Remember the theory of "the level playing field"? That was the notion, espoused by automotive luminaries Lee Iacocca at Chrysler and Roger Smith at General Motors, among others, that American auto companies ought to be able to compete on equal terms with Japanese car manufacturers. People bought Japanese cars instead of American cars, said Iacocca and Smith, because the yen was undervalued.
The Japanese weren't playing fairly, they said. Cheap money and cheap labor were luring millions of Americans into abandoning their Buicks and Mercurys and Dodges for the sake of autos bearing the names Toyota, Nissan and Honda. Worse, the United States had played its traditional role as the naive and good-hearted dupe, welcoming the interlopers into its parlor. If the Japanese were feasting on an international monetary imbalance that gave the yen an insurmountable advantage over the greenback, the automakers said, the solution was to get the numbers back in line, which would make yen-backed products more expensive.
Others, including those who lobby for the United Auto Workers on Capitol Hill, whined that the situation required more Draconian measures. Local content was the answer, they said. Congress should make the rascals produce automobiles with components made in the United States. That, of course, would result in parts made by U.S. auto workers earning nearly $25 an hour.
Now the situation between the yen and the dollar has been reversed, and the automakers' excuses have been stripped away. The yen has risen to a point probably unimagined by Iacocca and Smith just a few years ago. Japanese automobiles are no longer cheap. In the last two years, the prices of many Japanese autos have shot up 30 percent. Dozens of Nissan and Toyota and Mazda models cost more than $14,000. Several autos in Honda's Acura line sell for Mercedes-Benz prices.
Local content is no longer a viable excuse because Japanese automakers, including Honda, Toyota, Mazda, Nissan and Mitsubishi, have made commitments to manufacture cars and trucks in America. Ironically, wages and working conditions are so good in such complexes as Nissan's Smyrna, Tenn., plant and Honda's Marysville, Ohio, factory that the United Auto Workers has been unable to organize.
With sticker shock now associated with Japanese products and American prices relatively stable, bleatings about "level playing fields" have been muted. If Iacocca and Smith had been right, one would have expected the American public to abandon its fascination with Japanese automobiles. But the zooming prices of Japanese autos have not sent buyers back to American showrooms. Although 1988 sales of Japanese cars are expected to drop from about 2.3 million to 2 million, industry analysts say that slump would be amazingly small considering the uncertain economy and a market flooded with cars.
The fact that moguls like Iacocca and Smith have avoided for these many years is that the Japanese have been designing and building better products than Americans. It's that simple. Wise consumers will pay a premium for value, and while the bargains of yore are gone, the Japanese automobile will remain a factor in the American market because it is perceived to be extremely functional, economical to operate and highly reliable.
To be sure, some American automobile executives have perceived that the American auto is not well built and designed. Most of them work for the Ford Motor Co., which has responded with an excellent product line and is being properly rewarded in its showrooms. General Motors has just gotten the word and is frantically trying to catch up through a massive streamlining of its work force and manufacturing facilities (more about General Motors' enlightenment next week). Chrysler, thanks to its wondrous mini-vans, has remained in the hunt, but the day will arrive when the last K-car clone, now a 10-year-old design, will no longer be salable. New products, costing billions, will be necessary, and with so much expended in the acquisition of AMC-Jeep, it is probable that the "new" Chrysler Corp. will become increasingly dependent on its giant Japanese partner, Mitsubishi.
The automobile business is simple: It's not based on how much cars cost; it's based on product. The company that designs (the word needs emphasis because it has been so long ignored in Detroit) and efficiently builds quality automobiles will sell them. The Japanese understand that. And, finally, so do an increasing number of American auto executives. ::