The decline and fall of a motoring empire

[ford man xf]

The decline and fall of a motoring empire
Peter Cai10 hours ago 8
IndustriesAutomotivenull

General Motors, the parent of the iconic Holden, was once upon a time the greatest industrial empire in the world. It produced more than 450 million cars during its century of existence and its engineers also invented the room air conditioner and the mechanical heart pump.
Detroit, the home of GM and the two other American car-making giants Ford and Chrysler, was also the Silicon Valley of the mid-twentieth century, a place where mass manufacturing and mass marketing were invented.
However, their fortunes have taken a sharp turn in the last two decades. GM and Detroit, both symbols of American industrial might, filed for bankruptcy in 2009 and 2013 respectively. GM also pronounced the death sentence for its local manufacturing arm this month.
As we ponder the future of manufacturing industry in this country and the fate of thousands of soon to be laid-off workers, what lessons can we learn from the American experience in the automotive sector?
The rise and decline of the American car industry is one of the most dramatic business stories in our time.
Nearly eight decades after Henry Ford created a worldwide industry with the first mass produced T-Model, American automakers had to go Washington cap in hand to ask for bailouts. In total, American taxpayers forked out nearly US $100 billion to rescue the crippled industry.
So what went wrong?
Paul Ingrassia, a Pulitzer-winning journalist who covered the auto industry for 25 years as the former Detroit bureau chief for the Wall Street Journal explains the demise of the industry in his book Crash Course, the American Automobile Industry’s Road from Glory to Disaster.
For him, the answer was not complicated. Detroit’s auto industry was built on a corporate oligopoly and a union monopoly that had expended so much effort trying to outwit each other that they had little time left to either look after their customers or to fend off foreign competitors.
Ingrassia argues the sector’s ossified industrial relations is one of the key contributing factors that contributed to the decline of the industry. The United Auto Workers, the union that at its peak represented 1.5 millions car workers, fought management constantly.
For example, employments contracts that originally had been the size of pamphlets grew to become as thick as phone books. The complex rules governing seniority ran 16 pages alone.
Workers were also divided into dozens of job categories and they were forbidden from doing work reserved for members of another category. The list goes on. GM’s factories even had segregated toilets reserved for managers and workers.
However, by far the most absurd industrial relations creation is the so-called the Jobs Bank, which was originally conceived to provide temporary security for causal workers on layoff. Eventually, laid-off workers were making 95 per cent of their wages while not working and for an unlimited time.
This American invention makes Australia’s own generous awards system looks Dickensian by comparison.
While GM, Ford and Chrysler squabbled with union bosses, Japanese-owned car factories in the United States, which employ a largely non-union work force, flourished and gained market share.
The second key catalyst behind the decline of the American auto industry is lack of innovation.
Despite the fact that Americans invented the modern car industry, successors of Henry Ford and Alfred Sloan Jr –the legendary chief executive of GM during the 1920s, rested on their laurels and failed to innovate in the face of tough competition from Japanese car makers.
Crunch time was 1973, when the Arab Oil Embargo sent petrol price skyrocketing. American consumers turned to more fuel-efficient Japanese cars while GM, Ford and Chrysler were still wedded to the idea of making muscular petrol-guzzlers.
Though Detroit managed to achieve a significant comeback on the back of SUV boom in the 1990s, the big three car makers and the unions would succumb to hubris and lapse back into their old bad habits during the time of prosperity.
What have these American lessons taught us?
Overly generous awards and wages have made both the American and Australian auto sector uncompetitive. Industry Minister Ian Macfarlane said Japanese workers could produce twice as many cars for the same hour worked compared to Australian workers.
Innovation may sounds like a cliché, but it is one of the most important things for the survival of an industry. The Japanese have shown America and us the way, continuously dedicated to improving products and processes from factory floors to C-suites.
For example, Toyota’s lean production system has transformed the manufacturing industry. David Landes, an economic historian from Harvard describes it as the most important technical innovation since Ford’s successful implementation of the moving assembly line.
The decline of the mighty Detroit should serve as a warning to Australian industry. We must innovate or die and our generous wages and conditions must be matched with a corresponding increase in productivity.

http://www.businessspectator.com.au/...otoring-empire

An interesting read, but I didn't think Ford US needed a bailout package from the US government? I thought Ford was the only auto maker that didn't need a government bailout?
I also didn't know that GM invented the air conditioner, there you go.

[jpd80]

Originally Posted by ford man xf

http://www.businessspectator.com.au/...otoring-empire

An interesting read, but I didn't think Ford US needed a bailout package from the US government? I thought Ford was the only auto maker that didn't need a government bailout?

He doesn't say that Ford went bankrupt, Ford went to Washington to intercede for GM and Chrysler
and to arrange a lein of credit for itself incase the GFC got worse and its cash burn greater than anticipated.
Ford ended up not needing the lein of credit after all...

[cobramania]

Originally Posted by ford man xf

http://www.businessspectator.com.au/...otoring-empire
I also didn't know that GM invented the air conditioner, there you go.

GM didn't invent the air conditioner, Willis Carrier of Carrier Air Conditioning fame invented it in 1902, & Carrier were the first to install it in factories & homes.

Chrysler Engineers invented the Box "window/wall rattler" type of air conditioner about 35 years after Carrier started air conditioning.

Packard were the first to install an air conditioner in a car, but it was unsuccessful, partly due to the fact it took up over half the boot space.

Chrysler put air conditioning in their cars 12 years later in 1953, & it's progressed on from there.

AFAIK, Chrysler has never been owned by GM, so for GM to claim they (or their engineers), had anything to do with the invention of air conditioning, is just crap.
No wonder many of us here don't believe a word they say.
Lots here might believe Ford doesn't have a marketing department, but I'm sure GM has a bullshit department.

[GASWAGON]

GM......Government Motors!

[Kieron]

GM's claim on the room air conditioner -
http://history.gmheritagecenter.com/...ir_Conditioner

Carriers -
http://www.williscarrier.com/1930-1940.php

and the inventor of the window air con -
http://campbellapplianceheatingandai...ditioning.html

Chrysler -
http://www.allpar.com/corporate/airtemp.php

My old office had a Chrysler Airtemp system with a big Pentastar badge, should have pulled it off when it went to the junk yard!

That article could just about have been written about the Aussie car industry, the original big three basically known as the Falcon car company, Commodore car company and to a lessor degree, the Valiant while the newcomers (in this case importers) innovated and didn't have the local unions to deal with. Of course, the Aussie unions weren't as hard assed as the US ones.

[GASWAGON]

At least the yanks still have the 'support your locals' attitude.....That's all gone out the window for Oz now.....Don't worry GM/Ford U.S will bring us all new tech and sophistication.....Just look at the new V6 TwinTurbo Taurus 'Super High Output' + AWD....Bloody hell I'd own one.....And its already been out for a few years!

http://www.youtube.com/watch?v=fDT3VJL8Q-s

[Elks]

Originally Posted by EF_6

At least the yanks still have the 'support your locals' attitude.....That's all gone out the window for Oz now.....

We lost the ability to make those decisions years ago when we sold off our industries to foreign interests. While auto has always been foreign owned and controlled, many other industry icons weren't. Once the decision making goes offshore your done.

[ebxr8240]

Love it !! Cobramania..

Lots here might believe Ford doesn't have a marketing department, but I'm sure GM has a bullshit department.

[tranquilized]

The book referenced in the article is well worth a read. Like a lot of things, the U.S. story is very similar to our own, but everything is x10

[Serial_Fool]

Our industry was never owned by Australians though...both Holden and Ford were subsidiaries of foreign owned car makers.

The original "Holden" motorcar was a rejected GM design, the Commodore almost a direct copy of Opel's offerings in Europe. The Falcon was an American model adapted to local conditions.

Australians were employees and buyers, but never owners.

[Iggypoppin']

I wonder how things will be in the motor city in 20 years time. Once ford and GM completely offshore their factories and don't employ any Americans in manufacturing (which is my prediction, I could be totally wrong). Detroit is already close to the murder capital of America trailing Flint by a short amount. I can see the ghettos in Detroit spreading and the city becoming a complete skeleton of what it once was.

[GASWAGON]

Originally Posted by Iggypoppin'

I wonder how things will be in the motor city in 20 years time. Once ford and GM completely offshore their factories and don't employ any Americans in manufacturing (which is my prediction, I could be totally wrong). Detroit is already close to the murder capital of America trailing Flint by a short amount. I can see the ghettos in Detroit spreading and the city becoming a complete skeleton of what it once was.

It already is a skeleton.....And they cannot even afford to run the street lights or a hospital and all sorts of horrible stuff.....Crime rate is massive too!
Most of the houses ther are vandalised beyond belief.

Depending on what happens to the U.S with their 18TRILLION dollars of debt which is getting higher and higher by the day I am not really sure what Ford/GM are going to do.....Surely Obama wont give them any more bailout money they've already taken 100's of billions of taxpayers money in GFC of 08/09.

[castellan]

Originally Posted by Serial_Fool

Our industry was never owned by Australians though...both Holden and Ford were subsidiaries of foreign owned car makers.

The original "Holden" motorcar was a rejected GM design, the Commodore almost a direct copy of Opel's offerings in Europe. The Falcon was an American model adapted to local conditions.

Australians were employees and buyers, but never owners.

Are you pointing out the FX as being a rejected GM design ? no no, it was the most advanced car design of all GM for aussie conditions at the time.

Was Opel owned by Germany or Vauxhall by England ?
Toyota was owned by Japan ? i don't thinks so i think it was GM that had a hand in that.
Does or is a company like GM owned by the USA ? I think if you look into it all, it does not 100 %, the banks etc own some what of it regard less.
Even GM leand money for future endeavours be it from some bank banks etc all over the world.
Just as your house is or was owned by, who knows who really.
Companys in USA cleaned up after the war, as it was the best place to invest at the time i would think, if you look to see how GM cleaned up everything, boy did it ever. smart people running the show back then.

[Iggypoppin']

Originally Posted by EF_6

It already is a skeleton.....And they cannot even afford to run the street lights or a hospital and all sorts of horrible stuff.....Crime rate is massive too!
Most of the houses ther are vandalised beyond belief.

Depending on what happens to the U.S with their 18TRILLION dollars of debt which is getting higher and higher by the day I am not really sure what Ford/GM are going to do.....Surely Obama wont give them any more bailout money they've already taken 100's of billions of taxpayers money in GFC of 08/09.

The city isn't totally ruined yet, there are still pockets of wealth. But the city is in such rapid decline and it won't be long before it is totally abandoned IMO. For now I think it is just barely holding on.

[Bossxr8]

Originally Posted by EF_6

It already is a skeleton.....And they cannot even afford to run the street lights or a hospital and all sorts of horrible stuff.....Crime rate is massive too!
Most of the houses ther are vandalised beyond belief.

Depending on what happens to the U.S with their 18TRILLION dollars of debt which is getting higher and higher by the day I am not really sure what Ford/GM are going to do.....Surely Obama wont give them any more bailout money they've already taken 100's of billions of taxpayers money in GFC of 08/09.

If anything Ford are sending more work back into the US than what they are sending out. They have been hiring thousands of new workers in the US and expanding a lot of their plants there.

Luckily Ford should not ever need bailout money, they are making billions of dollars profit every quarter and i'm sure they are keeping a lot of it stashed away in case another GFC comes along. I'm sure they will be better prepared next time round in terms of cash reserves if the economy crashes again in the future.

[Road_Warrior]

Originally Posted by cobramania

GM didn't invent the air conditioner, Willis Carrier of Carrier Air Conditioning fame invented it in 1902, & Carrier were the first to install it in factories & homes.

Chrysler Engineers invented the Box "window/wall rattler" type of air conditioner about 35 years after Carrier started air conditioning.

Packard were the first to install an air conditioner in a car, but it was unsuccessful, partly due to the fact it took up over half the boot space.

Chrysler put air conditioning in their cars 12 years later in 1953, & it's progressed on from there.

AFAIK, Chrysler has never been owned by GM, so for GM to claim they (or their engineers), had anything to do with the invention of air conditioning, is just crap.
No wonder many of us here don't believe a word they say.
Lots here might believe Ford doesn't have a marketing department, but I'm sure GM has a bullshit department.

Yoink, I've just found my new signature.

[MethodX]

Man the anti GM bs in here gets too much sometimes.
GM is investing in plants In the US.

Be anti Japanese and anti French makers, before we have nothing left.


Ford Aus, just another small arm of a multinational that will close overnight...

[ford man xf]

Would it be true to say that Ford US had been planning the withdrawal of Ford Australia manufacturing since he introduction of the AU? I remember a few people saying that because the AU was not engineered for left-hand drive for export markets, eventually the Falcon was certain to fail. But then I think about the other side of the coin, why would Ford US invest money in introducing new engine managements systems such as the new LPG system and the 4 cylinder Falcon, could it have been that they didn't want the Falcon to fail and did see a future here, but in saying that I know that Ford Australia had to develop greener vehicles due to government funding, so this may have just been the reason for Ford US investing a bit more money?

It is interesting though that the Americans seem to love the look of the Falcon, I see a lot of positive comments from Americans "why can't we get one of these in the states" and such, but then we only have to look at the Commodore export program and see how dismal that is to see that the truth is not many Americans would purchase a Falcon if it was exported left-hand drive. Maybe we missed the middle east market?

[P6LTD351]

Originally Posted by MethodX

Man the anti GM bs in here gets too much sometimes.

It's a Ford Forum.

I've had to put up with a BS GM funded add on my TV for the past few days...the patronising tone of it is unbelievable.

[MethodX]

Originally Posted by P6LTD351

It's a Ford Forum.

I've had to put up with a BS GM funded add on my TV for the past few days...the patronising tone of it is unbelievable.

Thought it was an Aussie and American car lovers forum.

[LeadFoot81]

Originally Posted by MethodX

Thought it was an Aussie and American car lovers forum.

It's a Ford (irrespective of where and when it was built) car lovers forum, that's also accepting of lovers of others makes of cars (again irrespective of where and when they were built)

Being mainly Ford peeps on here though, it's par for the course for the majority to be very unforgiving of GM and their antics.

[outback_ute]

Originally Posted by castellan

Are you pointing out the FX as being a rejected GM design ? no no, it was the most advanced car design of all GM for aussie conditions at the time.

Was Opel owned by Germany or Vauxhall by England ?
Toyota was owned by Japan ? i don't thinks so i think it was GM that had a hand in that.
Does or is a company like GM owned by the USA ? I think if you look into it all, it does not 100 %, the banks etc own some what of it regard less.
Even GM leand money for future endeavours be it from some bank banks etc all over the world.
Just as your house is or was owned by, who knows who really.
Companys in USA cleaned up after the war, as it was the best place to invest at the time i would think, if you look to see how GM cleaned up everything, boy did it ever. smart people running the show back then.

The first Holden was based on a prototype they decided not to make in the US because they could make more money building larger cars.

Yes Vauxhall was English and Opel German before being bought by GM.

[jpd80]

And old Humpy was closer to Cruze in size than Commodore...

[DreadlyST]

quite an interesting doco series on Discovery turbo max at the moment, it's called "Wide Open Road" about motoring history of Oz, did you know that the first car to break 300Kmh was an aussie designed and built car back in the late 20s!

[GASWAGON]

Originally Posted by Bossxr8

If anything Ford are sending more work back into the US than what they are sending out. They have been hiring thousands of new workers in the US and expanding a lot of their plants there.

Luckily Ford should not ever need bailout money, they are making billions of dollars profit every quarter and i'm sure they are keeping a lot of it stashed away in case another GFC comes along. I'm sure they will be better prepared next time round in terms of cash reserves if the economy crashes again in the future.

It seems Ford are a bit smarter with their dollars than GM.......Stashing some away in case of another GFC and not needing bailouts is the way to go! GM just seem to rely on bailouts everytime the bank balance gets too low?

[castellan]

Originally Posted by outback_ute

The first Holden was based on a prototype they decided not to make in the US because they could make more money building larger cars.

Yes Vauxhall was English and Opel German before being bought by GM.

The yanks never intended to make the car in the US at all.
USA was a much more wealthy nation than aus, so we could not all be driving V8's like the yank tanks.

[Bossxr8]

Then why was it an unused Chevrolet design?

They obviously had a plan for it if Chev went to the lengths of designing it? Wasn't it designed before Holden even had the go ahead to build Australia's own car?

Chevrolet rejected it as being too small, but obviously they looked at it as a possible new model. Just like a lot of submissions, a lot of them don't make it past the design stages and into production, but it doesn't mean they didn't think they might put it into production, otherwise why would they have bothered designing it in the first place.

[Adamz Ghia]

Originally Posted by ford man xf

Would it be true to say that Ford US had been planning the withdrawal of Ford Australia manufacturing since he introduction of the AU? I remember a few people saying that because the AU was not engineered for left-hand drive for export markets, eventually the Falcon was certain to fail. But then I think about the other side of the coin, why would Ford US invest money in introducing new engine managements systems such as the new LPG system and the 4 cylinder Falcon, could it have been that they didn't want the Falcon to fail and did see a future here, but in saying that I know that Ford Australia had to develop greener vehicles due to government funding, so this may have just been the reason for Ford US investing a bit more money?

It is interesting though that the Americans seem to love the look of the Falcon, I see a lot of positive comments from Americans "why can't we get one of these in the states" and such, but then we only have to look at the Commodore export program and see how dismal that is to see that the truth is not many Americans would purchase a Falcon if it was exported left-hand drive. Maybe we missed the middle east market?

Terribly sorry to go off topic, but as for the AU not being made for left hand drive, how come the firewall has a spot on the left hand side for a steering column to go through...?

[ford man xf]

Originally Posted by Adamz Ghia

Terribly sorry to go off topic, but as for the AU not being made for left hand drive, how come the firewall has a spot on the left hand side for a steering column to go through...?

Didn't know of this, but I do remember reading Ford US canned the idea of making a left hand drive Falcon for export, not sure on the reasons, could have been the car unions in the US not liking the idea, they are powerful unions in the US.

[castellan]

Originally Posted by Bossxr8

Then why was it an unused Chevrolet design?

They obviously had a plan for it if Chev went to the lengths of designing it? Wasn't it designed before Holden even had the go ahead to build Australia's own car?

Chevrolet rejected it as being too small, but obviously they looked at it as a possible new model. Just like a lot of submissions, a lot of them don't make it past the design stages and into production, but it doesn't mean they didn't think they might put it into production, otherwise why would they have bothered designing it in the first place.

It was more of a German Opel design than any USA car. if you read up on it all, the car owes it's extream modern design at the time to work done by Opel and that part of expertise was mainly due to Hitler's involvement with the VW having to design a car without a full chassis this saves money and a poor nation like Australia needed a cheap car for the people hear as the yanks were a much more wealthy nation of people.
Obviously GM in the USA run the whole show.
If you know how a company like GM etc work, you would know that wars don't mean jack to them. they have to think past all that and would have people working on products in the future. they are on the ball mate they don't just drop everything for some stupid war or anything business is business and that's all that matters.