The Wall Street Journal ran a great article on those ‘other’ car manufacturers we have in the U.S. The takeaway:
These are the 12 “foreign,” or so-called transplant, producers making cars across America’s South and Midwest. Toyota, BMW, Kia and others now make 54% of the cars Americans buy. The internationals also employ some 113,000 Americans, compared with 239,000 at U.S.-owned carmakers, and several times that number indirectly.
The international car makers aren’t cheering for Detroit’s collapse. Their own production would be hit if such large suppliers as the automotive interior maker Lear were to go down with a GM or Chrysler. They fear, as well, a protectionist backlash. But by the same token, a government lifeline for Detroit punishes these other companies and their American employees for making better business decisions.
The root of this other industry’s success is no secret. In fact, Detroit has already adopted some of its efficiency and employment strategies, though not yet enough. To put it concisely, the transplants operate under conditions imposed by the free market. Detroit lives on Fantasy Island.
There’s no natural law that America must have a Detroit automotive industry, any more than steel had to be made for all time in Bethlehem, Pennsylvania or textiles in New England. Britain sold off all its car plants to foreigners and was no less an advanced economy as a result, though it was a healthier one. Detroit may yet adjust to avoid destruction in the best spirit of American capitalism. The other American car industry is a model for how to do it.”
Pat Buchanan made the protectionist argument on Hardball with Chris Matthews and our own Senior Research Fellow James Gattuso appropriately disproves it. Grant Bosse has it right when he says,
Bailing out the Big Three is subsidizing failure. And you only subsidize something when you want more of it.”
FYI, Honda opened up a new plant in Indiana just two weeks ago.
Time to put those Detroit dogs to rest.
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Via Bloomberg, even the Big Three will eventually be faced with a zero carbon future — that is if they want to continue exporting autos to Europe — according to an agreement by the Council of Ministers and European Parliament this week.
The move to curb emissions was delayed somewhat by industry lobbying from Germany and France, whose domestic car producers are also struggling in a tough market. Foreign car companies like Toyota and Hynundai will also fall under the new emission standards, and will be subject to fines if their automobiles do not meet low-carbon targets.
According to Bloomberg, the EU plans to fast track the auto emissions package, and seek agreement by the end of the year.
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Big three is a case study of poor management,poor management and poor management. They had never come to grips with cost and competition that is eating them alive. They were continually losing market shares but acting as though the good old days were back.
Detroit management problems are not that much different from our entitlement programs. We are headed to a disaster. Everybody knows it. Washington or for that matter, those that are feeding at the trough don't pay heed to it and act as though everything is alright.
Let Detroit go through bankruptcy. Invalidate and renegotiate all labor contracts. If that is not forthcoming, close down plants in Detroit and terminate assembly. It will still allow supplier base to stay alive without the UAW stranglehold.
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I am surprised that congress invited the (three) automakers back (a second time) so they can waste more of their time! Lets face facts these companies already are to far gone the leadership is in the dark ages these CEO’s need to be FIRED NOW!
I do not understand how any CEO of any size company would even think of showing up for a loan of any amount with out a detailed well written business plan (and show up in a private jet) that anyone would give them a loan. Come on . . . this tells me that they have no clue as to what they are doing nor has their been any though about how and when they will be paying the money back.
Why do we keep hearing on the news about how bad it will be if they go out of business will there be no cars to buy? There are the 12 “foreign,” or so-called transplant, producers making cars across America’s South and Midwest. Toyota, BMW, Kia and others now make 54% of the cars Americans buy. The internationals also employ some 113,000 Americans. The so-called transplant, producers sales will increase and the ‘big three’ unemployed workers will be hired by Toyota, BMW, Kia etc. There will be new start-up auto makers coming into the market as well.
It is time the ‘big three’ becomes history let them merge with each other and become a strong worldwide Auto Maker or simply go belly-up.
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