Where has U.S. automaking gone?
In the history of U.S. manufacturing from the East and across the Midwest, there have been renowned centers of expertise.
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There was Pittsburgh as the Steel City, Akron as the Rubber Capital, Cincinnati as the center for machine tool building, and Detroit as the Motor City.
Changes to basic industry and manufacturing sapped each one of those cities' claims to its title, and each one of those cities went through hell as the economies that they had grown on vanished.
Yet each of those cities rebuilt themselves, and there remains a level of expertise in Pittsburgh and its surrounding areas for steelmaking, around Akron for polymers, an industry that found its roots in rubber, and in Cincinnati for machine tools. Although those cities' economies no longer rely solely on their One Big Industry and they are diminished, there are a lot of people who continue to trace their current livings from them, and those Big Industries continue to enrich the local economies.
With that in mind, I found it hard in November to watch the heads of the Big Two-and-a-Half — used to be the Big Three — Automakers going off to Washington hat-in-hand to beg for a $25 billion bailout.
I am fully aware that there remain a lot of very smart people in Detroit and its suburbs who have great knowledge about how to make cars. Although their ranks have been decimated, there are still huge numbers of shops and businesses around the Detroit area — and, indeed, throughout the Midwest — that remain dedicated to the auto industry, and they are going to be hammered if the Big Three go into bankruptcy.
Putting all other excuses aside, it's ultimately the management of the Big Three that put those companies where they are today. Every union contract that led to burdensome labor rates and rules, retiree pension and healthcare costs was agreed to by management. Decisions on car designs and models that the American public doesn't buy were approved by management. And those same managers determined their company's reaction to government policies.
It seems that every three years for most of the past 20 years the Big Three managers announced restructuring plans, and the successive restructuring has made the U.S. auto industry the most heavily restructured industry in the world.
However, the automakers continue to struggle, and that leads me to the question: Have the Big Three auto companies been doing so badly for so long that their managers don't remember how to run a car company?
We've seen the demise of the other leading basic industries in the United States, and even with parts of industrial Detroit looking like a ghost town today, bankruptcy is going to wreck that city even more.
It may be that a handful of companies will survive the bankruptcy shock that seems imminent in Detroit, and those companies may keep some of the manufacturing knowledge that eventually will help to find a new, lower level of automotive knowledge in Detroit after the worst is over.
It has been 55 years since Charles E. Wilson, the chairman of General Motors who was being vetted for the post of Secretary of Defense for the Eisenhower Administration said: “For years I thought what was good for the country was good for General Motors and vice versa.”
Wilson said that before a Congressional committee, and he's often been scornfully misquoted as saying “What's good for General Motors is good for the country.”
That comment was met with derision then, but Wilson went on to be confirmed as Secretary of Defense.
Could you imagine the howl that would arise if the current chairman of GM would suggest anything like that before Congress?
He would be hooted out of Washington.
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