The Big Three and Bush: A Flock of Lame Ducks

By SHARE

It seemed a fitting display of futility: a recently thumped president listening to the gripes of America's besieged auto executives.

The CEOs of the America's Big Three–Rick Wagoner of General Motors, Alan Mulally of Ford, and Tom Lasorda of Chrysler–finally got a long-sought audience with President Bush, a week after voters in the midterm elections handed the president the strongest repudiation of his tenure. The incoming Democratic Congress is viewed as being more sympathetic than Republicans to Detroit automakers, who have been bleeding money, losing market share, and slashing production. But if the Detroit Three think Washington can solve their problems, they're whistling into a tsunami. Here are some of their complaints–and what they should really be doing, instead of bellyaching to Washington:

Huge healthcare costs represent an unfair burden. That's true. Since the U.S. healthcare system is one of the costliest and least efficient in the developed world, it tends to penalize big companies with lots of employees that must compete globally. The U.S. auto companies are in the center of the bull's-eye, with healthcare-related costs adding nearly $1,000 to the average cost of building a car. But look at the relatively marginal stuff the automakers are asking for: better technology for processing medical data, measures to reduce medical errors, more efficient purchasing of drugs. Yes, those are important things, but here's what none of the auto execs is willing to stand up and say: The U.S. healthcare system is not working–for us or our employees–and we need something new. GM and Ford are still among America's biggest companies, and Wagoner and Mulally have an opportunity to seize the bully pulpit and claim leadership on this issue. But they haven't. It's easy for them to say what doesn't work. It's not so easy to say what should be done.

America needs greater energy security. You must be kidding. The Big Three have lobbied aggressively for years against increases in fuel-efficiency standards–which could crimp sales of their SUVs and result in penalties for missing overall fleet targets–pushing instead for measures like greater use of ethanol, which is impractical for most Americans and would cost more, besides. With far less fanfare, Toyota and Honda have actually engineered new solutions to energy dependence, such as hybrids. They've funded the R&D out of pocket and produced reasonably priced vehicles that ordinary people can afford. In the process, they've even helped generate a movement passionate about better fuel economy. The Big Three are right about the problem of American energy dependence. But they've done nothing to help fix it, and they don't have any credible solutions. If they ever want to be taken seriously on this, for starters, they should begin supporting real, across-the-board fuel-efficiency improvements.

Japan keeps the yen artificially low, making Japanese imports cheaper in the United States. Let's say this is true. It is also true that Japanese manufacturers have been importing fewer models from Japan and building more models here. And the Japanese Big Three now employ about 100,000 Americans, paying roughly the same salaries and healthcare costs as the Big Three pay (minus the pensions and healthcare costs for retirees who worked years ago). Has that set back the Japanese companies? Doesn't seem so. In fact, the more the Japanese manufacture in America, the more their market share goes up. Is the yen really the problem?

Protectionist tariffs on imported steel make it costlier to build cars here. Let's give this to the Big Three too. Still, the Japanese firms that build here must buy the same local materials. Besides, the Big Three have had a decades-long head start serving the most important auto market in the world–North America–yet somehow they've squandered that built-in, homegrown customer loyalty. In some of the nation's key markets, consumers have come to value brand names like Toyota and Honda more than Chevrolet and Ford. The Big Three have the home-field advantage, yet they're complaining as if they're the visiting team.

Here's what Wagoner, Mulally, and Lasorda didn't tell President Bush: Our products aren't as good as the competition's, we've lost touch with our best customers, and our strategic vision is blurry. It would be much more refreshing if the Big Three dealt with those issues first, then came to Washington to boast about exciting breakthroughs that will help produce compelling new cars that use half as much fuel and can compete anywhere. Isn't that the American way?

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  • --Rick Newman

    TAGS:
    car manufacturers
    Bush, George W.
    • Rick Newman

      Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.

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