By Sholnn Freeman and Dale Russakoff
Washington Post Staff Writers
Saturday, December 23, 2006
Toyota said yesterday that it was on track to become the world's largest automaker next year, dethroning General Motors and underlining how far auto manufacturing has fallen from its once-pivotal place in America's economy and politics.
The Japanese automaker's potential dominance will sharpen the spotlight on the industry's problems when Congress reconvenes in January. Members from Michigan, led by Rep. John D. Dingell, have pledged to use Democratic control of Congress to help U.S. automakers.
"If Toyota's worldwide production surpasses General Motors', it will simply provide further evidence of the need for the U.S. government to pursue policies that maintain and strengthen the U.S. industrial base," Dingell said yesterday.
Instead of coming to Detroit's defense, other Democrats, including Sen. Barack Obama of Illinois, said Congress will be more inclined to push U.S. automakers in a new direction. Given how far the companies have fallen, members of Congress are likely to target issues of environmental awareness and fuel economy, areas where the Japanese automakers lead.
Sen. Barbara Boxer (D-Calif.) said she wasn't surprised by Toyota's growth. "I have long said that fuel-efficient automobiles in America would be the ticket to larger and larger market share," she said.
Evidence of the U.S. decline in auto manufacturing has mounted as foreign automakers press further into the U.S. market. Toyota has the top-selling car in the United States, the Camry, and the best-selling hybrid, the Prius. Just last month it opened a plant in San Antonio to build its Tundra pickup truck, targeting the last segment of the market dominated by U.S. manufacturers.
"Toyota just seems to be this behemoth that keeps moving along," said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass.
Meanwhile, the U.S. auto industry is staggering though a dark period. Plant closings have been announced from Atlanta to Oklahoma City, resulting in the loss of tens of thousands of jobs.
The decline of the U.S. automakers has also been seen in other ways. In the 1950s and 1960s, presidents turned to the leaders of GM and Ford to be their defense secretaries (Eisenhower to GM's Charles E. Wilson and Kennedy and Johnson to Ford's Robert S. McNamara). General Motors was synonymous with modernity, bigness and efficiency.
"It used to be that LBJ or Nixon would fly to Detroit and give a talk to the Detroit Economic Club and that would set economic policy for a year," said Nelson N. Lichtenstein, director of the Center for Work, Labor and Democracy at the University of California at Santa Barbara. "Contrast that to nowadays, when the presidents of the Big Three wanted an audience with Bush and it took them about a year to get it."
The clout of Japanese automakers has steadily grown in Washington as their factories have sprung up in the South. U.S. auto companies and the United Auto Workers union are still able to get some of what they want. So far, they have been able to stave off mandates from Congress, such as substantially more stringent fuel-economy standards.
For U.S. workers, the prospect of a smaller Big Three and a bigger Toyota means continuing pressure on high-wage jobs with health and retirement benefits, according to Lichtenstein and Chaison. GM, Ford and Chrysler are unionized, but the United Auto Workers has been unable to organize workers at Toyota, Honda and other so-called transplants, which operate mostly in Southern states where there is little union tradition.
Toyota employs 39,000 workers at six vehicle assembly plants in North America, including four in the United States. GM had 141,000 U.S. workers at the end of 2005, the latest date for which figures were available, compared with 464,000 in 1962.
The foreign companies pay comparable if slightly lower wages than the U.S. companies, but they do not have the expensive retiree health and pension benefits that General Motors says add $1,500 to the cost of each U.S.-made car. As the unionized sector of the industry shrinks, labor specialists said, the transplants will be under less pressure to pay wages comparable to those earned by union members.
Toyota said yesterday that it would build 9.4 million vehicles worldwide in 2007, 4 percent more than in 2006. Analysts estimate that GM's production will be 9.2 million vehicles this year. GM, which has 24.4 percent of the U.S. market, hasn't said how many vehicles it plans to make next year.
Some analysts said the race for supremacy isn't over, noting that GM is expanding in Russia, India and Thailand and that the lead could change again and again in coming years.
Brian Akre, a GM spokesman, said executives are focused on remaking GM into a more competitive, leaner company that can sustain profitability.
"We won't alter our North America turnaround plan or sacrifice our profitability for the sake of one superlative," Akre said.
Many of Toyota's top executives are U.S.-born, worked at U.S. auto companies and have roots in the Midwest. They have expressed concern for the U.S. companies' problems. But at the same time, they've poured on the pressure.
Jim Press, Toyota's U.S. chief executive, echoing company officials in Japan, said Toyota is following its own path and did not have GM in its crosshairs. He said Toyota would continue to expand manufacturing, research and design operations in United States.
He said Toyota's sales were powered in the U.S. by growing consumer demand for small cars and hybrid-powered sedans and sport-utility vehicles.
"We had the foresight to start hybrid development earlier than other companies," Press said. "This year we will sell more hybrids than Cadillac will sell cars."
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