THE FORD MOTOR Company's testimony in the imported automobile case is an outrage of the more predictable sort. Ford wants the International Trade Commission to recommend quotas on the cars, especially Japanese cars, imported into this country. The ITC appears to be skeptical -- for good reason.
Its decision will probably depend on its view of the nature of competition in the American automobile market. The conventional perspective, vigorously advocated by Ford, is that the American companies were doing their job, meeting the tastes and standards of American consumers. Then, suddenly -- for unfathomable and unforeseeable reasons -- American buyers' tastes changed. Because it is blameless, Ford argues, it is entitled to protection while it adjusts to the new fashions in cars.
But there's another view of recent history -- the right one. It was laid out, among other places, in the House trade subcommittee's illuminating report on automobiles last June. This view holds that the real competition has not be between American and Japanese manufacturers, but between small cars of all origins and the big ones. The trend to small cars accelerated rapidly when the price of gasoline started up, in the 1973-74 oil crisis. Then came one year, 1976, when the small cars' sales fell sharply. Ford apparently took that one-year setback as a signal that small cars were merely a passing fad. But the share of the market held by the small cars -- domestic and foreign together -- rose every year from 1976 to the present. The American manufacturers were unable to follow this trend. While they lost sales of their big cars, the entire increase in the small cars' share of the market from 1976 through 1979 went to the importers.
Now that the American industry has a handsome new generation of its own small cars in production, that pattern is likely to change. But there are much more advanced cars to come, and a great deal depends on which companies, in which countries, produce them first.
Quotas would immediately cut the supply of small fuel-efficient cars to the American buyer. That would raise the prices of the imports and, indirectly, the domestic cars. Those consequences alone are grounds enough for the ITC to refuse protection. But quotas would also have a further effect -- to slow down the rate at which the American manufacturers develop and produce the new models. With the pressure of foreign competition abated, why not convert a little less hastily and make a little more money?
Ford argues that a major American industry is under attack, and the outcome may well have a broad influence on the country's future prosperity. That's true. Quotas, by shutting off the only real competition to the American manufacturers, are an invitation to procrastination and slack performance. That's why quotas are the wrong remedy.