Llewellyn
King
Read Llewellyn's bio and previous columns
November 17, 2008
Two Bad Choices:
Save Detroit or Let It Die; Can Someone Come Up With a Third?
The case for saving
Detroit is lame. The case for letting the three domestic car companies
fail is terrifying. Good choices, there are none. It is reasonable to
expect a third way to be proposed, but it has not yet. It is urgently
needed.
The nation needs a
capable domestic vehicle manufacturing base for defense capability. But
does it need three moribund companies that have lost their way, compared
to their global rivals who are, in some cases, manufacturing
competitively in the United States?
When a choice
between two is too fraught, the need is another option. Fail or
nationalize is too stark a choice. Something else is needed, and the
time-honored option is to appoint a commission to weigh the assets of
the car companies and to decide on how they can be capitalized upon.
The three domestic
vehicle manufacturers, which are far from being wholly domestic, do have
assets, mostly overseas – especially General Motors and Ford. For
decades, their operations in Europe have been prosperous. For more than
20 years, Ford has looked to Europe for its profits and GM has been
enormously successful in China and Russia and with its German subsidiary
It
is one of the mysteries of the automobile world that Japanese and German
manufacturers have been able to bring to America successful cars first
marketed somewhere else, but the Big Three have not. Never was this more
apparent than after the first oil crisis in the 1970s. Detroit did try
to meet the demand for smaller cars, but by producing some ghastly
lemons – cars with a poor power-to-weight ratio, while the Japanese and
the Germans simply upped their imports of proven cars. The choice
between the Ford Pinto and Volkswagen Rabbit was no choice. Remember the
Chevrolet Chevette? Bet you'd rather not.
But at the time a
whole crop of lemons was coming out of Detroit, the same companies were
making excellent small cars in Europe: GM under the Opel name in
Germany, Chrysler as Simca in France, and Ford under its own name in
England. Why did these companies have to make small cars from the bottom
up in America? I have asked this question many times and have received
no good answer. Only guff about the American consumer being different.
Put that in your Toyota and smoke it.
A bailout on the
basis now being discussed has another problem. If Congress directly
finances the Big Three, it is only a matter of time – a short time –
that Congress will be designing cars. That will guarantee catastrophe.
If you doubt it,
look what happened to the motorcycle industry in Britain. As company
after company fell to the twin evils of bad management and Japanese
competition, the government, under the socialist leader Wedgwood Benn,
stepped in to consolidate the once proud and dominant world of British
motorcycles – marques like Aerial, BSA, Matchless, Norton and Triumph
were swept together to make the super British bike. The only thing
missing from the mix were the customers. They bought Hondas, Suzukis and
Yamahas.
There is an old joke
about a refusenik family that resettled in Israel. They wanted to
operate a shoe shop, and the Jewish Agency that handled such things
provided them with a great little emporium, complete with stock. They
were delighted. A month later, the father was back at the agency. “We
have a small problem,” he said. “You forgot to order our customers.”
The empirical
evidence is not reassuring that American consumers will again want to
buy from Detroit's finest.
© 2008 North Star
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