This week U.S. Sen. Richard Shelby (R) of Alabama told Meet The Press and CNN that the U.S. auto industry is a dinosaur whose demise would only be postponed by a bailout. In response, automotive journalist Peter M. DeLorenzo told Huffington Post today that Shelby is 100 percent wrong.
"Detroit has an image problem that is just killing them with Congress and the general public. The perception is that Detroit isn't building fuel-efficient, high-quality cars and trucks with great design. But it isn't true. An entire industry is being written-off by a combination of bad previous experiences and a reluctance to delve deeper into the issue. Dick Shelby is a classic example. His comments are flat-out false," said DeLorenzo.
To further this conversation, Huffington Post invited DeLorenzo, founder of the Auto Extremist internet magazine and author of The United States of Toyota, to share his views.
HuffPost: Senator Shelby said Detroit has good workers, but not good management, and that GM's Rick Wagoner, among other executives, should go. Do you agree?
Peter M. DeLorenzo: CEO Alan Mulally has done a superb job at Ford Motor Co. He quickly assessed the reality of Ford's position in the U.S. market, and made some immediate decisions that are proving to be positively brilliant today. Ford's financial position is healthier than any other U.S. automaker, and its future product plan is scintillating.
As for General Motors, CEO Rick Wagoner isn't the culprit. Did GM stink up the joint between 1979 and 1999? Yes. Are we talking about the same GM today? No, not even close. Under Wagoner, GM has extended its global reach, a strategy that is keeping the company alive today. Much to the surprise of critics who say GM is stuck in 1985, the company has designed dazzling new products like the Chevrolet Malibu, which is the best mainstream American car of the last 35 years, and equal to the vaunted Toyota Camry and Honda Accord. The Buick Enclave is the finest luxury crossover available. And the Chevrolet Corvette ZR1 is one of the finest sports cars in the world, at any price.
Then why is there a lack of respect for U.S. vehicles? Is it due to poor fuel efficiency?
Do the critics mention that GM offers more than 30 vehicles that get over 30 mpg? No. Do they mention that more fuel-efficient vehicles are on the way with each passing quarter? No.
Currently GM is developing an extended-range electric vehicle -- the Chevrolet Volt -- that will be a game changer for the entire industry. Bad management isn't the problem. The problem is America's crushing financial crisis that has decimated the credit industry, the lifeblood of the car business.
In addition to the financial crisis, isn't there a perception problem?
A suffocatingly negative perception gap exists, one that paints a picture of Detroit that was obsolete years ago. I can just see Washington "helping" Detroit by putting a bunch of a managers in place who are ill-qualified for the job. There's no time for on-the-job training in this business. U.S. automakers simply need a bridge loan -- not a bailout -- until their new products reach the marketplace.
Shelby accused Detroit of not being able to innovate. Are foreign engineers really coming up with all the new ideas?
People who say the U.S. doesn't innovate are woefully out of touch with Detroit's standing in this business. For example, the most significant anti-pollution device in the history of the automobile is the catalytic converter. Every car and truck has one. Can you guess which Japanese or German company invented it? None of them. It was General Motors.
Some of the most dramatic innovations in safety, drivability, and durability have come from Detroit. Why people want to shut down this crucial part of America's manufacturing base is a mystery to me. In Dick Shelby's case, maybe it's because he helped Toyota, Honda, Hyundai, and Mercedes-Benz open plants in his state. His comments are regional and self-serving.
A Buick LaCrosse costs $30,000 in the U.S, but nearly $50,000 in Tokyo. That's not a level playing field.
That's true. The Japanese government protects its home grown industries with an unofficial government policy of currency manipulation. Japanese cars built abroad arrive in the U.S. with a $1500 cost advantage before they even hit the showrooms. Add the pension and health care costs that Detroit has to deal with, and we start out with a disadvantage of $3,000 to $10,000 per car, depending on the cost of the vehicle.
Is it fair? I don't think so. Want to rectify the situation overnight? Require foreign automakers to comply with the same standards, tariffs and duties applied to U.S. vehicles imported in their countries. Back in 1983, the U.S. International Trade Commission imposed a 45 percent tariff on imported motorcycles to protect Harley-Davidson. It saved that iconic American company. Today, a fundamental part of the fabric of this great nation is about to go down the drain, and we -- as a nation and a government -- are acting like it's no big deal. But how can an industry that either directly or indirectly affects 1 out of every 10 jobs be no big deal?
Why not put a sliding scale of import tariffs in effect immediately for two years, and watch as the Detroit automakers unleash a series of innovative, efficient, safe, reliable cars? These machines are already in the works, by the way.
Is bankruptcy a viable option for GM?
Theoretically, GM could eliminate a lot of problems by filing Chapter 11. Dealer agreements, labor agreements, and pensions could all be dealt with in a brutally efficient manner.
But there's more to it than that. The car business isn't like the airline business when it comes to Chapter 11. We've all flown airlines that are in bankruptcy. However, when a consumer spends $10,000 to $50,000 on a new car or truck, they want to be sure the auto company in question is going to be around for service and parts. If GM files for bankruptcy, it's naive to think people are going to crowd into the showrooms.
The UAW is calling for "no concessions." Isn't that the wrong signal to send to Washington?
The UAW already agreed to new contracts that eliminated years of accumulated gains. UAW president Ron Gettelfinger thinks the concessions should stop right there, but I doubt he'll get much sympathy for his position. It may all come down to one simple question: Do you want jobs with additional reductions in benefits and wages, or no jobs at all?
If the U.S. goes deeper into a recession due to the loss of nearly three million auto-related jobs, it will affect everyone. Why is this issue splitting along party lines?
The GOP is trying to flex their muscles one last time before the new administration takes over. They're putting their own interests ahead of the greater good of the country, even though that attitude cost John McCain the election. How else do you explain Dick Shelby, who slams an essential American industry, smug with the knowledge that his state of Alabama has basically opened its doors to the import manufacturers, tax free?
President Bush doesn't appear to appreciate the complexities of the automobile industry. Does Barack Obama have a better grasp?
I think President-elect Obama understands that the domestic automobile industry's health and well being is inexorably tied to the health and well being of the nation as a whole. I wish his advisers knew more about what Detroit has already done in terms of developing high-efficiency and advanced-technology vehicles. They'd be amazed at what Detroit has coming down the pike.