Who is to Blame?

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The Thinker...There is much debate about WTF happened to the US auto industry and who is responsible for it. Some blame the workers, some the union, some the legislators and some the companies. I’d like to take a few minutes of your time to offer my own thoughts on this calamity and who’s responsible for it. It’s a real shame what has happened and knowing it didn’t need to end this way leaves me speechless (almost).

The root and cause of this is management. They market the cars, they make the design decisions, they make the R&D and investment decisions, they make the financial decisions, they negotiate agreements with the unions for compensation and benefits and they negotiate dealer franchise agreements.

They have spent 100’s of millions of dollars lobbying legislators federally and in each state to defer or water down legislation which would have forced them to change the environmental impact of the product, the national security impact of the resources those products consume and the safety of those products to the users. They fought seat belts, they fought air bags, they fought anti-lock brakes, they fought collision safety standards, they fought fuel economy standards and they fought pollution standards tooth and nail and continue to do so even today. They invented none of it.

They have fought every change of attitude of the consumers of their products and countered them with hundreds of millions of dollars in advertising and promotion selling the big car, big truck lifestyle and how their big cars enable it. When the scream of the market for smaller, more economical and more sustainable vehicles couldn’t be silenced they took their big trucks and made them smaller big trucks and called them “crossovers”. That is their response.

Now, out of nowhere, GM says they have an electric vehicle they can release within 2 years. That they get the message and they have changed their ways. Really? Does anyone really believe that Detroit couldn’t have done this 10 or 20 years ago? Does anyone really believe that?

This crisis isn’t new and it didn’t start in 2008. The business plans of the Big 3 haven’t been viable for over 40 years. Detroit is fixed on a course of pushing the boundaries of sustainability until they they break. In the ’50s they made cars bigger and bigger until the bubble finally burst and they were forced to come out with smaller more sustainable cars. In the early ’60s they got away with it because there was no one to compete with them. The post WWII economies of Japan and Germany were not fully restored.

How did they respond? Sure they made cars smaller but year after year they got bigger and bigger again. The engines got bigger, the cars got bigger and their environmental impact became bigger and bigger. Then, again, in the mid-70’s, we had the oil crisis and the US industry became unsustainable and they did the same time they did over a decade earlier: they made smaller cars. This time however the new economies of Japan and Germany were there to take a shot. Since that time the US auto industry has been eroding one 1% of market share at a time. You would think that with this threat from overseas they would have finally got their acts together but nooo.

As soon as the oil crisis passed and Reagan came into office in the early 80’s they went right back to what they were doing building bigger and bigger cars each year. When they could get away with bigger cars they switched to selling trucks tailored for consumers: the SUV. For the last decade or more all 3 of the major Detroit automakers have incrementally super-sized their vehicle line-up; think Ford Explorer, Expedition, Excursion for a vivid example of this incremental bloat. The final results of this push to the edge can be seen in any one of the Big 3’s final 2008 model line-up.

They’ve made zero investment in improving production technology to make selling small cars profitable while the Japanese were investing in building smaller cars more cheaply, more efficiently and with fewer workers. When the competition were investing in robotics, flexible production lines and basically eating Detroit’s lunch, the Big 3 spent millions, perhaps billions promoting an unsustainable and obviously doomed business plan.

Europe for its part spent that time inventing new technology and pushing the boundaries in materials science, passenger safety, fuel economy and just plain making cars better.

The US auto industry failed and failed miserably on every count to the point of complete and total incompetence. They saw this coming more than 40 years ago and despite repeated warning and opportunity to change course they chose to plow headlong into a giant iceberg of unsustainable and inferior products.

The only ones who can be reasonably blamed for this catastrophe are those at the helm. They are grossly negligent, incompetent and just plain stupid. They have wilfully and knowingly run this ship aground and now threaten to sink the entire US manufacturing sector and take some 3 million passengers down with them and leave another 40 million stranded.

If that isn’t criminal I don’t know how else to describe it. What do you think?

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