I listened to Friedman’s rant on how wrong the big three are and that they should not get any money, yada, yada, yada…
Folks, I have been involved both directly and indirectly in the automotive industry since 1985! My father used to a VP/Plant Manager for Magna, and Grammer. I myself have worked for multiple car parts suppliers. And I have had many friends who have worked in the automotive industry.
So what I am going to do is lay down some facts!
Myth: The union is at fault
The union is the same wherever you are in the automotive industry. The unions in the automotive industry in America is like the union in Germany is like the union in Japan. What is different are the conditions of the individual countries. For example in Canada, or Japan the companies do not need to provide health care since the government does. But in Germany and the US the company does have to pay into health care.
Putting the blame on the union is not going to change a thing since the entire automotive industry is one big union regardless of the manufacturer. Let me be very blunt the union and automotive industry are completely intertwined and you are not going to get the union out of it. The automotive industry knows this and those on the outside don’t! My comment is deal with it and stop complaining!
Myth: Bankruptcy will help restructure
Do you even understand how the industry is structured? How on earth are you going to claim bankruptcy? The automotive industry uses JIT (just in time) manufacturing techniques and any disruption will prove fatal to the entire chain.
If you decide to claim bankruptcy how on earth are you going to change the union or the workers? Where are you going get the production facilities to produce the cars? You can’t easily restructure the entire industry on a dime.
Myth: GM and Ford are creating clunkers instead of efficient cars
This is the biggest pile of do-do. The car makers are not at fault here. Let me illustrate with GM (Opel in Germany). The Corsa is a car that was brought to America and it flopped. Or how about Ford like the Ford Focus. This car has been around in Europe for ages. My point is that these cars exist, but what do people want? Obviously not THOSE!
What people like Friedman and critics don’t understand is that people LOVE big cars. If they can afford it, then they will buy it and the car makers will build it. Let me illustrate with the Porsche Cayenne. This car is an illustrative example of inefficiency. Yet Porsche built it because people wanted it! And Porsche is not even American!
This desire for big cars was not a recent thing. We need to be reminded of the following models:
These are 70’s models and in the 70’s there were fuel efficient American built cars, namely
Yet AMC went under, and cars like Chevette were known as "shove it"’s. People did not want those cars. People made fun of smaller more fuel efficient vehicles for decades!
What they wanted were big cars like Mini Van’s (which actually are not that mini). The morphed end result of that is the SUV. If you want to understand the mentality of the American consumer then look at the history of the Suburban. The American consumer has always desired such a car and why blame the big 3.
After all, foreign car makers like Toyota have been making just as inefficient vehicles (EG Toyota Land Cruiser). What I find stunning is that people are not talking about Toyota. Or the Porsche Cayenne, BMW X5, etc, etc, etc.
For those thinking, "oh well that is an American flaw", should not be so hasty. In Europe there has been an increase in BIG vehicles and in Switzerland one party wants to ban them.
Want to know what went wrong? 150 USD oil! That is what went wrong! Nothing more nothing less.
Myth: Toyota has the hybrid and GM has nothing
Hybrids are a red herring argument. Seriously! This is yet another myth that hybrids are the most fuel efficient. Diesels are more fuel efficient and the proof is at the urls (1, 2) note: these URLS are in German. Of course the most fuel efficient would be a diesel hybrid. Yet that is not what Toyota has, which is gasoline. GM has very very fuel efficient diesel based vehicles that are clean. YET they are not allowed in the US. The hybrid has not been a raging success in Europe because people drive diesels, which are more fuel efficient.
Put these points together and you should realize that the car industry is not that simple. It is not a sound bite.
Will things change? Absolutely because we are not driving the 440ci cars anymore. For those wondering how big that is, its 7.2 liters! Yes they used build and drive 7.2 liter engines!
An example of an affordable, very fuel efficient vehicle that completely flopped look no further than the Volkswagen Lupo. The car was heralded and well received by the media, but nobody bought it for one reason or another.