Can Detroit's Automakers Save Themselves?
When I was in high school, my parents gave me 15 shares of General Motors stock, worth maybe $600, and a lecture on investing in America. This is a great company, they said, and now you own part of it. Hold on to it, and your investment will grow.
They had that confidence, even coming out of the Great Depression, because they knew how deeply entrenched General Motors and its products were in the American way of life. It wasn't just Dinah Shore singing the jingle: "See the USA in your Chevrolet." Yanson Chevrolet was just down the street from my dad's dental office, and when parts started wearing out on one year's model, Burt Yanson would offer him a trade-in, and a new Chevy would go into our garage.
I never sold that GM stock, partly out of respect for my parents and partly because I could witness the steady conversion of its dividends into additional shares and the rise in the stock price from year to year.
Now, all the accumulated shares of some 60 years are worth less than what my parents paid for the original 15. As a taxpayer, I, along with millions of others, am now a creditor of GM and Chrysler. But looking at both of them, what I feel is mostly regret.
The American automobile industry is a victim of altered circumstances and self-inflicted wounds -- maybe more the latter than the former.
When I started visiting Detroit regularly as a political reporter in the late 1950s, local mentors were already discussing the parochialism of the Big Three executives and their families, living the good life in their suburban enclaves. As long as they were competing only among themselves, they were fine. But when the world came knocking at Detroit's door, they were caught napping.
My parents never thought of buying anything but an American-made car. Nor did I -- until the Army sent me to Europe in the early 1950s and I saw the early-model Volkswagens and Renaults and Fiats, little, cheaply made vehicles that ran forever on a tank of gas.
I bought a used Fiat Topolino -- a Mickey Mouse car -- to use on weekend passes, and though it was so underpowered it barely made it up a sizable hill, it served its purpose. But I sold it when my tour of duty was over, and I bought a Plymouth here at home.
By the time John Kennedy was in office, we had four young sons. Hauling them and their supplies to our summer cabin in Michigan became the real transportation challenge. Nothing else had the same roominess and economy as the Volkswagen buses -- high-standing boxes on wheels that started showing up about then. We bought a succession of them, used. Their fan belts snapped as easily as rubber bands but were cheap and easy to replace.
And then came the Japanese, quickly overcoming a reputation for shoddiness and challenging Detroit on its home turf. It wasn't just Japan signaling that times were changing. George Romney (Mitt's father) began turning out sporty Ramblers at the Nash plant in Wisconsin and stole a chunk of the economy market from the Big Three.
By the time the Republicans held their national convention in Detroit in 1980, it was clear that the American auto industry was in real trouble. We stayed in a rented house in Grosse Pointe during the convention, and our neighbors were candid about the worries they heard at work.
It is now almost three decades later, and the surviving companies and their dealers, creditors and workers finally are making the desperate adjustments this deteriorating situation requires.
Can the Big Three survive? I certainly hope so. But when I see what has happened to the city of Detroit -- the homes boarded up, the streets emptied, the newspapers starved -- I have to wonder. This industry has ignored so many warning signs. Can it still respond?