Unfair Competition From Overseas Deadly For American Car Industry

IBD Editorials ^ | November 21, 2008 | Patrick J. Buchanan

[Kaslin]

Who killed the U.S. auto industry?

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.

As far back as the 1950s, an intellectual elite that produces mostly methane had its knives out for the auto industry of which Ike's Treasury secretary, ex-GM chief Charles Wilson, had boasted, "What's good for America is good for General Motors, and vice versa."

"Engine Charlie" was relentlessly mocked, even in Al Capp's L'il Abner cartoon strip, where a bloviating "General Bullmoose" had as his motto, "What's good for Bullmoose is good for America!"

How did Big Government do in the U.S. auto industry?

Washington imposed a minimum wage higher than the average wage in war-devastated Germany and Japan. The Feds ordered that U.S. plants be made the healthiest and safest worksites in the world, creating OSHA to see to it.

It enacted civil rights laws to ensure the labor force reflected our diversity. Environmental laws came next, to ensure U.S. factories became the most pollution-free on earth. It then clamped fuel-efficiency standards on the entire U.S. car fleet.

[Jim W N]

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.

I dissent. Detroit stopped listening to manufacturing experts like Dr. Demming after WWII. Toyota and other Japanese car mfrs asked for help from Dr. Demming who went over there (in the 50's I believe) and showed them how to manufacture cost-effective, customer-oriented, quality products. There's a famous story that a Detroit executive (sometime in the 70's, I think) was visiting California and was shocked to see so many Japanese cars. They still don't seem to know what hit them. Detroit needs to get off their butts and compete and throw out the unions (rots 'a ruck) if they have to to do it.

[ml/nj]

Yeah. It's so unfair that they don't pay $2000/car to people who aren't working for them.

ML/NJ

[ggekko60506]

It was interesting article by Pat Buchanan and the anti-competitive factors listed in it do explain part of Detroit’s decline but no all of it.

The question to my mind is why the foreign transplant factories are doing so well when they must cope with exactly the same OSHA , CAFE standards and lawsuit craziness that the Big Three must cope with.

I think Pat is giving the UAW a free pass here. A pre-packaged bankruptcy filing would allow Detroit to shed the insane pension, job guarantee and health benefits with which they are saddled.

The transplant factories are using American workers and some American suppliers and are coping better with the same business climate as Detroit. After paying their very high structural labor costs Detroit has very little left over to invest in R&D and I think this is the real genesis of their situation.

[sickoflibs]

You will love this. On MSNBC Patrick J. Buchanan yesterday said US must raise tariffs on foreign parts to Japanese plants in USA that employ amreicans, So he wants to punish american workers at those plants, but worse is so STUPID he doesn't realize GM uses foriegn parts too.

[Lorianne]

Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us. That's Asia's idea of free trade.

Did the 700,000 Korean cars sell in the USA?

Would 700,000 USA cars sell in Korea?

This is the real free trade question that many, including P-E Obama, refuse to discuss.

[Lorianne]

Absolutely, the Big 3 are stuck in a rut.
They need some DIVERSITY!

[truthguy]

I dissent. Detroit stopped listening to manufacturing experts like Dr. Demming after WWII. Toyota and other Japanese car mfrs asked for help from Dr. Demming who went over there (in the 50's I believe) and showed them how to manufacture cost-effective, customer-oriented, quality products. There's a famous story that a Detroit executive (sometime in the 70's, I think) was visiting California and was shocked to see so many Japanese cars. They still don't seem to know what hit them. Detroit needs to get off their butts and compete and throw out the unions (rots 'a ruck) if they have to to do it.

Score: Buchanan 80% Jim 0216 20%
Look there is a tremendous amount of truth in what PB says. He's right that the Federal Government is run by an elite class that doesn't understand Manufacturing and would NEVER associate with the classes of people in Manufacturing even if those people were at the upper levels of management. I know some of these people. Most of these folks couldn't change the batteries in a flashlight. I agree with most of his comments on OSHA, Environment Overkill, CAFE standards, UNION inefficiency, Affirmative Action, Diversity Mandates, etc.
Jim has a minor point on Dr. Demming. But if it were that easy then the Auto Industry would have eventually corrected their mistakes. Many people think Detroit is run by idiots and they if only they were running the car companies then everything would be just fine. What fools! These idiots haven't got a clue how hard it is to manufacture ANYTHING here in the United States. It's damn difficult to run anything but a Software or Service Company.

Some of you posters who have been knocking Detroit ought to get out there and try it. Look the Big 3 have been having problems for over 30 years. At least one of the companies would have stumbled onto the right management team/approach by now. The fact that all three are doing poorly is indicative of a systemic problem. Jim, you need to get educated. You need to go out in a manufacturing environment and learn some facts.

[padre35]

Poor structuring of their business model is the American Big 3’s major problem, it is instructive to note GM and Ford have flourishing European Operations, they know how to do business overseas, but are chained to a stuck in the mud, Upper Midwest business model with unsustainable Taxes, Management that lacked humility, a work force that while looking out for their own interests, failed to remain nimble as well.

To me Bankruptcy is their best option, restructure, and try again....

[Tennessee Nana]

In TN, we are giving VW $1 Billion to build a factory here...

Thanks, Lamar!

Thanks, Bob..

No thanks...

[dr_who]

Better analysis than pitchfork Pat’s.

[IYAS9YAS]

I’ve been in Korea, and 5,000 cars a year is a good thing. They had no room for all the cars they did have 20 years ago and were imposing odd-even (last number on license plate) days in Seoul for driving.

[dr_who]

Why aren’t people buying cars from GM then (apart from the current state of the economy)?

[pnh102]

What a dumb article. Many foreign car companies build product right here in the USA with US workers and US-made parts and these products are far superior than anything the Big 3 have to offer. These foreign car companies are subject to the same regulations that the Big 3 must deal with but are still able to make money.

[EEDUDE]

“The question to my mind is why the foreign transplant factories are doing so well when they must cope with exactly the same OSHA , CAFE standards and lawsuit craziness that the Big Three must cope with.”

The answer is simple. For about 20 years, 90% of the stuff the Big 3 turned out was junk. People got tired of parts fallin’ off their new investment as they were driving off the lot.

They have gotten better, but they have a LOT to show me before I will buy another car from any of them.

[enduserindy]

All I can think of to say about the Big 3 and the bailout is...

BRING BACK THE TUCKER!

http://en.wikipedia.org/wiki/Tucker_Torpedo

What goes around comes around, it just takes awhile.

[Arkinsaw]

Ignorant article.

What did in the US industry is that they became a giant pension fund that made bad cars on the side.

The article blames the minimum wage when no UAW worker has ever made as low as the minimum wage.

The giant pension fund problem is because management tossed the UAW long-term bones in order to push some problems off to future generations of executives and keep the UAW pacified for their personal tenure. Now the bills are due.

Did they have any plan for unexpected changes in the market? Like $4.00 a gallon gas? No. Because they go for maximization of short-term profit. When market conditions change they are just screwed and have to endure massive pain in order to retool. This time they don't even have the resources to retool.

[Right Wing Assault]

Well gollee! I guess the unions are innocent, eh, Pat?

I know a guy who was earning $100k in 1988 drilling holes in engine blocks.

I wonder what he’d be making today if he hadn’t retired in his early 50s.

[mimaw]

I find it humorous when the execs from GM were bragging on their Volt to come out in a year or so. Isn't that a forty thousand dollar car? Toyota and Honda have produced cars with good gas mileage for years and Joe Six Pack could afford to buy it. Who is this car designed to appeal to when this economy will take years to repair itself and most Americans will not be looking to drop forty grand on a car. Old Pat has such a phobia to anything foreign he can't make an intelligent argument for the failure of the dinosaur car makers in this country.

[Ouderkirk]

It’s not labor costs that are killing GM. It’s property taxes wherever they are doing business.

THe foreign builders are negotiating tax rates up front as a condition of opening their factories. The municipalities know that if they start to screw them over that they will leave.