Will fewer Toyotas and Datsuns help the US car industry?
Detroit's shaky auto industry continues to get special consideration from the government in Washington. Under American pressure, Japan has agreed to a three-year plan to reduce its car shipments to the United States. The theory is that this will give General Motors and other carmakers a breathing space: they will be able to sell more cars, raise billions of dollars, retool for the manufacture of smaller, fuel-efficient cars, and re-enter the market better able to compete.
The theory has to be proved out. It is not only the Japanese who are critical of the action. Many American experts also believe that Detroit is using Japan as a scapegoat and that the import of some 140,000 fewer Japanese autos in the next 12 months will simply drive up car prices. The American consumer will in effect be the loser. Imposing import restrictions is also dubious trade policy. The US has benefited appreciably from the loosening up of world trade in recent decades. This move is therefore a decided setback.
But the deed is done, and the relevant question now is what Detroit does with what it thinks it has gained. The plain fact is that most of the US auto industry has yet to come to grips with its own managerial and other problems. It is not cinching its belt by bringing wage contracts under control, making management more efficient, and plowing profits back into capital investment. When a business is ailing, it is only fair that everyone be asked for some degree of sacrifice. Then why are the auto companies not considering reducing or temporarily suspending dividends to stockholders? Why is the United Auto Workers unwilling to renegotiate wage packages at GM and Ford -- labor contracts which put auto industry wages about 60 percent above the average in manufacturing as a whole? Why is management not pruning high corporate salaries and showing other cost efficiencies?
There is the key issue, too, of quality. The Japanese today have a big cost advantage but they also have a quality advantage. It is far from reassuring to hear the president of General Motors concede, as he did recently, that the company's new X car is a shoddy product. American buyers still have to be convinced that Detroit can and will produce a good and reasonably priced smaller car.
STill another important factor here is worker pride. Harvard professor William Abernathy, an authority on US productivity, notes that Japan's advantage in labor productivity lies not in the automation of its plants so much as in its "people" approach to car building. It comes, he writes, "mainly from the fact that they have a work force that's turned on, willing to work and is excited about making cars." In the US, on the other hand, labor has tended to be hostile to management and vice versa. Some efforts now are being made to involve the work force in management, but a great deal more needs to be done in this direction. "We're talking about a cultural revolution in industrial practice" is how Dr. Abernathy puts it.
In short, fundamental changes and belt-tightening are needed in Detroit. Japan's agreement to restrict imports has gotten the Reagan administration off the hook for the time being (Congress would have passed even stronger controls) and eased the way for Prime Minister Zenko Suzuki's imminent visit to Washington. But the American man-in-the-street should understand that he is the one who continues to pay the price when the US auto industry fails to put its own house in order. Instead of pressuring the Ja panese, the US government ought to be pressuring the carmakers.
