Detroit
GM, under pressure from its competitors, is no longer making money in the American car market – and it has been closing plants all across Flint.
Now there are only 6,000 GM workers in Flint, compared to 100,000 at the peak, and the town and workers are suffering.
“Flint has the highest rate of unemployment, poverty and homelessness in Michigan,” And GM has already told the unions it wants to cut the generous retirement and health care benefits it promised its workers in the halcyon days of success. The company does plan to build more car plants in the future – but only in places like China and India, not in the United States.
But 400 miles south of Flint, Michigan in Georgetown, Kentucky,
Toyota builds 500,000 cars a year at its vast Kentucky plant
Toyota is the fastest-growing car company in the United States, and it is building a new factory every year to keep up with demand.
And it is set to overtake GM this year as the world’s largest car company by sales, mostly because of a well-deserved reputation for quality and reliability – and the Camry has been the best-selling car in America for the last ten years.
Toyota has no trouble hiring the right sort of workers – 100,000 people applied for the 3,000 jobs when the plant opened in 1990.who now read in the papers about what is happening to autoworkers in places like Flint.
Why ?
While it was inevitable the big three would eventually lose their monopoly position, their failure to adapt their production methods and meet changing consumer tastes meant that US firms failed to innovate in the design of cars, preferring to make money by increasing the size and weight of their vehicles by adding extras like air conditioning, power steering, and fancy sound systems.
It was left to European manufacturers to develop disc brakes, rack-and-pinion steering, air-cooled and diesel engines since Henry’s mass production system discouraged innovation.
Toyota encouraged innovation – changing its production system to become leaner and more efficient than its rivals. But, it was the oil crisis in the 1970s that first illuminated the problems of US automakers. For the first time, smaller cars were the rage, and US consumers found that cars like the Toyota Corolla were an attractive alternative to big American cars.
Imports of Japanese cars soared in the 1980s, to the chagrin of the US companies and the unions alike, taking nearly one-quarter of the US market.
US car imports
And when the companies pressured the US government into limiting imports from Japan, Toyota and Nissan started building car plants in the US.
By 2005, these Japanese “transplants” were producing 4 million cars a years, one-quarter of US output, and more than GM.
The Japanese located their plants in low-wage, non-union areas of the US and brought new, more flexible production methods as well.
As a result, they could make money on smaller cars and change models more frequently.
The US car companies tried and failed to design a competitive small car.
They also experimented with Japanese production methods but neither seemed to do the trick and close the quality gap.
Honda, which already has the most fuel-efficient lineup in the U.S., announced in May that it will sell the new hybrid-only Prius competitor in the U.S., Japan and Europe starting in early 2009. It also announced that it will build a new hybrid version of its Fit subcompact.
According to James Womack, author of the influential book The Machine that Changed the World, it was easy for everyone to say they accepted lean production, but much harder to actually implement it.
Detroit Auto Show
Pretty much every exhibit in the vast Cobo Center contains prominently-displayed cars powered by alternative fuel such as ethanol made from plants, or by engines powered by conventional fuels such as petrol and diesel that are up to 25% more efficient than they were in the past.
Most carmakers also display hybrid models, where such conventional engines are coupled with electric batteries that are getting smaller and lighter by the day, thus increasing the possible range travelled by electric cars.
“This auto show may be different from the past,” observes David Friedman, research director at the Union of Concerned Scientists’ Clean Vehicle Program.
“It may actually be giving a real good glimpse for some of the consumers of what might be out on the road in the next few years.”
Auto makers are under pressure to produce more efficient cars that use less fuel and thus pollute less, in part because petrol prices have soared in recent years in the US, but also because they will soon be required to do so by law.
GM concept
Announcing the arrival of a technology does not mean it is ready for sale to consumers
Aaron Bragman,
Global Insight auto analyst
Detroit’s desperate struggle
In December, US President George W Bush signed an energy bill that will force the industry to cut average emissions from all vehicles.
By 2020, the average must have been slashed by 40% to 35 miles per gallon, and the industry is convinced they will be able to deliver – though it will not come cheaply.
“It’s going to come at some cost,” says Paul Traub, economy and industry analyst, Chrysler, estimating that the auto makers’ efforts to comply with environmental regulation could add as much as $7,000 (£3,400) to the price of trucks and cars.
