More Auto Woes

I recently talked to a friend of mine who is a plant engineer at an auto parts supplier in this area. His shop laid off a large part of its workforce last January. He tells me that the lights are turned out in half the plant; the machines stand idle.
“How are you surviving?” I asked.
“A couple of major office furniture manufacturers in the area have decided that they are going to see a huge demand for new office chairs. So the wing of our plant that makes office furniture is keeping us going.” He shrugged, “I don’t know where they are going to find bottoms to fill those chairs, but it pays the bills for now.”
“How long do you think that will last?”
He squinted his eyes. “I kind of think reality will set in sometime next fall. But, until then … .”
It came as no big surprise to me when I read through this week’s issue of “BusinessWeek” and learned that the lack on sales in the auto business is squeezing parts suppliers toward bankruptcy. This could leave restructured auto companies left with too few parts to build cars with.
The suggestion was raised that as soon as the government is finished bailing out what’s left of General Motors and Chrysler, it may have to go bail out some major parts makers. Compared to the banks, that’s just a few billions—but, as the old saying goes, “a billion dollars here; a billion dollars there—that can add up to real money.”
General Motors is braced to enter bankruptcy proceedings in a day or two. Even though all sorts of creditors, unions and bond holders are agreeing to major losses, it looks like Chapter 11 will be inevitable.
And now the heavy hitters are at the plate trying to turn an amalgam of Chrysler, Fiat and Opel into a single entity. Chrysler I know about—it’s been teetering at death’s door for half a century. Fiat has always had problems building cars that ran better than the Italian Army.
But Opel? They’ve been making cars since 1898; they were once the largest auto maker in Germany (back in 1913). General Motors bought them out in 1929-31. As a GM brand they’ve competed successfully against the likes of Volkswagen, Audi, and BMW for decades. At one point, in the 1980s, they were the biggest GM brand in Japan.
They came back from the rubble of World War II (Hitler once decorated a GM vice president for his contributions to the mechanized Wehrmacht) and again competed throughout Europe very successfully. In some countries Chevrolet models were sold as Opels.
How did GM let this brand go to the point that it needs to be sold? This will certainly cut back on General Motor’s presence as an international brand! Can people who have let Saturn, Opel, Oldsmobile and (soon) Pontiac go to smash be trusted to run anything?
The people who are trying to meld Opel into a Chrysler/Fiat merger feel that only if the three are together can any one of them survive. You need to be huge to survive in today’s auto market. Remember when General Motors was the hugest of all?
For now, whole factories (and their towns) in Germany are left as desolate as Detroit. My friend, here in Michigan, goes on setting up machines to build furniture for new offices that may never materialize.
Americans all over the map are deciding not to afford cars that easily cost as much as a nice house did only a few decades ago. We may not have seen the end of the auto shakeout yet.
We can only hope that when GM comes out of bankruptcy it can find a way to see lots and lots of the brands it still has left—and find the parts companies to build them with. Ditto for FiatOpelChrysler—and Ford--and, for that matter, all those Japanese auto factories in Tennessee and Alabama.
I just don’t think the “fat lady” has sung yet.