In the US auto industry on the verge of collapse? Anyone reading the grim news pouring out of Detroit these days about earnings plunges, plant shutdowns, and worker layoffs might easily get that impression.
There is no question that the current sales slump is causing big trouble here in Motor City. But US automakers, conceding that a very difficult struggle lies ahead, have no intention of pulling back from the challenge facing them.
Interviews with top officials in each of the four auto companies headquartered here indicate a confident determination not only to stage a comeback and survive not to thrive once again in the process.
US automakers are counting on a new wave of small cars -- which they admit have never made them a profit in the part -- to do the job.
They view the current slump as a temporary setback.They say they were caught off guard by shaprly rising fuel prices and an abrupt shift in the American motorist's preference toward the small car.
Automakers bristle at critics' charges that they should have seen the handwriting on the wall after the 1973 arab oil embargo.
Yes, small cars sold well for four or five months afterward, company officials counter, but large cars soon returned on a top selling position, with customers buying more as recently as February 1979.
"We were rebating small cars and doing everything we knew from a marketing standpoint to get people to buy them," recalls Louis Ross, Ford Motor Company executive vice- president for product development.
The only US automaker that admits not being completely startled by the American motorist's preference for small cars in American Motors Corporation (AMC).
"We were never successful with our larger cars so we were getting the message all along that, at least for us, we better stay in the small car business," says Dale Dawkins, vice-president of AMC's product group.
The key problems now for US automakers are timing and capital.
Ordinarily, the time lag between the design and production of a new model is from three to five years. And US automakers are racing to get more small cars out before foreign competitors capture even more than the 28 percent share of the market they not hold.
One of the chief reasons US firms will be able to put a few new small car models on the market this fall is the steady prod of the five- year-old federal fuel efficiency standards. Thanks to those, automakers admit, they got an early start in producing such models as the Ford Escort and Mercury Lynx, the Plymouth Aries and Dodge Reliant K-body compacts, and more of General Motors' X cars -- such as the Chevrolet Citation W, and American Motors' new subcompact, the Eaglet.
But gearing up for a permanent small car market, carmakers say, is a major, long- range job. It calls for new designs, new engines, new machinery, and often new plants.
Some automakers talk of the change now under way as a second Industrial Revolution. And if the morale of the average assembly line workers has hit a new low in the current crisis, it's not that way with engineering and technical employees. The latter see the challenge as an unprecedently opportunity.
"They're really in their heyday," says one observer.
To make the shift, the US auto industry will spend about $80 billion over the next five years. Automakers admit that ordinarily such a project when profits are down and losses are up makes little sense. But they feel they have no choice.
"We're working full-out around the clock. I've never seen people work as fast or as hard," says Alex Mair, vice-president and group executive in charge of the technical staff at General Motors. GM is spending about half the total $ 80 billion, or as puts it, about $1 million an hour. "Even though we have a downturn, we've made a decision not to stop our forward programs until we can't do it," Mr. Mair explains.
The mix of cars on US highways over the next five years is expected to look much like Europe's today. Four-cylinder, front-wheel- drive compact and subcompact cars with much more sophisticated electronic controls than in the past will be increasingly common.
Diesel cars, significantly more fuel efficient than their gas-fed counterparts, may account for as much as 20 percent of the mix. But much will depend on the availability of diesel oil and the ability of diesel engines to meet Washington's tough emissions standards.
If a technological breakthrough, considered near, can be made on increasing the engine's operating temperature, fuel efficient gas turbine cars also could become part of the US automotive scene by the end of the decade.
Electric cars, too, could move in for a share of at least the commuter market if ways can be found to extend their range and battery life.
Many manufacturers have managed to extract hundreds of pounds of weight with the development of each new model.
For instance, Chrysler's new K-body is 1,000 pounds lighter and two feet shorter than the compact Volare and Aspen models it replaces. Yet interior space is about the same. The big space and weight saver in this case was the shift to front wheel drive.
Automakers are also turning to increased use of plastics, aluminum, and thin, high- strength steel as other ways to trim weight.
Aluminum is largely used for transmission and engine parts and in bumpers. Over 75 percent of Ford's two new compacts this fall, for instance, will feature aluminum bumpers.
Plastics are used in everything from door trim and instrument panels to fenders and front ends. If reinforced with graphite, they can offer the strength of steel in structural or functional parts. But the price tag is high.
"Reinforced plastics are exotic, but we just have some small applications of that," notes Ford's Louis Ross. "It costs $18 to $20 a pound and at that rate a 4,000 pound car could cost you $80,000."
Yet plastics technology is changing fast, and many companies are finding plastic more cost-effective and a good substitute for the aluminum they once rushed to put in as a weight saver.
"Most of the inexpensive ways of taking the wieght out, making the car smaller, and substituting materials that are the same cost or less has already been done -- at least considering today's technology," says Chrysler's John Withrow. "Getting more weight out is going to be much more expensive and a lot tougher."
American Motors' Dawkins cautions against expecting new "exotic" technology to do the rest of the job: "It looks as if we already have than any dramatic change in materials."
Yet even as US automakers forge ahead, they stress that their survival in the coming months and years depends on far more than their own ability to step up the supply of quality small cars. It depends, too, on how soon and how well the weakened economy recovers, the scope of future federal regulation, and on the nation's future energy supplies.
"We're proceeding as if the US is going to take care of its energy supply problem. But we're worried that the job isn't getting done very fast," says GM's Alex Mair. He urges that "artificial" roadblocks to further development and use of oil shale and coal be replaced by encouragement and a "push."
Survival also depends on whether or not the quality, quantity, and price of the new US small car fleet stacks up well in consumers' eyes against increasingly stiff import competition.
Next: How Detroit plans to meet the Japanese import challenge.