By Jonathan Yardley
Sunday, January 17, 2010; B08
The American Automobile Industry's Road from Glory to Disaster
By Paul Ingrassia
Random House. 306 pp. $26
P aul Ingrassia of the Wall Street Journal, who covered the American auto industry for a quarter-century and probably knows it as well as any journalist, begins this account of its spectacular collapse by describing something called the "Jobs Bank." No, I'd never heard of it either. It was established by the manufacturers and the United Auto Workers in the 1980s "to provide temporary security for hourly workers on layoff," but "by the 1990s laid-off workers could remain 'bankers,' as they were nicknamed with knowing irony, for an unlimited time, making 95 percent of their wages while not working." This in turn led to "inverse layoffs," wherein "senior workers volunteered to be laid off and thus bumped junior workers back onto the assembly line."
Ingrassia asks: "After all, why should a worker with high seniority slave away building cars when workers with lower seniority collected virtually full pay just for sitting around? Such was the logic of Detroit's dysfunction." Indeed, "dysfunction" barely begins to cover it. "Self-destructiveness" or "insanity" would come a lot closer. Yes, by the time the feds finally forced General Motors and Chrysler into bankruptcy last year, most sentient Americans doubtless were aware that the domestic auto business was a mess, but in order to understand just how much of a mess it was -- not to mention how it got that way and how, if at all, it can be cleaned up -- you really need to read "Crash Course." Ingrassia is not the most gracious prose stylist on the planet, and his efforts to weave in the stories of a car dealer in Maine and father-and-son auto workers in Illinois tend to get lost in the bigger picture. But this is a vivid and wholly persuasive depiction of what can happen when "confrontation instead of cooperation" between labor and management becomes the "default mode" of operation.
"Hubris and sclerosis had been building for years in Detroit," Ingrassia writes, "in a heedless union and feckless managements." This isn't a story about good guys on one side and bad guys on the other, because for decades there was more than enough badness on both sides -- arrogance, incompetence, tunnel vision, irresponsibility, selfishness -- to satisfy even the most morbid screenwriter or novelist's desires. Along the way the occasional good guy makes a cameo appearance -- William Clay Ford Jr. and Alan Mulally, the man he hired to rescue the family business, being the most notable of recent vintage -- but this is such a rare occurrence you almost want to stand up and cheer.
For three decades after its inception in the early 20th century, the auto industry was a work in progress, with companies starting up and disappearing, gradually sorting themselves into what became mythologized as "the Big Three" -- GM, Chrysler and Ford -- with smaller companies such as Studebaker, Packard and American Motors playing lesser (but in some cases important) roles in the shadows. Labor relations did not really become a problem until the 1930s, when the combination of the Depression and rising union militancy brought the issue to the fore. Management, to put it charitably, did not meet the challenge well. Though leadership in other industries was intransigent at the time, it was especially so in Detroit, where striking and/or protesting workers were met by security guards or local police who used "tear gas and billy clubs," especially those under the thumb of "Ford's thuggish personnel chief, Harry Bennett," a truly villainous character even by the standards of 1930s Detroit.
The result was that once the UAW won recognition and began to organize the labor force, a mood of intransigence had calcified on both sides. "The UAW's early battles fostered antipathy toward the car companies that would stay with the union forever," and by the 1970s -- under the bellicose, short-sighted leadership of Leonard Woodcock -- the union "made gains in wages and benefits, but it also single-mindedly emphasized protecting the rights of workers, often without expecting workers to fulfill their responsibilities." A case in point:
"When a machine broke down and stopped the assembly line, workers would take an unscheduled break and wait for an electrician or machinist instead of rushing to fix it themselves. Only skilled tradesmen were allowed to repair machinery, even if ordinary workers were capable of doing it -- rules enforced not only by the national contract but also by the separate local contracts at each factory. The electricians or machinists often took their time getting to where they were needed, so that the plant would have to go into overtime to make up for lost production, and everybody would get more money."
Management was effectively complicit in this. Managers "understood the problem but deemed giving in to the union to be the path of least resistance -- especially because consumers had to pay up regardless." If you've ever wondered why a Detroit clunker often costs significantly more than a comparable and vastly superior import -- or a car with a foreign nameplate but manufactured in the United States -- there's your answer, though it's necessary to throw into the equation the greed, arrogance and complacency of management, which established elaborate, pampered hierarchies and a bureaucracy to serve them that made the Pentagon seem a model of efficiency. At GM there actually were separate men's rooms for salaried and hourly-wage workers, "part of an apartheid system in which the behavior of white-collar managers constantly sent humiliating reminders to blue-collar workers that said, in effect, 'I'm better than you are.' "
While Detroit was bogging itself down in rules and regulations, not to mention pensions and health-care guarantees that gave retirees a lifelong free ride, foreign companies -- especially the Japanese -- were showing how to make cars that not merely were significantly better but were more responsive to rising environmental concerns and could go years between trips to the repair shop. Not only that, but once they started manufacturing in the United States, they proved that American workers were entirely capable of responding positively to management that welcomed their ideas about improving assembly-line efficiency and even treated them like mature adults.
Detroit's answer to all this? The SUV, the pickup and, most egregious of all, the Hummer, all of them road-hogging gas guzzlers, each of them "the perfect complement to a Patagonia windbreaker: a fashion statement, the sports-car substitute for soccer moms." For a while these monstrosities gave Detroit an adrenalin boost, but that lasted only so long as gas was cheap and the economic bubble was still inflated. When gas climbed toward $4 a gallon and the bubble popped, Detroit self-destructed with extraordinary speed. Ford, which had taken precautionary steps earlier, managed to avoid government rescue and bankruptcy, but GM and Chrysler, after decades as kingpins of the American economy, were humiliated.
Many people wondered whether bailouts were the right solution to their problems, but there was surprisingly little schadenfreude. The companies may have deserved to go down, but few people wanted them to do so. It remains to be seen whether the various efficiencies in which they and the union most reluctantly acquiesced are sufficient to allow their recovery, but all of us have more reason than ever to pray that they make it. After all, now we're their bosses.