The Big Three have dug their own grave with mismanagement, greed, and bad quality. There is an old saying: Screw me once and shame on you, screw me twice and shame on me. Lets take a look at how the Big Three have opened the doors and literally invited in foreign competitors by deceiving and cheating the American car buying public.
Sometime in the fifties they concocted a fabulous money making scheme: Planned Obsolescense. They engineered cars to start breaking down sometime after the warranty expired. Parts that were hard to get to, and expensive to replace, failed first. When people got tired of spending money on repairs, they would opt for another new car, or so the theory went. Since all of the U.S. car companies did the same thing, if you got sick of a Ford, and bought a GM, it would not matter, because someone who was sick of their GM constantly breaking down would buy a Ford.
Then they tried to increase profits by applying pressure to vendors who supplied parts. They wanted cheaper, cheaper, cheaper. The only way parts manufacturers could cut costs was to cut quality. They bought cheaper materials, made people produce more, and cut inspection. When I was at Ford I saw a steady decline in the quality of purchased components. At one point I had to assign men to cull through purchased parts to find good ones, and what passed for a “good” part kept declining until we used everything Ford purchased, because none of the components met written quality specifications.
Then there was the war in the auto plants. The war between management and labor. Management used techniques from the 1920s, and the UAW fought them at every step. Both quality and productivity were casualties of these in-plant battlegrounds. Sabotage was sometimes passive, where bad quality was let go out of indifference. Other times it was intentional, active sabotage because producing bad quality was seen as a blow against the enemy: dictatorial managers, some of whom belonged behind bars.
Finally, there was benign neglect of maintainance. Machines were patched up and made to run, even if they were not running right, or could not run to the quality specifications. In Department 251 at the Sharonville Transmission Plant there was a machine that would run only if the operator put a gigantic rubber band on an arm that wobbled as it made up and down strokes. In Department 285 there was a machine that would not run parts that met specs unless the operator inserted the back of a paper match book between two slides whose bearings were completely shot. In the Press Room sometimes round parts came out of the presses round, and other times they came out egg shaped. In either case they were used to make transmissions.
So what was the result of all this mismanagement, greed, and indifference to the quality of cars being produced? In the seventies and eighties we had the largest recalls in automotive history. We had deadly cars that killed people in fires. We had transmissions that jumped out of park, into reverse, and killed hundreds of people. Consumers Report magazine stated that, in the seventies, the United States of America produced the worst cars of any industrialized nation. Bad automotive quality became an international disgrace to America, and 33 states passed “Lemon Laws” to protect consumers from the Big Three.
This, or course, gave a giant green light to foreign auto companies, who were selling so many cars in the United States that there was, at least in the case of Volkswagen, a three month wait to get your VW. In the meantime, Ford, GM, and Chrysler had their first near death experience, and Chrysler offered $50 to anyone who would even test drive one of their cars. I was in the new car market in 1980, went to a Chrysler dealer to test drive one of their cars, and the salesman could not even get it started. Needless to say, I passed on the $50 prize to test market the car.
The Big Three spent 30 years trying to undo the mistakes that would ultimately cause their collapse. Finally, after decades, American cars are now on a par with Toyota, Honda, VW, and others. Will it make any difference? If you had friends or relatives killed in poorly built American cars, or simply were disgusted with the junk Detroit pawned off on us, are you likely to switch from a Toyota, Honda, or VW that was top quality, to go back and try one of the cars from Detroit? My answer would have to be that this is highly unlikely.
That is why I am predicting that over the next several years Chrysler will fail, as will GM, and both will go back to the government to ask for more of our tax dollars. Ford stands a fighting chance of survival, but it will be an uphill battle all the way. Americans have long memories, and the competition for your car dollar is not going to get any easier going forward.