What went wrong with the US auto industry.

[Guest guest]

What happened was something that was endemic in the whole of US society: image mattered, not substance; marketing not development. Detroit built fashionable cars that were junk when people wanted quality and safety. They're still doing it really with all these gimmicks built into the cars like video and even internet connection (if you can imagine anything dumber) but quality hasn't improved that much, or at least the perception of quality compared to foreign cars.

Quoting from the article:

Yet Sloan’s vision of turning cars into dream machines, embodiments of their owners’ aspirations, left a gap that the Japanese, and later Korean, automobile companies later exploited. Unfortunately, Detroit came to believe that sizzle sold, while technology and reliability were of secondary importance.

Two other factors made Detroit vulnerable. One was its provincialism. Michigan became a one-industry state, dominated by the Big Three and hundreds of auto parts suppliers. It became unthinkable that auto companies could be run by anyone but Midwestern “car guysâ€.

A second vulnerability was the grip of the United Auto Workers (UAW) union, led by Walter Reuther, who exploited the complacency of the Big Three in the 1950s and 1960s, when money was flowing, to hammer out labour deals that later produced vast pension and healthcare liabilities.

Such forces not only made Detroit underestimate the Japanese invasion but also prevented it from responding effectively when it woke up. The Big Three maintained the comforting mantra that the plain, reliable cars being built by Nissan and Toyota – the Model Ts of their day – were alien to American tastes.

Ingrassia describes the moment in 1979 when Detroit should have ceased kidding itself: when Honda built its first US plant in Ohio and showed that American workers could make high-quality cars. It was not a matter of nationality, it turned out, but of good management.

http://www.ft.com/cms/s/2/78e355e0-06e0-11df-b058-00144feabdc0.html

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We'll see if the Big 3 survive, but I'm not sure they will or if they deserve to in their current form. They should have been made to go into bankruptcy, which would not necessarily been the end of the companies, but it would have forced them to clean house and get back in order. Now they owe tens of billions to the government that will never likely never get repaid.