When …?

Automotive Design & Production, Feb, 2006 by Christopher A. Sawyer

More often than not, this is a question parents hear from their children, or a statement of the questioner's dissatisfaction with the questioned. However, this single word--though it deals with things that have yet to happen--has historical import in that usually it is asked to discover what will be done about a problem that has festered for some time. For the auto industry, this historical sense of the word is the most important at this time in its history. There are many "whens" in need of substantive answers.

When are the rank-and-file members of the UAW--especially those dissidents who claim they are being sold out by Ron Gettelfinger's tepid "reforms" to the health care plan--going to realize that the domestic auto industry is in danger of collapse? True, the problems facing the industry are not of the line workers' making--they didn't hold a gun to management's head--but they're going to have to be part of the solution. Whining about minor prescription drug copays, the end of "first-dollar" health care coverage and pulling down supplemental unemployment benefits when they're laid off doesn't win them any friends with the buying public. For most American workers, benefits like these are the stuff of dreams.

When are the leaders--and I use that term advisedly--of the domestic auto industry going to come to terms with the 40-year decline in their share? It's a fact of life that, as more options become available, buyers move away from previous choices. Over the past 40 years, more and more buyers of domestic vehicles have switched to an increasing number of foreign brands and are very satisfied with the switch. In that same time, however, each of the domestic automakers has decimated its product planning function, eliminated divisional autonomy, chased profit at the expense of long-term health, and let Wall Street's shortsightedness determine the time horizon for an industry that can't turn on a dime. The solutions proffered by these so-called leaders thus far are weak at best, aimed primarily at boosting the share price, and revolve around offering "class-leading product"--as if every other car company on the planet didn't have the same idea.

When is the reality going to catch up with the hybrid hype? As Holman Jenkins of The Wall Street Journal pointed out recently, these vehicles make little or no economic or environmental sense. Current hybrids are best at stop-and-go driving--and only if you are willing to ease away from a stop so gently and accelerate so gingerly as to incur the wrath of your fellow drivers. Which leads to the real point: When will the fast followers realize that Toyota has won this PR war, and that all the eco-weenies really care about is that the great unwashed masses bow before their superior environmental awareness while they savage Detroit for its shortsightedness and inability to lead? When is someone going to launch a counteroffensive?

When will the public realize that companies can no longer afford defined-benefit plans and inevitably must switch to a defined-contributions plan? Not only is it the responsibility of every worker to save for their retirement, the whole defined-benefits mess arose out of the government's WWII-era attempts to keep a lid on inflation by controlling wages, while leaving benefits alone and offering tax incentives to corporations that followed the program. This basic structure still exists, and all efforts to overhaul it have failed. Pensions in this country are as secure and solvent as Social Security. This is to say, not at all.

By Christopher A. Sawyer, Executive Editor, csawyer@autofieldguide.com