The rise and fall of the auto men's empire; 'Reinventing' the American auto
America's domestic automobile industry, once the pacesetter in world car production, is painfully out of step with the times. Buffeted by the influx of fuel-efficient imports, American manufacturers are scurrying to regain lost ground by turning to safer, less polluting, more economical cars. But Detroit concedes it will be several years before it can close the gap.
In the meantime tens of thousands of automobile workers are on long-term layoffs at beleaguered Chrysler Corporation as well as at healthier, but still recession-troubled, Ford and General Motors.
Ford slammed the gates at its Los Angeles assembly plant last February. It will throw 4,000 people out of work when it closes the sprawling Mahway, N.J., plant next month.
But the embattled US industry is only part of a larger global reshuffle of the automobile industry triggered by unstable economies, unsettled fuel markets, and shifting consumer demands.
New car empires are rising (Japan, East Europe) with manufacturers scouting for new territories to conquer. Old ones are falling (US, Britain), with manufacturers rapidly retooling to minimize losses and prepare for new offensives. Along the way, some countries are considering high import tariffs to keep intruders out, while others, under pressure, are considering lower tariffs to allow more foreigners in.
Until a quarter century ago, all automobile facilities were centered in two areas of the world: the US and Western Europe.
Japan didn't even exist as an automaker. US manufacturers were secure then, their markets assured. people bought a GM car, a Ford, a Chrysler product, or one of a dozen or more other nameplates that are now part of the automobile history book. There were only a handful of imports.
The 1970s, however, brought the energetic emergence of the competitive Japanese and the Arab oil embargo.
The US, oriented to big, gas-guzzling cars because fuel was cheap and readily available, was caught off guard. The Japanese were ready with a phalanx of fuel-efficient, high-quality cars that caught the American motorist's attention. The result: The Japanese are now the world's no. 1 car exporter, and in 1980 they will churn out more autos than the US.
Yet the Japanese were not the only ones to exploit america's slowness in adapting to a revolution in automobile design. Eastern Europe also moved in successfully.
By the mid 1980s, the Soviet-led East bloc may send as many as a quarter of a million cars to Western Europe each year.
What is happening to the US industry (producing smaller, more-efficient cars) was bound to happen. The deepening recession that has accelerated plant layoffs has only magnified the problem.
No longer the monolithic car builder, Detroit is being forced to adapt. Ultimately, with a long line of fuel-efficient cars projected for the mid-1980s, the US can settle down to its new role. "I think the key to the domestic industry's resurgence is getting our new products on the street," says Philip Benton, head of Ford Motor Company's Ford division. "But that is going to take years to complete."
The domestic industry's drive to "reinvent" the automobile will likely bring dramatic changes -- some nostalgic, some futuristic. It will include developments such as small, two-seater cars that may get 50 miles or more to the gallon. (GM and Ford are already working on them.)
Smaller engines, lighter-weight bodies, and more diesel-powered autos are also on the drawing boards. Electric-driven cars, too, will gain credence.
Rapidly shifting consumer demands are also spurring competitive thinking in boardrooms.
"While the smaller US manufacturers have manifested great reluctance to adopt innovations before GM does, the leading foreign competitors for US auto sales have shown no such timidity," says an article in Transatlantic Perspectives, a publication of the German Marshall Fund of the United States.
"The evolution of the major auto manufacturers and suppliers into multinational firms has weakened parochial orientations and may accelerate the pace of innovation transfer among them," it adds.
Indeed, the move toward increased efficiency and competitiveness is prompting world automakers to set up joint production and assembly plants and research facilities as never before.
BL ltd., Britain's state-owned automaker, will build a Honda-designed car in the early 1980s. Volvo, Renault, and PSA Peugeot-Citroen have jointly developed a V-6 engine that all three companies now use.
Renault, Fiat, and Alfa Romeo have combined to build a diesel engine. Chrysler's Omni-Horizon is powered by a Volkswagen motor. And while Japan is grudgingly beginning to look at putting up US-based assembly plants, Volkswagen is working on setting up its second.
Also gradually emerging out of this more interdependent auto world is the "world car" -- a standardized or look-alike design that will be built in many different countries to help hold down production costs.
About 30 companies now compete in the worldwide auto market. By 1990, that number may be cut in half.