U.S. automakers have history of goodwill

By Warren Brown

NEW YORK — It is easy to feel disassociated from Detroit in this city of imported products, services, celebrities and mannerisms. It is easy to laugh at the stumbling, homegrown industrial giants of the Midwest in this bastion of urbanity and sophistication that makes money the old-fashioned way — changing it from one hand to another, often at profitable interest rates; and then running to the federal government for help when the elaborate Ponzi scheme of lending, borrowing and insuring comes crashing down.

Here is where newspaper columnists — Thomas L. Friedman of The New York Times comes to mind — routinely dismiss the idea of federal aid to an ailing Detroit, suggesting that the city and its automobile industry be consigned to the scrap heap of history, having failed dismally in their core mission to design and develop the kinds of cars and trucks Americans really want.

It is sophist nonsense, of course, the kind of tale spun by people who haven’t bothered to check the numbers, and who have paid even less regard to the history of their supposed knowledge.

The truth, all things considered, is that Detroit has done reasonably well. The American Three — General Motors, Ford and Chrysler — still hold an estimated 47 percent of a home market that is wide open to competition from car companies all over the world. Until July of 2007, domestic automobile manufacturers historically held more than a 50-percent U.S.-market share. But in a country where consumers have made Wal-Mart the retail king — that’s Wal-Mart, one of America’s biggest importers of foreign goods — that was bound to change.

If you are a free-trade advocate, have no fear. This isn’t a treatise in defense of protectionism. It is simply a more accurate assessment of reality, the bottom line of which is that free trade isn’t free.

American consumers, in their passionate pursuit of the very best goods at the lowest possible prices, have undermined their own economic well-being. It is rather difficult to maintain high salaries and premium health and pension benefits in a business environment built on profitably moving a maximum number of high-quality products at bargain prices. Something has to give.

‘Pro-business’ states

In the automobile industry, it was union influence and organizing. Unions failed miserably in wooing the U.S. workforces of foreign automobile manufacturers — nearly all of which strategically have set up shop in nonunion or “pro-business” states, usually in the South and Southwest.

Those nonunion, foreign car companies have been successful because American consumers want them to be successful. Why not? If consumers can get great cars from Toyota or Honda free of the costs associated with United Auto Workers union-represented labor at General Motors, well, that is what they’re going to do. They’re not going to look for the union label, let alone pay more for it.

But the more American consumers make those kinds of decisions — choosing goods and services unburdened, or less-burdened, by health-care and pension costs — the more they reduce the protective power of UAW contracts and similar labor agreements. GM could have all of the good intentions in the world; but if Honda, aided by less-expensive labor contracts, can build a car as good as GM for less money, Honda has the clear advantage.

That is an inconvenient truth that pundits here and in similar redoubts of sophistry delight in ignoring. They’d much rather beat up Detroit for mistakes in product judgment real and imagined, as if foreign car companies have made none of the same errors. It’s baloney.

The simple truth is that car companies play first to the markets in which they find themselves. Toyota, for example, got much of the money to develop its gas-electric hybrid Prius car from lucrative sales of gas-guzzling trucks and sport-utility vehicles in United States, where those big rides, before soaring fuel prices, once constituted more than 50 percent of new-vehicle sales.

Why didn’t the American Three adopt the same strategy of taking profits from trucks and putting them into more fuel-efficient cars? Truth is, they did; but they did it in a way that didn’t tickle the fancy of lawmakers and media pundits.

GM, for example, reasoned that gas-electric technology was an expensive, short-term approach to fuel economy heavily dependent on batteries that did not yet exist — the kind that could deliver the driving range of a full tank of regular gasoline at an equivalent cost of about $2.50 a gallon. (Actually, rising gasoline prices helped to make a better business case for gas-electrics.) GM decided to put its money in long-range, less-glamorous, more-complicated, more-difficult-to-understand-and-explain hydrogen fuel-cell research. It was a public relations blunder.

Hybrid gas-electric

Curiously, Toyota and Honda had made similar decisions, backing away from early electric vehicle projects — before Toyota returned to the idea, first proffered by Porsche in the early 1900s, of creating a hybrid gas-electric.

You can blame GM and the other members of the American Three for guessing wrong on gas-electrics; but it is wrong to accuse them of deliberate malfeasance in pursuit of fuel-efficient technologies.

The American companies can and will do more. But they will need a country and a government to support them in those endeavors, just as many of their foreign rivals have received and continue to receive aid from their respective governments.