Ford, Chrysler, GM--Glub, Glub, Glub

It has come down to it. The unthinkable is being thought of—at the highest levels. The Bush Administration is talking about “structured bankruptcy” for any or all of the Big Three Detroit auto makers. The Senate may well have left us with no other choice.
I can tell you that talk like this has sent convulsive shudders through states like Michigan, Ohio and Ontario. The shudders are scarcely limited to the rust belt. My cousin, who spent a career as an accountant for Ford Motor Company—and has been comfortably retired in Florida for twenty five years—is suddenly concerned that his pension might go away. He has several million for company.
The era of Walter Reuther is over, indeed, it seems likely to come to a screeching halt right In front of our eyes. Year after year when the supremely arrogant Detroit auto companies believed the good times would never stop rolling—anything the unions asked for, they got.
Thirty years and out, extra pay during layoffs, decades of retirement covered under ever more generous pensions and health benefits, higher and higher wages—anything to keep the assembly lines rolling. All of this piled on potentially crushing overhead. But that didn’t matter. We’re General Motors—or Ford, or Chrysler.
They didn’t seem to notice what was going on around them even then. Other American car companies were folding up and dying. Studebaker, Hudson, Nash (American Motors), Packard—all collapsed as the Big Three kept appeasing their labor unions at any cost.
Clouds “the size of man’s hand” showed on the economic horizon, but the sudden popularity of the first European cars—VW and Volvo—caused no second thoughts in Detroit. Henry Ford II sneeringly dismissed the thought of competing with Honda, Toyota or Datsun (Nissan): “Mini cars, mini profits.”
The overhead piled higher; the see no competition, hear no competition, speak no competition attitude continued. The only rivals a Detroit auto maker could imagine as worth its consideration were the other two down the street. They remained myopic as American cars lost both coasts to Europe and Japan. The SUV and truck buying Midwest seemed as far as Detroit could see.
They designed their cars exclusively for the ever forgiving big vehicle loving middle American, virtually ignoring everyone else. It didn’t seem to catch their attention when Volkswagen first tried to manufacture cars in the US—and could not locate a single American automotive parts supplier who could make parts that were up to German standards. That should have made someone reflect.
But nothing did. (Even when they demonstrated to themselves that they could build and sell small cars in Europe!) For the US, they built more Hemi’s, Hummers and ten cylinder trucks. They created a mindset in American consumers: small and fuel efficient=Japan; big and gas guzzling=Detroit.
That was okay as long as there was no compelling reason to buy small cars. It became a problem in 1973 when gas prices doubled. People took recently purchased American cars out into the California desert and torched them for the insurance. That could have been another warning. Detroit remained blind.
Until last summer. Now Detroit needs a multi-billion dollar bailout just to get to next payday—assuming people will start buying Hummers and Hemi’s anytime soon. Oh, Hudson, Studebaker, Nash … .
A coalition of people like senators from southern states where BMWs and Toyotas are manufactured, disgusted buyers (like myself) who don’t care if they ever own an American car again, and a large group of people who don’t believe that Detroit has the will or the capability of reinventing itself have created an informal coalition to oppose the bailout. Why, they ask, throw good money after bad? A bailout, they believe, won’t save Detroit, it will merely delay the inevitable. So why waste taxpayer money?
That’s a more than fair question. Would Detroit have any idea how to recreate itself? Would buyers who have been conditioned to see Detroit exclusively as Big Car country change their perception in time to save the shrunken three? Would Detroit know how to build a vehicle with enough quality to woo Toyota buyers? Enough pizzazz to woo Mercedes or BMW drivers? Efficient enough to win over Green People?
Neither Detroit nor the taxpayers can afford a single misstep at this late date—and Detroit has a very bad record for missteps—going back as long as I’ve been alive. What will be different this time?
What, you ask, about the poor workers who pushed Detroit for higher pay, better pensions? Where will they find other jobs that pay as well? Maybe, brutal thought, the Walter Reuthers of today can’t force GM and Ford to protect them any more? Maybe that day is done.
What, you ask, of the states whose economy has been built around Detroit cars and its too well paid work force? Reality is sometimes cruel, especially to those who blind their eyes to it.
Southern States that welcomed European and Japanese companies—and are doing so well now—backed the wrong side in the Civil War. They suffered privation for decades as a direct consequence. Perhaps there are equally bad consequences for backing the wrong industry, exclusively and for too long.