better handled, that would’ve gone a long way towards mending fences.

I think the product issues, and the accompanying structural deficits *are* indicative of a deeper issue-one that does have to do with culture, and how American industries were operated (and as modern GM was the prototype for many of them, what is happening to GM is instructive).

Much as I liked “On a Clear Day You Can See General Motors”, I take it with a grain of salt. Most people include in those kinds of books a mea culpa for some of the mistakes they’ve made, and John Z. really didn’t own up to ever doing anything wrong, IIRC.

Just some quick hits, since this thread is just about done.

MikeEss:  I do understand your point.  I just wanted to make that clear; hell, I’m tired of the excuses too, if for nothing more than I hate to see the damage those excuses have caused.

Bitter Scribe:  Yeah, I’ve suspected that myself.  I do think that most people on left-liberal blogs at least understand the value of the union jobs and don’t want to see those go, but I think there’s a noticeable minority who wants to see those uppity blue-collar folk who had the audacity to make a middle-class wage put in their place, as you succinctly put it.

I think Yig has a great point.  I don’t know how GM or the others will restructure, if they can at all.  Definitely the U.S. auto industry will not be what it was 30-40 years ago.