Doug Thompson

I remember the first time I heard Detroit carmakers say they had learned their lesson and vowed to do better. That was in the 1970s. The 1973 oil embargo had hit. The Japanese imports ate Detroit for lunch. Some sharp observers noticed that women customers were turning to the Japanese cars because those cars were more reliable. Men were more obsessed with size and power, as usual.

Thirty-five years ago I heard how Detroit had learned its lesson and how that would impact the rest of my adult life. But, it’s been 35 years of dragging our feet on clean air standards for fear they might hurt Detroit. Thirty-five years of increasing addiction to foreign oil, of buying fuel from people who hate us. Thirty-five years of sprawl because Detroit destroyed mass transit in the 1950s and created a spread-out development pattern that never gave public transportation a toehold again.

Disagree with any part of that, but the effect it has had on this nation and the nation’s long-term economic health is still staggering.

I’ve had it. I’ve watched the wheel at the front of my crankcase, the one that turns the serpentine belt, bounce down the road in my rear view mirror. I heard a fan blade hit the freeway under another American-made car of mine after it flew off. I’ve replaced the transmission in another three times. One was only a few weeks old. I’ve done all the subsidizing of U.S. auto companies I’m going to do.

The cost to the economy may be dire. All we’re doing is putting it off, though. I don’t believe Detroit carmakers can survive whether they ought to or not. Buying time is expensive and will just make the crash worse when it finally comes.

There are enough factories left in the United States to make 17 million cars a year. Americans might buy about 13 million this year. A lot of those are imports. Analysts expect 2009 to be worse at 12.3 million. This compares to 16.1 million in 2007.

Something’s got to give.

Chrysler is dead anyway. Spin off the Jeep brand if you can, and maybe the Dodge Ram pickup.
General Motors should stop with the open-faced denial. You can’t blame your problems on the credit crisis when you lost $51 billion in the four years before that crisis hit, as Forbes magazine points out.
GM should sell the Hummer brand. That alone might raise enough cash for them to at least make it until the presidential swearing-in ceremony. Maybe Hummer and Dodge Ram should form a company. Macho Motors, anyone?

In fact, perhaps the “Big Three” should take a good look at what it has left, shut down the ones that aren’t selling and merge.

The “Big One” is better than the “Big None.”

Good luck getting Ford to do that. It’s not as desperate as the other two.

Actually, “Big None” is a myth. Other companies would quickly take up the slack if Detroit simply dropped off the map. All the frightening talk of what would happen if they crashed should mention that other automakers would expand. Those other automakers such as Toyota are healthier than Detroit because they make better cars at lower costs.

That rosy capitalist picture is too simple. If GM went under, for instance, the domino effect of ruined parts suppliers would choke everybody for a while, even foreign firms with factories in the United States.
Yes, Toyota benefited from protectionism and from government health care in Japan. They could have survived by being fat and lazy in those conditions. They chose to make good cars instead. It paid off.
I don’t deny for a minute that the collapse of Detroit would be a first-rate economic disaster. The collapse of Detroit and the collapse of car manufacturing in the United States, however, are not the same thing.
Detroit asked Congress for a $25 billion loan. By the latest estimates including the total value of outstanding shares of stock, those carmakers’ fair market price is about $6 billion. That combined total is about 5 percent of the fair market value of Toyota. U.S. automakers lost 4 percent of U.S. market share in the past 12 months.

It’s time to ask: What can be saved here, and what can only be prolonged?

Categories: Features