Tuesday, May 17, 2016

BBC NEWS Business The decline of Detroit

Global coverage News on Bloomberg TV



Laura Wilshire, Toyota worker, Georgetown, Kentucky.
She doubled her salary when she joined Toyota, and the company provides a good health care plan for her family, including dental coverage for her two children.
And she says that Toyota has also helped to provide better schools for her children by putting money in the city budget.
According to her, most of the workers are expected at Toyota than her previous job in a convenience store, but she doesn t mind taking responsibility.



If isn t right seat belts, I stop the line until it is fixed - which is an important issue as it could affect the safety of people.
Toyota encourages workers to take personal responsibility for defects, and work together to fix them.
This has given them a well-deserved reputation for quality and reliability - and the Camry has been the best selling car in America for the past decade.
Toyota has no trouble hiring the right sort of workers - 100,000 people applied for the 3,000 jobs when the plant opened in 1990.
Laura says she feels sad when she reads in the newspapers about what is happening to autoworkers in places like Flint.
Now, according to Professor Garel Rhys of Cardiff University, the three major US are facing their greatest challenge ever in their entire history of post-war.



This led to lower US automakers in their home market.
While it was inevitable they eventually lose their monopoly position, their inability to adapt their production methods and meet changing consumer tastes has accelerated their decline.
Flint, Michigan, GM's production center, was once a thriving community.
In 1955, the world looked like a very different place.
Four out of five cars in the world were made in the United States, half of them by GM.
No other car manufacturers had the capital or expertise to enter the global automotive business.



Main US rival GM, Ford, was half its largest foreign automaker size VW, was little bigger than GM's own German subsidiary, Opel and only had one model - the VW Beetle.
And Toyota was not even on the horizon He made 23,000 cars in 1955 in Japan, against 4 million manufactured in the US by GM.
But the near-monopoly conditions in the high complacency of the US market - and the assumption that the American leader in technology and marketing was unassailable.
Ford and GM dominated the US auto industry in the l960s.
According to Stephen D Arcy, head of global automotive practice at Pricewaterhouse Coopers, in the long term the US monopoly was an unsustainable anomoly.
In the 1950s and 1960s, US firms failed to innovate in the design of the cars, preferring to make money by increasing the size and weight of their vehicles by adding extras such as air conditioning, power steering and systems fancy sound.



It was left to European manufacturers to develop disc brakes, power steering rack and pinion, air-cooled engines and diesel.
And mass production system discouraged innovation because it was so expensive to introduce fundamentally new models.
Meanwhile, Toyota made a virtue of adversity, changing its production system to become leaner and more efficient than its competitors.
It was the oil crisis in the 1970s that first illuminated the problems of US automakers.
Lean Production is easy to say you will, but harder to actually implement.


James Womack, author, the machine that changed the world.
For the first time, smaller cars were the rage, and US consumers found that cars like the Toyota Corolla were an attractive alternative to big American cars.
Imports of Japanese cars soared in the 1980s, to the chagrin of US companies and trade unions alike, taking nearly a quarter of the US market.
And when the companies pressured the US government into limiting imports from Japan, Toyota and Nissan started building car plants in the US.
In 2005, the Japanese transplants were producing 4 million cars a year, a quarter of US output, and more than GM.



The Japanese located their plants in low-wage, non-union areas of the US and brought new production methods, more flexible as well.
Therefore, they could make money on small cars and change models more frequently.
US automakers have tried and failed to design a competitive small car.
They also experimented with Japanese production methods but seemed to do the trick and close the quality gap.



According to James Womack, author of the influential book of the machine that changed the world, it was easy for everyone to say they accepted lean production, but much harder to actually implement.
If the 1980s was a decade of fear, the 1990s represented a false dawn.
With oil back to 18 a barrel, the US companies thought they had the answer to the Japanese threat - the SUV sport utility vehicle.
As light trucks, SUVs were protected by a tariff of 25 import and also escaped government rules laid down to increase energy efficiency.
SUV sales rose 60 1-4000000 with the three major sales - and almost all of their profits - coming from SUVs.
The SUVs transformed the fortunes of Chrysler, dominating with its Voyager minivan and Jeep Grand Cherokee and Ford which had the best-selling SUV, the Ford Explorer.



Cars have proven to be a costly mistake for Detroit abandoned when it became clear in recent years that environmental concerns were here to stay.
Last year, the price of gasoline in the US reached a record 3 per gallon in most states.
As a result, SUV sales slumped, and the sale of smaller vehicles rose.
At this year's Detroit Auto Show, Ford and GM made clear that they take the environment seriously, and produce concept cars to electric drive.
But these cars are years, even decades, away from reaching the public, while Toyota is already also its hybrid electric motor gasoline throughout its range.



In 2006, Ford and GM finally accepted they would never dominate the US car market as in the past.
Detroit still puts on a glitzy image at the annual motor show.
They both announced huge downsizing programs, cutting 70,000 jobs between them.
And Chrysler - now owned by German firm Daimler - also announced its own downsizing program and is effectively up for sale.



There is a real doubt in the industry that all three can survive.
GM hopes to survive as a global car company that operates increasingly outside the United States.
And Ford may survive by selling some of its more profitable European subsidiaries.
But even if they succeed, it is sad end to what was once a central element in the American industrial dream.








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