US auto industry springs back with new products and verve
The American auto industry has shed its conservative Midwestern garb for European- and Japanese-inspired wraps that will give it a better chance to compete on a worldwide scale.
It had to in order to survive.
''It was either change or shut down,'' says Ford chairman Philip Caldwell.
The old view that ''what's good for General Motors is good for the country'' has switched to ''what's good for the world is good for General Motors'' - and Chrysler and Ford.
US carmakers, in fact, are lean and hungry as they spend tens of billions of dollars on not only all-new products but on state-of-the-art assembly and component plants as well.
Typical of the industry, Chrysler Corporation has slashed its break-even point from 2.4 million cars a year to about 1.1 million, a massive drop. Each worker now produces about 20 cars a year compared with 10 in the 1970s. To the company's dismay, however, the average Japanese worker produces half again as many cars although the components are usually built up more fully by the suppliers than they are in US assembly plants.
One out of every four cars now sold in the United States is an import, compared with only a few percentage points in the 1960s. High wages, outmoded and inefficient plants, stubborn and hold-onto-the-past management, as well as stiff government regulations, have all contributed to the humbling of Detroit.
Also hurting Detroit is the shallow engineering pool out of which the carmakers can draw. In Japan, 40 out of every 1,000 citizens are engineers or scientists compared to 7 out of 1,000 in the US. In the decade between 1968 and 1978, the number of scientists and engineers in Japan rose by 62 percent, and in West Germany by 59 percent. In the US, by contrast, there was a drop of 13 percent.
''The Japanese produce 15,000 more engineers than the US in a population only half as large,'' laments GM president F. James McDonald.
''Today's competitive squeeze will have to be met with new ways of doing things - and entirely new ideas,'' Mr. McDonald told the International Congress of the Society of Automotive Engineers earlier this year. Alluding to the Koreans and others, the GM executive said that ''competitors everywhere are scrambling to get a foot in the door.''
Besides battling the importers, the domestic carmakers are energetically fighting one another as well. Ford Motor Company, for instance, is vying bumper to bumper with GM as the future-trend design leader among US car producers. Now solidly committed to the ''aero look,'' Ford took a chance that has richly paid off.
Ford's spiffy new sports coupe, the aerodynamic Merkur (pronounced Mair-KOOR) XR4Ti, is a good example of what is happening more and more to America's car producers. Launched in Europe only two years ago as the Sierra, the West German-built Merkur XR4Ti is the first of what could be a series of crisply designed new cars, under the Merkur label, which Ford Motor Company will import into the US. (Merkur is the German word for Mercury.)
The Pontiac 6000 STE and Chevrolet Celebrity Eurosport also reveal the European impact on design as well as road feel. GM has further intensified its ''import chase'' with its wedge-shaped, front-drive Pontiac Grand Am, Oldsmobile Calais, and Buick Somerset Regal.
As part of its long-range competitive strategy, the domestic industry is also reshaping its corporate structure.
Under the leadership of chairman Roger Smith, GM is tightening its entire operation, shedding huge layers of efficiency-robbing fat and devising new ways to react much faster as shifts in consumer buying preferences show up in the marketplace.
The world's biggest carmaker has finally discovered that the mid-1920s way of doing business is far too unresponsive in today's globally competitive marketplace.
Ford Motor Company also has thrown open the windows in its ''glass house'' headquarters in Dearborn. The company's new aerodynamic shapes - Tempo/Topaz, Thunderbird/Cougar, and Continental Mark VII - result from its highly successful European operations and the continual cross-flow of on-the-rise executives between the US and Western Europe. The present chairman and president of Ford also headed up the European contingent before they reached the company's summit in Detroit.
For a number of years the US auto producers have also had product relationships with the Japanese: GM with Isuzu, Suzuki, and now Toyota as the result of the joint car-production facility in Fremont, Calif., due to start up by the end of the year; Ford with Mazda Motors (formerly Toyo Kogyo); and Chrysler with Mitsubishi.
All of this collaboration has a dramatic impact on the quality of the products carmakers build. Further, GM is learning a hard-nosed lesson in the management techniques that allow the Japanese to build a car at far less cost than the domestics.
The company's Fremont assembly plant will soon build a version of a Toyota car, to be called the Chevrolet Nova, which is vigorously opposed by Chrysler as unfair competition.
What the Federal Trade Commission-approved joint venture will do, of course, is enable GM to see how a Japanese plant operates from the inside, while Toyota can test its ideas in the US at much less cost than putting up an all-new facility as was done by both Honda in Ohio and Nissan in Tennessee.
American Motors Corporation, in order to survive, found its white knight in Europe. Renault, the largest car producer in France, has pumped hundreds of millions of dollars into AMC and now owns more than 46 percent of the company.
With the exception of Jeep, future AMC cars will originate in France and be Americanized in the US along the lines of the French-based Renault Alliance and Encore.
Meanwhile, a four-year, seven-nation study on the Future of the Automobile, directed by the Center for Transportation Studies at the Massachusetts Institute of Technology, concludes that the world automotive industry ''faces a long tightrope walk to a brighter future.''
But the automobile is not doomed, the report says. Automakers will continue to produce cars ''far into the future,'' despite the doomsayers who predict the end of the car as the world now knows it.
Indeed, there may not even be a significant decline in the number of carmakers, even though it has been widely forecast that the number of producers will contract to perhaps a half dozen within the predictable future.
This prediction is no longer valid, the report asserts.
Some of the world's smaller companies, for example, are thriving, among them Sweden's Saab and Britain's now independently owned Jaguar.