A Long Trail of Fail

What happened to Detroit? How could it go from entrenched industry leader to wheezy little brother in less than half a century? There are numerous reasons for the decline, but it's correct to state that it was not based on the credit collapse, on the rise of a Prius, or on any other singular moment. Neither Rome nor Detroit were built or destroyed in a day. The decline was comprised of hundreds of poorly conceived plans, weak-willed compromises, and short-sighted policies.

U.S. News's Chief Business Correspondent, Rick Newman, has a list titled "10 Cars That Sank Detroit" on his blog. It's a great quick read. Besides taking the reader down Memory-of-My-Crappy-Car-Lane, Newman's list also is useful as a collection of cars that were the product of multiple mistakes. A "Who's Who" of Corporate Fail, if you will. Follow me as we pick over the bones...

(quotes in italics)

- Ford Pinto - This ill-fated subcompact came to epitomize the arrogance of Big Auto. Ford hurried the Pinto to market in the early 1970s to battle cheap imports like the Volkswagen Beetle that were selling for less than $2,000.

So, first stop on the list is a car that first came off the line in 1970. "Wait!" you're exclaiming, "I thought that "fuel efficiency" was what caused the collapse of Detroit!" Not so fast, my friend. The Pinto, now recognized to be a disaster, was a lazy and bloated corporation's response to foreign competition*. Up to this point in America, the only real competition for "average" consumers was other American manufacturers. Foreign cars at this point (like Jaguar, BMW, Mercedes) were luxury vehicles.

So when Toyota and Volkswagen began importing cars, what happened? Detroit arrogantly put out a p.o.s. that's message was, "Screw it. We know this is poorer quality than our competitors, but we don't care. Heck, we'll even throw in an exploding fuel tank, and then refuse to acknowledge its a problem! Why? Because you'll still buy it, Joe America. You'll buy it because it's American. You'll buy it because it's your patriotic duty." This appeal to loyalty has sway with many Americans at first, but even for many patriots, this was too much:



Unfortunately for Detroit, exploding-rear-fuel-tanks stop at the water's edge, and the first 'loyal-to-imports' consumer was born.

- Chevrolet Astro - While Chrysler, Toyota, and Honda were refining their minivans in the 1990s and coming up with innovations like hideaway seats and electric sliding doors, GM was offering an old, truck-based van gussied up with carpeting and cupholders. . . Before long, GM was effectively out of the minivan segment. No biggie—those were just mainstream American families the automaker decided to ignore.*

Rick Newman has already beaten me to much of the snark with this most-excellent summary, but fear not. There's more to mock, and I'll press on until every wisecrack has a home.

- Jaguar X-Type - Ford bought the British luxury brand Jaguar in 1990, when all three Detroit automakers were seeking ways to expand their global reach. Eventually, Ford decided to build an entry-level Jaguar starting at around $30,000 for people looking to move up from, say, a Mercury Marquis. The down-market move "represented everything that Jaguar is not," says Libby of J. D. Power.

See, here's the thing: Jaguar was always a luxury brand, and Ford was always a "consumer" brand. They aren't writing books titled "Henry Ford: The Genius Behind the Luxury Car." He was the father of the "Affordable Car". So when Ford, drunk with profits from trucks and several sedans, could've spent the money reinvesting into improving their already popular products, they instead chose to buy up a brand that had zero-overlap with their current base.* Ford always was "everything that the Jaguar was not", and they were idiots for thinking so.

Ford then followed one foot into the cow-patty with the other, and built a Jaguar that was simply the Jag label on a Ford body. Really. The leaders in Dearborn, in an attempt to create a "middle-class luxury car", simply put some metal on the Ford Mondeo body (better known as the Ford Contour in the U.S.), dusted off their hands, and asked "Who wants one?" You can predict the results from this half-cocked development plan*.

- Chrysler Sebring - Did Chrysler engineers set out to build the world's most boring car? Of course not. Yet Chrysler still produces this blandmobile to keep assembly lines running*(emphasis mine --S.) and maintain a presence, however weak, in the sedan market. . .

. . . and . . .

- Jeep Compass - Quick, what's the difference between the Jeep Compass, the Jeep Liberty, and the Jeep Patriot? The bosses at Chrysler, which owns Jeep, could explain, but the real answer is that Chrysler has oversaturated its strongest brand lineup in a desperate attempt to boost sales... "The Compass is not needed," says James Bell of Intellichoice.com. "Just the Liberty, please." The Compass has the same mechanical underpinnings as the Dodge Caliber, which helps illustrate one of Detroit's favorite tricks: Create multiple versions of every product under a bunch of different brand names, hoping that if buyers shun one, they'll take a more favorable view of another.* Message to Detroit: Consumers aren't that stupid. Give them a bit more credit, and you might have a future.

Rick Newman, FTW. Few industries are as besieged by overreaching unions than Detroit automakers. For years the unions have managed to hoist plans and policies on the Big 3 leadership that most Americans would find egregiously onerous. That doesn't absolve corporate leadership from this fisking, but it is an added burden on the companies to be in constant fear of employee uprising.

Example? Example.

The job bank plan. Never heard of it? You're not alone, as I'm sure all but UAW and automotive observers are unfamiliar with it. Allow me to explain the policy and its creation in a short story:

Long long ago, machines called computers and robots were being invented. They could do many things, like weld steel, turn screwdrivers, and install stereos. The men of the villages of Flint and Dearborn, men who had welded steel, turned screwdrivers, and installed stereos for decades, didn't much care for these newfangled job-stealers. Since these men all belonged to the same gang, they told their warlord: "Sir, our jobs are threatened. Help us, you're our only hope!" The warlord heard the pleas and was moved. He donned his fiercest strike-threatening armor and rode his trusty team of Teamster warhorses to the headquarters of the companies. Threatening the leaders with chaos, pickets, and empty assembly lines, the warlord commanded that the companies, if they were to install these robots, were not allowed to release the men who's jobs had been replaced. No, the leaders were required to keep paying the welders, screwdriver-turners, and stereo-installers their full wage even if they weren't working. This way, the warlord said, the leaders would be forced to find new jobs for the sad old workers. The leaders, ever desirous of peace, foolishly agreed to the bargain.

Yup. The Jobs Bank is a repository of fully-paid but not-working UAW employees. Ain't America great? Now, this puts pressure on the Big 3 leadership to "find things for the workers to do". The best idea they could think of? Duplicate!

Instead of just having the Chrysler Town & Voyager, we can also have the Dodge Caravan! Why just have the Chevy Tahoe when you could also have the GMC Yukon! Ford Explorer or Mercury Mariner or Lincoln Aviator? See, we named them all for adventuresome pioneers! But they are different, we promise!

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So to summarize: I've asterisked several overarching statements that, when combined, better show us just why the Big 3 have declined:

1. They arrogantly believed that a half-hearted response would prove successful enough to foreign competition, simply because the response would come from "America" instead of "foreigner lands".

2. GM was absolutely trend-deaf to the minivan craze of the 90's. They thought that their painters-van-with-upholstered-bench-seats would suffice. They were wrong.

3. & 4. Detroit mishandled expansion. GM chose to acquire crappy brands, Ford chose to aquire luxury brands. Both were bad ideas, but were made even worse by bone-headed arrogance and market ignorance. The X-Type, Ford? Really?

5. Because of obligations to their employees (due in no small part to anti-free-market unions), the Big 3 have had unbelievable labor costs and eye-bleedingly redundant hiring-n-firing policies.

6. The inability to fire a redundant worker, combined with clueless leadership, created a climate of repetitive brands and excess production. This lead to oversaturation of the brand and devaluation of the product. When you see 8,000 Tauruses (Tauri?) on a Enterprise Rental Car parking lot, you don't think much of the car.

Note that none of the reasons on this non-comprehensive list involve "fuel efficiency" or "green" alternatives. While a lack of high-mileage cars is in part a reason for the decline of the Big 3, it's at best 7th or 8th on the list of Thuddingly Stupid Decisions made over the past half-century.