American auto industry: “healthy as it has ever been”

Last month when GM offered buyouts to 100,000 workers, the airwaves were filled with the familliar eulogy of the American auto worker. If anything keeps America from being competitive in the world marketplace, it’s our bloated salaries, corrupt unions, and aging workforce, sang the chorus. But if that’s true, why are Japanese companies falling all over themselves to build car plants in the U.S.?

“The domestic auto industry is as healthy as it has ever been,” says Eric Noble, president of Car Lab, an industry consulting firm in Santa Ana, Calif. “The names on the plants are just changing.” – Business Week (February, 2006)

In fact, as of this month, Japan now builds more cars in North America than General Motors. And they build an average new car in 18 hours, compared to GM’s 20. Don’t they hire the same workers as GM and Ford? (and pay nearly the same wage?) Why aren’t Honda and Toyota laying off tens of thousands of employees?

The answer is simple. US companies spent the 1990s trying to recover from a legacy of producing poor quality automobiles, and they let innovation fall by the wayside. And on top of that, quality is still job #2. It’s no wonder there isn’t a single American car among Consumer Reports’ top 10.

The shortsightedness is staggering. It wasn’t until a few months ago that GM dropped its boneheaded moratorium on developing hybrid cars, a segment expected to “outpace sales of sport utility vehicles, pickups and luxury models” in the next five years. We just finished a period with historically low interest rates, when U.S. cars should have been selling themselves! And we’re having to lay everyone off.

So how should the U.S. auto industry recover?

1. Swallow your pride. Stop resenting the Japanese and start learning from them. (after 30 years)
2. Stop crying over the high cost of healthcare. Start smaller spinoff companies that can be younger and more agile. (like Saturn)
3. Stop building the car your dad wanted to drive. Start building the car your daughter wants to drive.

But hey, I guess it’s easier to blame globalization for your problems.