Join Date: Jun 2001
Location: Catonsville, Md.
A reminder of why glory days have passed by
from the Detroit Free Press:
TOM WALSH: A reminder of why glory days have passed by
August 6, 2004
BY TOM WALSH
FREE PRESS COLUMNIST
TRAVERSE CITY -- The annual auto industry gripe session here -- also known as the Management Briefing Seminars -- will conclude today with more hand-wringing about paltry profits, Detroit's shrinking share of vehicle sales and sniping about who's to blame.
On Thursday, Ford Motor Co. Chief Operating Officer Jim Padilla took some not-so-subtle digs at crosstown rival General Motors Corp. by boasting that Ford had shut down two plants, trimmed inventory and dialed back costly sales incentives. By inference, some other auto company -- guess who? -- must be responsible for industry overcapacity, a glut of unsold products and the rebate wars that are eroding profit margins.
John Devine, vice chairman and chief financial officer of General Motors Corp., spread some blame too. Japan's unfair currency manipulation, he said, amounts to a "subsidy of several thousand dollars per vehicle" and gives Japanese car companies a huge price advantage in the U.S. and European markets. And he cited the heavy burden of health care costs, which amount to $1,400 per vehicle for GM -- about double the burden for Toyota Motor Corp. plants in the United States.
Auto suppliers, as usual, have been huffing about demands by the car companies for price reductions, even as prices for raw materials such as steel and oil have been zooming up.
Even one of the conference's upbeat moments, the presentation of the S.M. Wu "Camel Award" for manufacturing leadership on Thursday, took on a bittersweet tone.
For the first time, the award went to a labor union leader -- UAW Vice President Richard Shoemaker -- instead of to a captain of industry as in years past. Gary Cowger, president of GM North America, heaped praise on Shoemaker for his efforts to help GM improve quality and shop floor productivity.
Shoemaker, in remarks after accepting the award, wistfully recalled the beginning of his career on a Deere & Co. shop floor in East Moline, Ill., in 1957.
"American industry was in its glory days for the next two decades," Shoemaker said. "American cars, except for a few sports cars, were the only ones on the road. American technology, American ingenuity and American know-how were dominant."
"How quickly things changed," he said ruefully.
Well, no joke. But whose fault was that?
It's nice to see a UAW leader recognized for helping GM get its act together after 20 years in the wilderness. And it's appropriate that Cowger, the executive that then-chairman Jack Smith selected to repair relations with the UAW after the disastrous Flint strikes of 1998, was the man who presented the award to Shoemaker.
But Shoemaker's walk down memory lane was a painful reminder that GM and the UAW -- and yes, Ford and Chrysler bosses -- were collectively to blame for Detroit's fall from dominance.
Despite impressive progress on productivity and customer satisfaction in recent years, the domestic auto industry still hasn't dug itself out of its competitive hole because Japanese, Korean and European automakers keep improving too.
Investors have "an almost universally negative perception" of American auto companies and their suppliers, Kim Korth, president of IRN Inc., a Grand Rapids-based consultant to the auto parts industry, said in a presentation Thursday. The reasons: overcapacity, dysfunctional relations between auto suppliers and their customers, a 20-year history of downward price pressure and the new threat of competition from China. And now things are getting even more ominous, she said. This year's cost reduction targets are not being met. Raw material prices continue to rise. Interest rates probably will rise over the next few years. Yikes.
Come back to Traverse City again next year for another fun-filled week of auto industry self-examination.