THE EVOLUTION of the American automobile industry is now proceeding with great speed. Change on this scale is never comfortable, but it doesn't have to be disastrous. Companies and unions are now moving rapidly to develop strategies to meet it, and this week's events offer at least a bit of hope.
The stockholders of American Motors voted to sell control of their company to Renault, to raise urgently needed capital. Behind this decision lies the truth that the number of automobile companies throughout the world is going to decline sharply in the 1980s, through the failure of some and the consolidation of others. The enormous capital requirements to produce the next generation of automobiles is going to eliminate all but the strongest competitors. Renault has great resources -- it's owned by the French government -- but it knows that the European market is going to get very crowded in the years ahead. It also knows that, to survive, manufacturers will need access to very wide markets.
American Motors had earlier agreed to manufacture Renault cars in this country. But the financial strain on American Motors has become far greater than it expected as recently as a year ago, and, instead of a partner to Renault, American Motors now becomes a subsidiary. But the company, its factories and its dealers' network will remain in operation, becoming part of a much larger and stronger company. That's a very welcome solution to American Motors' crisis.
The Chrysler Corporation, harshly squeezed by high interest rates and depressed sales, has returned to the United Auto Workers for further concessions under its labor contracts. Now the Ford Motor Company, watching this unorthodox bargaining, has said that it will ask the union for rollbacks of similar size to any that it gives Chrysler.
Over the past decade, wages and benefits in the automobile plants have risen much faster than in most American industries. Ford, like most other automobile companies, concluded some time ago that it could not afford prolonged strikes and, at that point, its wages began to soar out of proportion to the national average. That helps explain the American companies' high manufacturing costs, in comparison with their Japanese competitors'. For unions, there's often a choice between higher wages and more jobs.But in the automobile industry, that choice has become starkly clear. The prospect for Chrysler is not promising, even with further concessions from the UAW. But for Ford, that kind of concession could be extremely important. To have this choice under discussion, publicly and explicitly, is healthy both for the companies and the people who work for them.