Auto industry hasn't abandoned U.S.

By WARREN BROWN
WASHINGTON POST
WASHINGTON -- The domestic automobile industry seems to have gone to hell in a handbasket. The appearance is framed by bankruptcies in the automotive parts manufacturing business and by the enormous financial difficulties facing General Motors Corp. and Ford Motor Co.
But the appearance is profoundly misleading.
The automobile industry is in trouble, but it hasn't gone to hell. It only seems that way to people in the Midwest and Northeast, the once-strong regional bastions of Big Manufacturing and Big Labor.
The automobile industry has moved to the South.
It pains me to say it as a native black Southerner who still celebrates the South's trouncing by the North in the Civil War. But the South has risen again, this time aided by a massive restructuring of the global automotive industry that is moving parts and assembly plants there from the Midwest and the North in the United States, as well as from Europe and Asia.
Except, the United Auto Workers union (UAW) and similar labor organizations were never considered very friendly, or treated as friends, in the right-to-work Deep South. So the vast majority of those plants and jobs are moving to the South without them.
Therein lies a major problem for the UAW, which has failed to organize BMW AG, Toyota Motor Corp., Michelin Tire, Nissan Motor Co., Mercedes-Benz, Hyundai Motor Co. and nearly all other auto assembly plants and their attendant suppliers that have moved to the South since 1970. And in failing to unionize those companies, the UAW has placed an enormous competitive burden on the manufacturers -- GM, Ford and DaimlerChrysler Corp. chief among them -- where unions had taken root.
The U.S. automotive industry and related manufacturing businesses are "transforming, not disappearing," said Kathleen Ligocki, president and chief executive officer of Tower Automotive Inc., a major Michigan-based automotive supplier currently reorganizing its North American operations under Chapter 11 bankruptcy protection.
'Dinosaurian extinction'
"While historic, high-cost unionized manufacturing generally located in the Midwest and Upper East Coast is slowly lumbering to dinosaurian extinction, the Old South is rising," Ligocki said last week in a Washington address to the annual meeting of the American Bankruptcy Institute.
Some 140 years after the Civil War, "the ascendancy of the South is in good part based on the very thing that defeated it so long ago -- a strong, growing industrial base," Ligocki said.
There is a tendency in the United States to take a myopic view of such developments, to see the shuttering of plants in the North and Midwest as American Big Business chasing big bucks through the acquisition of highly skilled low-cost labor. But that perspective reveals only a part of the story.
The truth is that big manufacturers are scurrying all over the globe in pursuit of the same thing. That is why Mercedes-Benz is building sport-utility vehicles in Alabama instead of in Germany. It is why BMW is building cars in South Carolina, Hyundai Motor just opened a splendiferous new plant in Montgomery, Ala., instead of in Seoul, South Korea, and Kia is joining its South Korean counterpart by building a plant in Georgia, just across the Alabama state line.
It is why Japanese, Korean and U.S. manufacturers are expanding their operations in Europe and China; it is why some Chinese companies are outsourcing components and operations to India; and it is why some South American journalists I joined on a recent trip to Poland were worried that many of their manufacturing jobs will be lost to workers in Central and Eastern Europe.
Organized labor represents only a few of those migrating jobs. That means most nonunion enterprises are not carrying the same kinds of health and pension costs as their union-represented rivals.
It's a funny thing about money in manufacturing: The cash you don't sink into personnel, or into a bankruptcy restructuring of your business, you can invest in attractive new products. If those products sell, you make money. You grow. You stay in business.
The trick for domestic automobile manufacturers will be to right themselves, to fix structural and product problems, before they run out of cash, Ligocki said.
"They will have to move fast. They do not have much time," largely because the South, pumped up by billions of dollars in foreign automotive investments that are spawning legions of highly competitive products, is rising without the domestic car companies and their unions, Ligocki said.
"GM and Ford are doing a lot of the right things" in terms of closing inefficient plants and cutting other costs, she said. But "product is key," she said.
And the thing about products is that most consumers do not care about where those products are made. Savannah or Shanghai makes no difference as long as it's a good car sold at a good price. And consumers don't care who makes those cars or trucks.