Re: American Cars
Bob Hutchins in central TX
>"I really don't have any secret agenda for defending American auto manufacturers except for the fact that they are spending hundreds of millions to develop world-class automobiles in order to satisfy the consumer in all the criteria I mentioned earlier, including fuel efficiency. I'm afraid that if we don't begin to wholeheartedly support this industry, it is lost forever. And we invented it, after all."
Well, Norman, I don't know if the industry is in danger or being lost or not. And, I, too, would not want to see its total demise. Yes, they have done much to turn their market position around; but I'll feel more confident about American car makers when I see the quality of their products on a par with the Japanese and the Germans and prices competitive. Although many of the foreign makers now produce their cars in this country, it defied logic -- not to mention common sense -- when they were making their products so far away and shipped them to the States, with all the attendant costs and quality maintenance issues, and generally beat the socks off the American makers.
"Consumers didn't really know what they wanted 20-30 years ago. Gas was cheap, and V-8's were de rigeur. I recall there were small pockets of people that drove 4 cylinder cars but these were few and far between. The manufacturers responded to this demand with the Pinto and Vega, rear wheel drive cars, but front-wheel drive was foreign to N.America at the time.. It isn't like it is today when all this is reversed. We need to place our mindset in that era to justify the decisions made back then."
I must disagree. Consumers voted with their dollars when they purchased foreign products in such large numbers. I have been an automobile 'consumer' since the mid 50's (about half of the history of the industry), and I can tell you from first-hand experience that it was not lack of consumer demand that caused the Big-3 to make the crap they did for so long. It was their we-know-what-you-want-better-than-you-do mentality and their unwillingness or inability to listen and respond to the market.
"I don't know too much about the details of what went on back then with the American auto manufacturers and the unions, but it always seemed to me that the companies were at the mercy of the powerful unions. Deals were arrived at and GM,Ford, Chrysler are paying the price today, likely unjustifiably so. In that era, GM,Ford,Chrysler owned the market in N. America and sales growth was high year over year. This might have reason for them to enter into these lucrative contracts with the unions. We all know what happened since then with respect to American manufacturer market share."
Capital (management) has never been at the mercy of labor. If you truly believe that to be the case, I can only wonder how we have read and lived the same history and come to such widely disparate conclusions. Capital has frequently found it convenient to go along with labor demands as a political and short-term economic position.
One only needs to look at the major concessions that have been forced on labor in the last 25-30 years to observe the power of capital and the weakness of labor. Observe the long-term shrinkage of health benefits, wages, holidays, vacations, and retirement plans and you see the weakness of labor.
"Gas priced did increase in the early 70's, but dropped again to previous levels and the appetite for V-8's returned. Yes, I do agree, the manufacturers should have foreseen that it was only a matter of time that a simiar gas shortage would return, but more and more oil was also being discovered in that decade. It was a confusing time and in the late '70's the mnfctrs. decided to get serious and also develop front-wheel drive along with smaller engines. Let's not forget, this is almost 30 years ago."
Gas prices have not kept up with inflation over the period. I can't cite sources to confirm this. Perhaps Denis or some of our other economists can do so; however, the media have widely reported this to be the case; and personal experience could also be cited as proof. GM even bought up and removed from service many public transportation systems and used its considerable lobbying power to hold gasoline prices down. What's worse,perhaps, is that they and their confreres have actively resisted regulatory and legislative efforts to get them to invest money into alternative power sources. Even today, there is great industry resistance to ethanol which is not only a renewable resource but one that would pump money into the agricultural economy which needs it so sorely. Geologists I know who work in the exploration industry tell me that they have long known -- 30 years or more -- of the finite nature of petroleum sources and the unliklihood of major future discoveries.
"There were also many American cars also exported to Europe and Japan in that time. Fuel efficiency was probably the prime motivator for the surge in imports of Japanese and European cars in that time, as few American cars could equal the fuel efficiency. But again, this is due in large part to Europe and Japan having a leg up on this type of automobile technology. Gas prices there were similar to current prices over here now and it became almost necessary to make fuel efficient technology. Today most autos produced here are as fuel efficient as the imports ,,, except for a few boutique sports cars ( for which there is a demand and GM,Ford is taking advantage of a niche).
Cars produced here today are world-class and very reliable.
Our trucks are second to none."
Although some American automotive products have been exported to Europe and Asia, imports from those economies have far outstripped the meager exportation. To say otherwise is to ignore a major contributor to trade deficits that were in good measure the cause for foreign car makers building plants in the States. Foreign engineering and manufacture have been superior for at least the last 20 years in mainstream markets. Boutique markets are not only examples of engineering/manufacturing superiority but instead examples of those makers' superior management and marketing skills. Our Big-3 almost totally ignored product segmentation and focused instead on advertising segmentation. It's almost impossible to differentiate a Chevy from a Caddy in terms of anything but product positioning, marketing hype, and sticker price.
"What I am saying is that we cannot continue to bash, we are bashing and trashing our own industry. Mistakes were made along the way, manufacturers have smartened up, it is time the American consumer cut them some slack and begin to accept the product."
Personally, I am fearful of the global economy and the impact it has had and will continue to have on the American people. I would prefer that we have no industry segment in which America is not a superior producer and competitor. I believe this is the only way we can stay free of foreign capital and political control, but I'm not unrealistic enough to think that wishing it so will ever make it so. "If wishes were horses, beggars would ride."
My points have not been to 'bash' the industry but to castigate it soundly so that it might wake up and smell the coffee. The first step in improving any situation is realistically assessing it and admitting what things are wrong and what are right. IMO the American car makers have a long way to go, but are not out of the running yet.
"Sure, we have at least discussed this.
This isn't the first time I need to come to the defence of American auto manufacturers, but in fairness they have made large strides
in delivering a quality product."
My studies led to a degree in business from one of the best public university b-schools in the world. I spent a long career as a middle and senior manager thus feel myself qualified by dint of both education and experience to critique management practices. Yes, I'll give credit for effort to improve the situation. But I'm not ready to put my retirement savings on the line with those who manage that industry today. There is a great deal more pain to be endured in that industry, I fear.
Thank you for an interesting discussion. We must probably agree to disagree, but I hope I have not been too disagreeable in doing so.
Regards,
BobH