Who's at fault for US automakers failure?

[navychop]

Where does the blame lie?

-Massively overpaid executives
-Unions
-US Gov't for not providing universal health care, thus putting Detroit at a disadvantage.
-Auto companies, for not designing vehicles people want
-U.S. consumers, for not faithfully buying American
-The blame lies, at least in part, elsewhere (please explain)

Vote for as many as you like.

 

[Pepper]

Unions, the companies themselves, but mostly the US Gov't for burdensome regulation, taxes, and destroying the economy in general.

 

[vurbano]

Unions

 

[stogie5150]

All the rest would have been solved if the auto companies built cars Americans want and need. They ignored fuel efficient small cars and concentrated on pickup trucks starting in the 70's, and once American consumers (including me) had a taste of a nice car, that got good mileage, and didn't break down all the time, plus lasted 300k miles or more, the US automakers were sunk. Now, the big three started building much better cars in the 90's, but the die was cast. Too many people got burnt on excrement-box cars from GM, Ford, and Chrysler, and they didnt forget and forgive.

Then add meddling by the government over the years with CAFE and other things, making it MORE expensive.....down a rat hole they went.

Which is sad, because my family is a GM family, I was the first to buy Japanese, Honda Civic in 2004, but OTOH, I did buy a Chevrolet Equinox in 2006, its been a competent vehicle, but in build quality, appearance and smoothness, its no Honda or Toyota.

 

[Skyhi]

All of the above.

 

[HDRoberts]

All of the above.

Bingo.

 

[cosmo_kramer]

Unions


Why else are the other auto makers who build cars in this country with American labor not in Washington with their hands out??

 

[Ira Lacher]

To all who said: "Unions":

How was it the unions' fault that American auto companies continued to design huge, hulking, polluting boxes that broke down every two years even as the price of gas zoomed into the stratosphere, while the Germans, Japanese, Swedes, and Koreans rolled out elegant, fuel-efficient, well-constructed vehicles that easily last 200,000 miles?

 

[Inno]

I agree, there are many factors.
The big 3 made HUGE profits for many many years. The execs. took WAY too much. The unions took WAY too much and made no compromises. There are now more retirees "on the payroll" than there are actual workers..........how could that EVER sustain itself?
And to top it all off, yes, the quality you get from some imports puts any of the big 3 to shame. Not to mention the fact that the fuel/power hungry folks seem to decide what types of vehicles we "want"........if you know what I mean.

 

[darrencp22]

This topic is dangerous in that it is very pitt-like. But my vote is for Unions. Massively overpaid with inflated benefits for too many years. Not to mention the fear of buying a vehicle built on a Friday.

 

[Inno]

To all who said: "Unions":

How was it the unions' fault that American auto companies continued to design huge, hulking, polluting boxes that broke down every two years even as the price of gas zoomed into the stratosphere, while the Germans, Japanese, Swedes, and Koreans rolled out elegant, fuel-efficient, well-constructed vehicles that easily last 200,000 miles?

That part was not their fault but they played a part for other reasons.

 

[navychop]

To all who said: "Unions":

How was it the unions' fault that American auto companies continued to design huge, hulking, polluting boxes that broke down every two years even as the price of gas zoomed into the stratosphere, while the Germans, Japanese, Swedes, and Koreans rolled out elegant, fuel-efficient, well-constructed vehicles that easily last 200,000 miles?

I can't help but respond, that in part, because the non-American automakers put money into design and development, not jobs banks and overly generous pension and medical plans. And, IMHO, massive executive salaries.

There's plenty of blame to go around.

 

[Curtis0620]

UNION

 

[bhelms]

I think we have a chicken and egg scenario here to a great extent. The current economic collapse for which there are many reasons outside of Detroit has a lot to do with the current domestic automaker situation, and I really don't want to go there in this thread. This collapse did not begin with the Big 3, but they provided a steep slope for the snowball that resulted, and to be sure, they were unstable enough that only a small push was needed to send GM and Chrysler over the edge as well. I think Ford won't be far behind. Without the overall collapse things would still be limping along in Detroit.

I chose "elsewhere", and I name it...inertia.

Exec. compensation is only a small part of the total. White collar layoffs are commonplace as the cost structure resets, but that's all too gradual.

Unions are a bigger problem due to the legacy entitlements, but in time positive changes were and continue to be made, both in the compensation package vs. value returned and workrules. But these don't change overnight either.

Govt (state and fed) is a bigger problem, but for other reasons mentioned in the other posts. Once regulations are in place there's no rescinding them. Most are burdensome but over time are assimilated across all makes / models without undue stress on corporate longevity. What hurts more is the conflicting standards pushed through Congress, like CAFE vs. safety. Maybe this is a case where MORE inertia is needed!

Tho' US automakers have lost global share, domestic consumers want(ed) at least some of the models produced in profitable numbers. Look at the success of the light pick-ups and SUVs until the gas crisis of recent years. If anything there is an inertia problem as far as model availability goes to meet the recently morphing demand. Perhaps the Big 3 are also guilty of complacency in the face of inevitable change, another form of inertia.

And finally, in terms of lack of domestic customer loyalty that certainly did not happen overnight. If anything, the competition served to improve the Big 3 at least in terms of price and quality over several decades and the American consumer is right to demand the best value as he alone defines it.

We're in an increasingly global market however, and the inertia to that change has been confounding. We can't expect to compete globally with low cost markets that now can produce comparable quality unless we can change our socioeconomic model, and that means evolving to new businesses and business models. Until we can better compete again globally with new added-value technologies and intellectual property we will not rise back to our traditional world-class level of incomes and lifestyles. And that means greater personal levels of independence, education, self-actualization, and accountability. Improving that means reducing personal inertia to a large extent...

And that's where the real problem lies...

 

[Ira Lacher]

I can't help but respond, that in part, because the non-American automakers put money into design and development, not jobs banks and overly generous pension and medical plans. And, IMHO, massive executive salaries.

It's always important to remember that if a company couldn't afford to pay a certain level of benefits and salaries, they wouldn't do it. So it's disingenuous to say that the unions siphoned money away from the automakers that otherwise would have gone to R&D.

On the other hand, having invented the concept of planned obsolescence, the carmakers chose to put money into superficial facelifts every year instead of real improvements. How else to explain that they didn't make any major improvements in safety, fuel efficiency, aerodynamics or other tangible features until the late Eighties, long after foreign manufacturers started selling better cars in the States and eroding market share?

 

[ab187]

I voted Unions but I also think the US Auto Companies have not been designing vehicles Americans want.

 

[Derwin0]

Unions

Why else are the other auto makers who build cars in this country with American labor not in Washington with their hands out??

That would be my vote and for the same reasons.

 

[Awohar]

I think all of the above but I chose other as well and here's why:

I read this in like car & driver or a similar mag while in a doc's office. The author was talking about the issue and his past experience working high up the ladder at a major US automaker. It was his opinion that US automakers tend to be inflexible when it comes to adaptation. As an example he cited an attempt by the auto maker to try and show off a particular model's eco-friendliness. The idea was brought up to paint the valve covers green. It never transpired because it had to be think-tanked by everyone. There's no real department that just says "go with it" so you have 100 heads that can't agree on anything.
The end result is automakers trying to dump gas guzzling SUVs while gas was hitting $4/gallon here. That lack of adaptation leaves them missing the money boat when it comes to offering a vehicle the public wants at any given time. Bottom line, to make money you have to have a vehicle the public wants. They lost out because they didn't.

 

[durl]

Unions, I believe, get the biggest blame of the options given. As someone pointed out, no company can long survive when you're payroll to retirees is greater than that of those who are actually working to produce the product.

Total salary and benefit packages get expensive. According to 2006 data, US autoworkers make, on average, $73/hour (the average worker in the US makes under $30/hour). That's GREAT money, but that cost is paid by the consumer. "Import" autoworkers in the US, on average, made about $44/hour. On average, a vehicle made by the UAW has an additional $1000 on the sticker compared to non-union automakers. So if you buy a $14K car, you'll pay about 7% more for a US car than an import simply to cover union benefits.

I do believe that auto makers themselves have to share some responsibility. I believe the quality of US cars began to go down when the accountants began deciding which cars could be build rather than designers and engineers. The bean-counters looked at production costs and seemed to ignore market trends. Automakers churning out SUVs was a GOOD move because that's what people wanted. But that hit a brick wall because of my next point.

Another share of the blame also must go to bureaucrats. Imposing heavy regulation forced automakers to spend tons of cash to meet guidelines that may not be a response to consumer demand. Gas hitting $4/gallon was a big turning point but, again, the responsibility for that lies with bureaucrats that essentially forced the price increases by not allowing oil to be drilled domestically. Also, newly proposed carbon tax legislation will add around another $1300 to the price of a vehicle. Simply put, legislation can make cars far more expensive to buy.

So were overseas manufacturers really determined to give US customers what they want by building smaller cars? Not necessarily. While the US is a very lucrative market to them, they also build cars to meet the demands of buyers in other countries where small cars, even micro cars, have always been the norm. Plus you can't ignore that gas also costs $6/gallon over there. People in the US tend to want bigger cars that hold more stuff and that have more power.

Basically, I believe it's been a "perfect storm" of sorts that has crippled the US automakers. A combination of bad decision making on the part of the manufacturer, burdensome legislation and tinkering with the free market on the part of the bureaucrats, plus astronomical costs demanded by workers and retirees. It was only a matter of time before the bottom fell out.

 

[Ira Lacher]

While the US is a very lucrative market to them, they also build cars to meet the demands of buyers in other countries where small cars, even micro cars, have always been the norm.

Isn't it likely they were the norm because their automakers weren't pushing outsized tanks that gulped gas as if it were water?

How are the unions responsible for the U.S. automakers' ignoring the unmistakable message of the 1970s oil embargo: that the world was inevitably changing?