It happens to be the Detroit bankruptcy. I worked in the automotive industry for a couple of years back in the '80's. I might not be an expert about every facet of the story of US automobile manufacturing, but I think I know enough to present a relatively cogent case for why things crumbled so disastrously.
There's an old story in the annals of family mythology about my great-great-grandfather Wilson. Wilson was an entrepreneur from Northern Indiana. Around the turn of the century, he owned and operated a carriage factory. The story claims that the Dodge brothers, Horace and John, who had moved with their families from nearby Niles, Michigan to Detroit. They had been machining parts for Ransom Olds and had recently partnered with Henry Ford as well.
The Dodge brothers had become very successful and were ready to create their own start-up automobile manufacturing company. The purpose of their visit to Grandpa Wilson was to propose a partnership for Wilson to convert his carriage factory into an automotive body manufacturer for the Dodges.
Well, grandpa said no. "Those motorcars won't catch on, they just get stuck in the mud", said Wilson. So much for that opportunity.
Anyway, I went to work for a fairly large automotive parts manufacturer in the mid-1980's. Ours was a union shop, beholden to the UAW, of course. I helped develop and implement systems that contributed to significant improvements in productivity, efficiency, and quality. I believed that we had successfully transformed our big Indiana plant, plus the two smaller satellite plants I worked with, into perhaps the best in the company, at least in terms of efficiency and quality.
But I could see that the pressures were building. The UAW contract was coming up for renewal. And the Big 3 (GM, Chrysler, Ford) had just given us the news - yes, they would continue to use our parts in their big Detroit assembly lines. But they were going to pay 10 percent less for them next year. Take it or leave it.
I thought I saw some handwriting on the sooty plant walls, so I accepted a new job elsewhere shortly before those new developments were scheduled to take place. Not to mention the fact that those two developments included me being transferred to the Corporate office in Toledo, which was actually the primary motivation for my moving on to a new adventure. Toledo, just an hour south of Detroit, was suffering the same urban decay as Detroit, so I had no enthusiasm for relocating there.
Why did Detroit die such a slow and agonizing death? The obvious answer is politics. Here in Columbus, we have Cummins Engine Company, which has a history of showing a positive cooperative partnership with the city to keep Columbus a nice place to be. After the race riots frightened the white folks out to the Detroit suburbs, the radically leftist city governments who ruled the city for 50 years were more like gangsters than partners with the Big 3.
Should the Big 3 executives done more to try to keep Detroit safe and decent and a great destination city? Probably. But I suspect the Detroit mayors and city councils were not in a partnering mood, but instead were focused on lining their pockets with graft and trying to constantly hold up the automakers for more and more cash, too much of which ended up getting diverted into their own pockets.
In the plant I got to know the engineers and operations managers reasonably well. They constantly decried the top-down management style out of Detroit that failed to understand the growing trend coming from Dr. Deming and Japan. Japan was shipping Hondas and Toyotas to the United States and consumers were discovering that those cars were much better engineered and crafted to stay on the road two to three times longer than their American competitor's vehicles.
Detroit, meanwhile, was already becoming a wasteland. Whenever we traveled north for a meeting in Detroit, our boss would caution us to avoid walking in the city after dark. Detroit's downtown in the mid-80's was already a ramshackle city full of empty, vandalized buildings. Everybody we met with who worked for the Big 3 lived in the suburbs. Except for the big glass towers on the river where they worked, the city was dying even then.
American cars today are better built and more reliable, but still have not cast off the impression from the 80's and 90's of being inferior to the Japanese and now German cars. The government bailout of General Motors didn't turn around the company's fortunes, but merely gave them a transfusion of cash to keep them solvent a bit longer. That's why I am resolved to never buy another GM vehicle as long as the government owns any stake or has any say in their operations.
I used to wonder, even back when I worked in the industry, why don't some young, energetic automotive engineers get together to form a brand-new American car company? I think I now know the answers:
Because the government won't let them use non-union labor.
Because the government will erect barriers to protect the Big 3 (or is it 2 now?) from competition.
Because the banks won't finance them, at least partially because they might be instructed not to do so by the government.
Back in the plant, we kept hearing about this secret project at GM. They had some sort of code name for it, and it was supposed to be this new autonomous automaker that would be allowed to break free of the restrictions of GM's top-down management. That turned out to be Saturn. I guess we saw how that experiment worked out.
I wonder, will some Americans find a way past all the government-imposed obstacles one day to prove that we are the home for ingenuity and the American Dream? Where people like the Dodge Brothers, Henry Ford, and Ransom Olds started with nothing and built the automobile industry from the ground up? I think it could be done, but only by a very determined and persistent group of visionaries.
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