Crash Course: The American Automobile Industry’s Road From Glory to Disaster by Paul Ingrassia is an intriguing book. Focusing mostly on the Detroit Three– GM, Ford and Chrysler it documents a bit of their history as well as tracing how the auto companies have always been skirting on the verge of financial disaster. As a capital intensive industry even when sales are up, profits aren’t always up as well. Ingrassia also talks about the insular nature of the people at the top who run the companies; how they are wedded to the particular corporate culture prevalent at each company. Which makes them more interested in protecting their jobs than properly running a big automobile manufacturer.
The Detroit Three pretty much missed most of the major clues that would have told them that drastic action was required to keep solvent. Such as not seeing that after the scare of $4 a gallon gas was putting smaller more fuel efficient cars in the minds of consumers. They kept pumping out expensive gas sucking SUVs and trucks. We Americans share some of the blame for this as small cars have traditionally been a hard sell to most Americans. Chasing high profits on SUVs and badge engineering instead of real engineering was a big reason they got caught short. The much touted, vaporware Chevy Volt and GM’s EV-1 experiment, which failed ultimately due to lack of follow through and no real support within GM, allowed them to talk a good game while not doing much to foster fuel economy. Which meant they got totally blindsided by the Japanese, yet again. Not to mention the Germans, and the Koreans. Dismissing Hyundai/Kia was a serious mistake on the part of the Detroit Three and the Japanese.
A bigger problem was the antagonistic relationship between the Detroit Three and the UAW. The UAW pushed and Detroit mostly caved. Which lead to outrageous abuses in labor contracts. Such as the Job Bank, where a laid off worker could draw 95% of their pay, quite literally forever. Which led to something called “an inverse lay off’, where workers with more seniority could choose to be laid off and someone pulled out of the Job Bank to take their place. So not only did a worker get paid for doing no work, but they got paid at a higher rate.
Management at all of the Detroit Three turned a blind eye to all of this, and they showed a basic inertia which caused the companies to flounder. Failing to invest in developing their own main product and giving up the smaller car market to the foreign companies was one of the final nails in their coffins.
Crash Course the American Automobile Industry’s Road From Glory To Disaster by Paul Ingrassia is a fascinating book and a must read for anyone interested in cars, business or just any American taxpayer who’s money was taken for the bail out.
Thought this was an interesting book. Igrassia is a bit of an US automotive historian so clearly his knowledge is quite deep. He wrote a books about the “re-birth” of the industry in 1994…oh how things change. I picked up a copy his ’94 book and this 2010 publication from http://www.awesomebooks.com – both books cost me just $9.99 including delivery.
A good read, I recommend it if your interested in the subject.