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Sunday, February 22, 2009
Steve Chapman :: Townhall.com Columnist
Detroit as the Prodigal Son
by Steve Chapman
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In the New Testament story, a man has two sons. One of them demands his inheritance, runs off and squanders it all having a wild time, and ends up penniless.

At that point, he slinks home in disgrace, assuming he will have to beg forgiveness. But his father is so thrilled to have him back that he kills a fatted calf and throws a party to celebrate the prodigal son's return.

Not a bad deal, huh? Unless you're the other son, who worked hard for his father and avoided loose women but never got the big fiesta. He felt cheated, and it's hard to blame him.

People employed by automakers other than General Motors and Chrysler would be justified in feeling the same way. Last fall, facing bankruptcy, those companies sought and received some $17 billion in federal loans intended to keep them in business. Now they are back asking for more -- $16.6 billion for GM and $5 billion for Chrysler.

That doesn't count the $7.7 billion GM wants to improve fuel economy or the $5 billion its financial arm got from the Treasury Department. Nor does it exclude the possibility that they will demand more help in the future.

And what about the automakers that have not run themselves into the ground? They get nothing. Actually, they get worse than nothing: They get the privilege of competing not just against GM and Chrysler but against the federal government, which has unlimited resources and is now in full partnership with the two.

It's not just Ford, Toyota, Honda, Nissan, Volkswagen and all the other companies that sell (and often build) cars here that are seeing their wisdom and restraint punished. It's also the American people -- most of whom voted with their pocketbooks not to support GM and Chrysler but now see their money forcibly diverted to those automakers anyway.

For years, Detroit has been relentlessly driving customers away. In 1985, the Big Three accounted for 80 percent of all the cars sold in this country. Today, their share of the market is just 43 percent. Continued...
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Steve Chapman is a columnist and editorial writer for the Chicago Tribune.
 
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Reply # 1
Date: Feb 23, 2009 - 11:17 PM EST
Doc Liberty: VA
Help me here please. You are such a young'n you have seen Studebakers, Nashs, Tuckers only in museums? What is the first new car you ever saw on the road, rode in or drove?

I'll bet your Stimulus Check you cannot buy a Hewlett-Packard pocket calculator or a shirt with a front chest pocket big enough to put it in, an IBM computer that required two men and a boy to lift and a sturdy desk to hold it, an electric or manual typewriter, or see a coal box out by the roadside at the end of your home's wooden walk, a coal bucket and a scoop to ladle coal into a potbelly stove either.

Tempus fugit, and things change. That does not necessarily make the old better than the new, vehicles included.

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Reply # 2
Date: Feb 23, 2009 - 1:20 PM EST
Para Dimz is Correct
I have worked in and with suppliers to the US Auto Industry for the last 45+years, now retired. Para Dimz makes some good points, but so do many others. First, as far as GM, for whom I worked. As a result of catostrophic mis-management in the late 70's and 80's their doom was foreshadowed over 25 years ago. The Roger B and Lopez era placed GM in an adversarial relationship with its suppliers. The arrogant Lopez eliminated the partnership approach taken by transplant automakers with their suppliers. Roger B, an accountant, deemed himself an expert in manufacturing and efficient car design, he was a disaster. Also, the cowardly GM management caved to the UAW at every turn. The Union has every right to try and get as beneficial a settlement as they can negotiate. It is management's responsibility to protect the shareholders and customers. The incompetent GM management team just assumed, "hell I won't be here when it all crumbles, so why should I care".

Second, US autos are now on a quality par with the transplants. US wages are now competitive with transplants' wages. The yoke from which GM cannot escape are the immense legacy costs. It is not the pension costs that are the killing burden, it is healthcare costs for the UAW retirees. Para Dimz speaks of the sacrifices made by the Union, up until now these have been merely cosmetic. For example, they canceled the Job Bank, but there were only about 5,000 employees still in that program. The only meaningful steps from the UAW side are to adapt more flexible work rules and to seriously restructure the entire retiree healthcare program.

From GM management's side, after firing Wagoner, is to drastically cut back their product lines and reduce the size of the unprofitable dealer network. GM should consist of only Chevrolet and Cadillac, and about 1500 dealers. However, neither the Union or Management will take the steps necessary to restructure - bankruptcy anyone?
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