Foundation for Detroit Renaissance

"One thing's for certain, ten years from now Daimler-Chrysler will look more like an American company than a German one."  I wrote those words 10 years ago, just after the announcement of the ill-fated takeover of Chrysler by Daimler Benz. 

At the time I felt strongly that, despite assurances to the contrary, this was an out and out takeover by Daimler Benz.  It turned out to be exactly that.  A shameful sellout, really, by Chairman Bob Eaton and his merry band of bean counters.  In retrospect, perhaps it was the catalyst that launched a decade of corporate greed that harkens back to the age of Carnegie, Morgan, and Rockefeller. 

But at least they built something.  Outsourcing, asset and market manipulation, the shuffling around of money are the “New Economy”. That, coupled with the almost criminal loosening of reserve requirements of financial institutions by our "representatives" quietly one night in 2004.

 We've been building a house of cards for some time now, and anytime someone raised thoughtful objections they were dismissed--almost derisively--as not "understanding" the new economy.  If the situation we find ourselves in today is the "new economy", I'd like to go back to the old one, please.  Or at least remember that there is no free lunch, and that unmitigated greed at the expense of your company--not to mention the country--is the road to ruin for all.

Why all the pontification?  As I write this, the Big Three are in Washington D.C. asking for loans.  There is a lot of resistance, and some of that resistance is understandable.  Detroit has repeatedly shot itself in the foot chasing short term profits at the expense of long term viability.  But to grant a virtual $750 billion blank check to the financial institutions that were instrumental in causing this mess in the first place, and then turning their backs on a vital part of our overall economy and a critical part of our manufacturing base is ludicrous.  In fact, part of the problem with the automotive industry right now is due to the financial situation of the country--which was caused by the very sector that is getting most of the rescue package!

Detroit has come a long way in the last ten years.  It recognizes it's structural problems and is working hard to alleviate them.   Make no mistake, they are not without blame.  But their products are now competitive in every segment, quality is way up, as is reliability.  Compared to other nation's automobile companies (including the transplants here which are non-unionized), they have been saddled with an uncompetitive wage and benefit structure and an endless list of legacy costs such as pensions and health care that are crushing.  Even there however, the Big Three are making progress, thanks to cooperation with a more realistic UAW that recognized the impending collapse if nothing was done.

Perhaps the old adage "As GM goes, so goes the nation", no longer applies. But from the countless suppliers throughout the country to the seemingly ignored aspect of national defense, the Big Three are immensely important.   For it's part, Detroit must recognize that this is a game changer.  We truly are entering the new frontier of the 21st century, and the old ways will not do.

Rome is burning, and we cannot afford to fiddle around.

This piece first appeared in the February 2009 issue of Collector Car Market Review