The Real American Auto Industry

As crocodile tears are shed for GM and its now penny shares of stock, commentators are also mourning the demise of the American auto industry. While I also regret the loss of jobs at the former “Big Three”, the truth is that the American auto industry is alive and well - - we’ve just been looking in the wrong place.

 

The front page of the June 1st 2009 New York Times shows a bar chart of GM’s sales for the past 50 years. In the 1960s, GM sold over 4 million cars a year and under a million trucks. By the first decade of the 2000s, GM was selling under a million cars each year and over 2 million trucks. Of course SUVs were the real product, because GM put those living rooms on wheels atop truck chassis. Looking at that sales progression over time, it’s clear what happened to GM and its Detroit brethren. Instead of producing efficient vehicles in appropriate sizes for the marketplace, they gambled on what appeared to be more profitable gas-guzzlers and, like anyone else in Vegas, finally went bust.

 

Meanwhile, on May 13th, Honda announced that it will begin manufacturing cars, powered by cleaner burning natural gas, in Greensburg, Indiana (see www. civicgx.com). The engine for this greenhouse gas-busting marvel will be manufactured in Ohio. Lots of suppliers will do lots of business with these factories in many surrounding states. Sounds like the American auto industry to me.

 

It sounds even more red-white-blue when you realize that Honda has been manufacturing cars in the US for 40 years already and has invested more than $12 billion in its North America operations, including 16 major manufacturing facilities with more than 35,000 employees. These very American factories also produce millions of motorcycles, lawn mowers, and small engines for everything else. That’s not just the colors of our flag, it’s the color of money flowing into our economy.

 

So let’s cancel the wake for Detroit and celebrate the emergence of the real American auto industry - - the one that also boasts management and investors who were smart enough to respect their planet, people, and long-term profits instead of risking everything for fool’s gold. There may be some useful lessons in this for other shrinking “American” industries in these tough economic and environmental times.

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2 Comments

  • Mike Austin

    Yup, that's absolutely right. Detroit spent their time (as did we as consumers) on the wrong stuff. This change is all about the right values at the right time to preserve who who want to become. R.I.P. old Detroit. Ring-in sustainable transportation and rise the occassion!

  • Gregory Ferenstein

    I think you make a good point: we need to redefine what "American" is. Is a foreign company that produces cars in the united states less American than a domestic company that produces parts in India? In a globalized world, if we don't redraw our mental boundaries, we're going to miss a lot of opportunity.

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