Dr. Errington Thompson

I hope everyone has a peaceful and prosperous 2009. I know it’s going to be extremely difficult when we have been living through the worst recession since the Great Depression. Still, that doesn’t mean I can’t hope that we will have the prosperity that we all deserve.

Holman Jenkins, a columnist for the Wall Street Journal, recently wrote an op-ed entitled “Let Detroit Build Profitable Cars.” In his article, he spins a web of half-truths, but his point is that the rules of the Corporate Average Fuel Economy (CAFÉ) have killed Detroit, and that therefore these rules need to be relaxed.

This is representative of the types of arguments that conservatives have been coming up with over the last several months. Some have been arguing that pensions are the problem. Others are arguing that the United Auto Workers caused the problem. Still others have taken the position that too much regulation is what has killed Detroit.

Any honest assessment of Detroit must start with a hard look at the management of GM, Ford and Chrysler. Let’s just take a gander at the auto industry over the last 40 years. Throughout the 1970s and ‘80s, Detroit lost the market share to BMW, Mercedes-Benz, Lexus... and to Honda and Toyota. They thumbed their collective noses at the US consumer and made very little attempt to change. It was only in the ‘90s, when Honda was building the bestselling car in the US, that they woke up. These corporate executives completely failed.

Let’s look at the Lexus ES 330. What American car can come close to this entry-level Lexus? Take your time. I would suggest that the Cadillac CTS is a close competitor, but if you equip them the same, you will get more for your money with the Lexus. True, the Caddy is faster, but you get better service with your Lexus and it will last longer. Ford doesn’t have even one car that comes close and Chrysler hasn’t built anything close to rivaling this.

With the ES 330, Lexus has targeted a group of Americans who are upwardly mobile and who have (or had before the crash of October 2008) cash... That’s right. Yuppies.

Okay, what about the BMW 3-series? What American car can compete head-to-head with the all world 3-series yuppiemobile? Not one American car manufacturer has anything comparative to offer. The Caddy had a BLS model that was a bust. Ford has nothing. Chrysler! Let me stop laughing before I hurt myself. So, basically,

American manufacturers have written off a whole class of Americans who have money and would like to have a nice, dependable, reliable driving machine. This corporate strategy is crazy, and it is precisely why Detroit is failing.
So, when I hear conservatives whine about how much CAFÉ costs, how much the UAW costs or about the cost of pensions, I laugh, because Detroit wasn’t even trying for over 20 years. They knew that Americans would buy American products so they didn’t care. So I don’t have much patience for those who say that government regulation or pension costs are killing Detroit. Detroit is killing Detroit. I think the evidence is clear.

Let me add, I am not against the bailout. I’m against the way in which conservatives continually mislead the rest of us about why Detroit has failed. I am ready for Detroit to build a car that will be as reliable, as maintenance-free and as fun to drive, while remaining competitively priced, as the Honda Accord.