Anthony Porcelli
Dr. HeitmannHST 48512/11/10
What Goes Around Comes Around: The Boom and Bust Cycles of the U.S. Auto Industry 1979-1989
In 1979, the United States Auto Industry was bouncing back from a crisis that shook its foundations in the early 1970’s. The Arab Oil Embargo of 1973 lead to gas shortages throughout the U.S. and placed a heavy toll on the U.S. auto industry. The price of gas skyrocketed, and driving American-made cars during the shortage meant that people had no choice but to spend the better part of their time in their cars on line at a gas station. Fuel economy in most U.S. cars during the Arab Oil Embargo was pitiful, but that all changed as U.S. car buyers began to opt for foreign, more fuel efficient and reliable cars. The American auto companies began to try to push increased production of their own small cars, compacts, such as the Chevy Vega, Ford Pinto, and AMC Gremlin. This did stabilize the industry for the time being, as their production of compacts competed with foreign small cars. However, in 1979 the industry was struck with another oil crisis. This time it was initiated due to the overthrow of the Iranian Shah. The 1979 oil shock did not last as long as the one in 1973, nor was it as wide spread, but its effect on the industry was much more crippling. Chrysler, one of “the Big Three” U.S. auto makers, filed for Chapter Eleven bankruptcy, sales at Ford and GM dwindled, hundreds of thousands of workers were laid off as U.S. factories were closed, and most frighteningly, GM would not post a profit for a financial calendar year. Yet, all the while, foreign car companies, especially Japanese companies, were seeing both the skyrocketing sales and the opening of their own factories in the U.S. It would take strong, disciplined leadership and production methods, with the desire for actual mechanical and design innovation, to lead the U.S. auto companies back from oblivion. Nevertheless, even if these miracles were granted to the U.S. auto companies, their true test would be to see if they would last.
Perhaps the crisis of the U.S. auto industry would have been averted if the U.S. had not developed such a dependence on foreign oil. Since 1970, the production of oil from the U.S. was declining, and in order to keep American cars on the road, large amounts of foreign oil had to be imported into the U.S.[1] This necessity for foreign oil meant that the U.S. was more vulnerable to the new, major source of oil in the world, the Organization of the Petroleum Exporting Countries (OPEC). A majority of these countries are located in the Middle East where government stability has not always been strong. Because of high tensions in Iran in 1979, they ceased their exportation of oil to the world market.[2] This restriction of oil lead to world shortages and the 1979 oil shock in the U.S. That same year, the World Watch Institute released a report titled: The Future of the Automobile in an Oil-Short World. The report covered the oil crisis and the looming news that no one wanted to acknowledge: the world’s supply of oil will one day expire. At the end of the 1970’s “the world’s annual use of oil began to exceed the discovery of new reserves.”[3] In the report, it is made clear that in order for the auto industry, especially in the U.S., to survive, major changes would have to take place. The report specifically mentions that U.S. cars were becoming heavier, more powerful, and have become “laden with such energy consuming devices such as automatic transmissions.”[4] The World Watch Institute found that it would be necessary for the U.S. auto industry to change with the times and not continue to make bad fuel economy decisions, such as installing V8 engines in ninety percent of its vehicles, as it did in the 1960’s[5]. The era of cheap gas was over, and Detroit was going to have to make changes to remain competitive with the tiny, once openly-mocked foreign imports.
Though the oil crisis was at the forefront of a siege against the U.S. auto industry, there were other domestic factors that threatened it. Chief among these threats were: the push for car safety by the U.S. government, pollution, tradition in auto manufacturing, and lack of innovation and foresight. According to author John Jerome, in his book The Death of the Automobile: The Fatal Effect of the Golden Era, 1955-1970, increased U.S. federal government intervention for the improved safety, and fuel emissions, of automobiles was costing the industry money. The National Traffic and Motor Vehicle Safety Act, passed in 1966, was what put auto makers in their places. The passage of the Act allowed the government to hold the auto makers to higher standards for safety and pollution control.[6] This placed more financial strain to the U.S. auto makers because it added the expensed of installing new anti-pollution and safety devices on all of its cars. This lack of foresight and sluggish response to the new safety laws by the auto makers is an example of their loss of innovation and the desire to continue to produce a better product. Economist and Historian, Emma Rothschild, warned of this in her 1973 book Paradise Lost: The Decline of the Auto-Industrial Age. Rothschild explains: “All the troubles and hopes of the automobile business lead back to a pattern of industrial inertia… the auto industry faces the direst and least tractable problems of social obsolescence.”[7]
With the auto industry being held accountable for its actions by the U.S. government, it was also losing popularity on another issue: its lack of innovation. As Rothschild explains, when the auto industry was in its youth, it was the cutting edge of technology, something of which nearly everyone wanted to be a part. By the early 1970’s, U.S. cars were getting bigger and consuming more gasoline, but they had not had any major design or mechanical changes. Their status in society as class symbols did not mean as much as they had in the 1940’s or 1950’s. However, by the end of the 1970’s it was becoming clear that foreign cars were of a much higher quality than American cars, thus attracting more American buyers. Author John Rae suggests that the American people have always had a predilection for larger cars as opposed to other countries.[8]
U.S. auto manufacturers pushed to keep American buyers buying big cars because the production of large cars is cheaper than smaller ones.[9] However, it took two oil shortages in the 1970’s for the industry to learn that the desires of the American market were turning away from large cars towards compact cars at an alarming rate. Rae explains that a possible explanation of the lack of response in the U.S. industry was that despite the surge in the purchases of foreign cars, “from 1945 until the oil crisis of 1979, sales of motor vehicles in the U.S. moved steadily upward.”[10] Therefore the “Big Three” in Detroit never saw foreign cars as a major threat to the selling of their cars to the American people. In essence, they were caught mercilessly off guard by the effects of the 1979 oil crisis and had no way of stopping the flow of imports until the intervention of the U.S. Federal government. In 1981 an agreement was made by the U.S. government and the Japanese auto makers, the Voluntary Export Restraints (VER). The agreement put a limit on the number of imported Japanese cars coming into the U.S. each year, with the intention of giving the struggling American auto companies a chance to get back on their feet.[11]
Chrysler, the smallest of the “Big Three” U.S. auto makers, was most in need of government interaction by the late 1970’s. Though Ford and GM were not immune to the external and internal threats to their companies, Chrysler’s problems were more dire than the other Detroit auto makers. To make matters worse for Chrysler, it not only had its own issues but was also subjected to all of the threats that Ford and GM faced. For example, while Ford and GM’s major issues were of a lack of innovation, efficiency, and the threat of imported cars, Chrysler’s major problems were a lack of organization, efficiency, and leadership. By 1978 Chrysler was nearly beyond all hope of lasting as a company.
It was that year that former Ford President, Lido Anthony Iacocca, became the CEO of Chrysler. In his book, Iacocca: an Autobiography, he explains just how bad things were at Chrysler when he took over. Chrysler had a surplus of 80,000 unsold cars sitting on the Michigan State Fairgrounds, in what was called a sales bank, “representing $600 million in finished inventory.”[12] Despite this massive inventory, Chrysler was still producing cars which had not been modified in years. Iacocca knew that there would have to be drastic changes made to the organization of business at Chrysler in order for it to survive. 1979 was the year in which Chrysler embarked on a complete overhaul of the way it conducted its business.
The 80,000 unsold cars in a sales bank, no change in the design of a Chrysler made car, a faulty business strategy with car rental companies, and massive debt all faced Lido Iacocca in his first year as CEO of Chrysler. Aside from the $600 million in unsold, finished Chrysler cars the other largest source for Chrysler’s deepening debt was how it made business with rental car companies. Instead of selling their cars to car rental companies Chrysler leased cars to companies such as Avis and Hertz. At the end of the lease contract, Chrysler would then buy back their cars and sell them at auction. According to Iacocca that practice lost $88 million for Chrysler in 1979.[13] These reckless practices, which cost the company hundreds of millions of dollars, infuriated Iacocca. His first major hurdle was to eliminate the sales bank.
The sales bank operated as a wholesale dealer such as Costco. Chrysler would call its dealers from around the country at the end of every month with special offers to sell dealers multiple cars at a low price. Iacocca knew that it would not be easy to eliminate this practice because Chrysler’s dealers had become dependent on buying cars from the sales bank because of their low prices. He made it known that he was eliminating the sales bank because it needed to be eradicated to save money. Iacocca told Chrysler dealers that they had no choice but to buy Chrysler cars from the corporation, and that he had no choice but to sell cars to them. Therefore the elimination of the sales bank and halting of building cars without requests for them from dealers was established.[14] This, Iacocca explains, was not an immediate success. He had to get someone on his management team that would be able to work with the Chrysler dealers for their and Chrysler’s betterment. Gar Laux, a retired Ford executive and partner in a North Carolina Cadillac dealership, was perfect for the job.[15]
Hiring retired Ford executives was a key strategy for Iacocca. He knew most of them and knew that they were hard-working, intelligent men. It is then no surprise that when Iacocca decided to tackle Chrysler’s design issue he hired another retired Ford executive, Hans Matthias.[16] Matthias brought quality and harmony back to the production of Chrysler cars. Matthias and Iacocca made quality a top priority, and they even made a pact with the United Autoworkers (UAW) at Chrysler. According to the UAW-Chrysler Management Quality Program: “Quality cannot get mixed up with other bargaining and be compromised by the usual adversarial relationship between workers and management.”[17] This meant that Iacocca was getting Chrysler on the right track to once again producing a car that the American people would want to buy. Yet Chrysler’s massive debt was still putting a toll on the auto maker, and it was becoming increasingly clear that in order for them to survive they were going to go to the U.S. government for help.
As Iacocca was preparing to appear before Congress to request a massive federal loan, Ford and General Motors were having problems of their own. For the last half of the 1970’s Ford posted billion dollar losses after gaining a reputation for building the worst quality cars of the “Big Three.”[18] GM, in 1981, posted its first financial calendar year loss since the Great Depression losing $763 million.[19] The two larger Detroit auto makers were in need of innovation and new leadership of their own to guide them through the 1980’s foreign and domestic threats to their industry.
GM was able to hold off on taking drastic measures until the mid-1980’s, but Ford needed to take immediate action by as soon as 1980 to be able to continue being a major car producer. In that year, Ford’s market share went down to sixteen percent.[20] This was alarming because since the 1930’s, Ford had been able to keep a market share of around twenty five percent. Though 1980 may have started off as a year with terrible news for the Ford Motor Company, it was also a year for transition for Ford. Henry Ford II retired as the CEO of Ford that year, and the position was passed along to Philip Caldwell. Caldwell’s tenure at Ford brought back the modernization and innovation for which German and Japanese cars had become known and adored.
The President of Ford, Donald Peterson, was leading an effort to make new Fords have a different look than the boxy, sharpe-edged cars of the 1970’s. Peterson used the talents of the vice president of styling at Ford, Jack Telnack, to get the new look that he wanted.[21] The new cars which were scheduled to debut in 1982 were edgeless and did not resemble a box. Called the “aero look,” the design was made to actually be aerodynamic, thus improving fuel economy in Ford cars.[22] This new design strategy was just one way Ford was actively attempting to improve the quality of its cars which was something that Fords were not known for in the 1970’s. The best example of this would be the huge safety issues with the Ford Pinto its exploding gas tank.[23]
To further show that top executives were taking production quality Fords seriously, in 1980, while the company was still reeling from debt, Ford chose to close a modern factory in New Jersey because it was not producing a high enough quality product. The other factory which was under consideration for closure was an older one in Virginia. Ford decided to renovate the factory in Virginia and keep its doors open because the work environment there was strong and, as a result, so was their product.[24] This sent a message to Ford factories all across the U.S.; those producing poor quality products would be the first to close if needed.[25]
There were so many major changes to Ford in the early 1980’s that it hardly resembled the company it was in the previous decade. It was the only major U.S. auto maker to analyze carefully and use the reasons for the market shift to foreign cars to their advantage. The saving grace for the Ford Motor Company in the 1980s, for example, was the Ford Taurus. All of the executives who were responsible for the design and production of the Taurus had foreign experience with Ford.[26] They knew and understood what foreign car companies were doing to improve their vehicles. Author Douglas Brinkly puts it best in his book, Wheels for the World, “The 1986 Taurus was 1,600 pounds lighter than its 1970’s predecessor, the LTD, while delivering only slightly less horsepower from an engine one half as big.”[27] Ford was rebounding, finding better, cost-cutting ways to produce modern, efficient cars. One GM designer even said that the Taurus gave Ford a two year head start in design, and so by 1987 the Taurus was the most popular car in America.[28]
If the Taurus was the single saving grace for Ford, then the K-Car and minivan were the innovations that also saved Chrysler from collapsing. Lee Iacocca was successful in his case to receive a federal loan from the U.S. government, but that meant that the pressure was on for Chrysler to prove to the American people that they meant it when they promised to once again be a competitive auto manufacturer. Chrysler received an impressive, but necessary, $1.2 billion in loans from the U.S. government in 1979.[29] The loans were given with the requirements that Chrysler would have to reduce $3 billion in internal cost to prevent layoffs and a corporate wide pay freeze worth $622 million with concessions from UAW members and another $161 million from salaried workers.[30] Chrysler began to do all it could to save money, and cut costs all the while still managing to produce cars that Americans would actually want to buy.
In his autobiography, Lee Iacocca mentions just how important the success of the K-car was for pulling Chrysler out of the hole. It was the first American made car, he says, that was roomy enough to fit a family of six and light enough to get twenty five miles per gallon in city driving and forty one miles per gallon on the highway. For an American made car at the time, those numbers were quite impressive.[31] The K-car sold very well for Chrysler and by 1981 twenty percent of the compact market belonged to Chrysler.[32] Though the K-car may have saved Chrysler in the early 1980s, Iacocca makes an interesting comment in his autobiography which was written in 1984 and foreshadows one of the reasons for the decline of Chrysler in the late 1980s. “Today the K-car serves as the foundation for almost everything we do. Virtually all our other cars have been derived from its platform, including the LeBaron, Chrysler E Class, Dodge 600, the New Yorker, and to a lesser degree our sports cars.”[33]
Chrysler’s production of similar looking cars with different labels was also heavily practiced by GM. Author Paul Ingrassia calls them the “look alike cars.”[34] GM had been the better off of the “Big Three” until the mid-1980s, when finally the fluctuating auto market and poor leadership caught up with them. In 1981, GM executive Alex Mair released a study which he had just finished on the future of GM in an increasingly global auto market. Mair’s report showed that GM was incredibly wasteful in its production of automobiles, and the Japanese had surpassed them in efficiency. Mair’s report estimated that GM was wasting $681 million per year in inefficient practices such as producing and storing car parts when there were no orders for them to be placed on cars that were being manufactured.[35] That led to a surplus in auto parts which needed to be stored and cataloged.
Mair’s report also concluded that the Japanese automakers were not only producing more efficiently, but also better quality products. Mair and his team came to this conclusion because they took apart cars from their competitors, especially the German and Japanese cars, and compared the parts to those in GM cars. One of the finds that Mair’s team made was from a Honda. The connecting rods that Honda was using, which connect an engine’s piston head to the crankshaft, Mair found to be of a better quality than GM’s connecting rods. This was because Honda had their connecting rods made per order of cars, unlike GM’s custom of making only one kind of piston rod and then manually modifying them to fit each individual engine model, not only raising production time but cost.[36] Mair warned GM Chairman Roger Smith of the dangers of GM continuing to produce cars in the manner in which they had been doing for years. Smith’s responses were to modernize the corporation, update factories in the U.S., but not change production methods, only replacing workers with robots.[37]
In 1986, for the first time in over sixty years, Ford, one-third the size of GM, posted higher profits than GM.[38] Roger Smith’s response to this was to build up GM as a corporation. This was also done in the 1980s by each of the “Big Three” automakers, but Chrysler and Ford were making improvements in their cars and production process in a way that GM was nowhere near matching. Between 1984 and 1989, GM, Chrysler, and Ford bought $20 billion worth of acquisitions combined.[39] For GM, Roger Smith acquired Electronic Data Systems (EDS), a company which GM had been contracted with in the past for all of its electronic and robotic systems and software. With the acquisition of this company, GM also gained a new executive board member, Ross Perot, who was the founder of EDS and remained in charge of it under GM’s ownership.[40] The purchase of EDS worried UAW workers at GM because they thought that GM was going to use the technologies from EDS to replace human workers. The UAW and GM made a contract in which it was specified that if GM replaced a worker with a robot, the worker would be paid ninety five percent of his or her salary until GM found a new position for them.[41] Unnecessary acquisitions and bad business deals such as giving Ross Perot $700 million in 1987 to leave GM’s board and EDS and to stop criticizing GM in the media deepened their debt.
By 1987 Chrysler, which had paid back its loan from the government in 1983,[42] was returning to trouble. By the mid-1980s, the price of gas had once again become very low in the U.S., and Americans wanted to buy larger cars again. Chrysler’s answer to the American consumer’s desire was to stretch out the K-car horizontally.[43] Making the cars longer, but not wider was cheaper to do because it did not require any restructuring of the chassis or axels.[44] Author Paul Ingrassia writes in his book, Comeback: The Fall and Rise of the American Automobile Industry that a stretched out Chrysler Imperial was “so long and thin that it looked like a Virginia Slims cigarette on wheels.[45] This attempt to save money, a strategy that Iacocca used to save the company in the early 1980s, was now hurting Chrysler. There was no innovation coming from them to keep up with newer models from other car manufacturers. Ford suffered from the same lack of change. By 1988, the Ford Taurus, which had become the most popular car in America, did not change in appearance.
To make matters worse, Chrysler had bought the failing American Motors Company (AMC) in 1987 for $200 million. However, with their purchase they also bought $700 million in debt, and $3million in unpaid pensions.[46] The total amount that Chrysler was now involved in with AMC was $1.2 billion. That was the same amount of money that Lee Iacocca borrowed from the U.S. government in 1979. Chrysler had brought itself back to the brink of disaster less than ten years after government assistance.
Had the top executives of the U.S. auto industry read David Halberstam’s book The Reckoning when it came out in 1986, they may have been more prepared, and possibly able, to avoid their decline in the late 1980s. In chapter fifty of Halberstam’s book, he looks at and analyzes Harley Shaiken’s take on the U.S. auto industry. Shaiken is a MIT professor, and ex-GM assembly line worker. Shaiken, who was studying the decline of American heavy industry, thought that there were different reasons for the loss of U.S. jobs aside from Japanese competition. The focus was mostly on the Japanese, but Shaiken wanted to focus more on what the Americans were doing in response to the advances that the Japanese had been implementing.[47] Shaiken points out that the Japanese were hailed for their modernization by critics of the American auto industry, but that made sense because the Japanese auto manufacturing companies and their factories were not as old as those in the U.S.[48] One of the most amazing things that Shaiken points out is that the Japanese were able to move ahead of Americans when they were at a disadvantage technologically during the 1970s.[49] The reason for this was that the Japanese were being innovative when the Americans were not. Shaiken argues that the U.S. auto companies used the Japanese modernization as an excuse to close down their older factories in the U.S. and open new ones in South American or Eastern Asian countries.[50] The perks for doing this is that those companies did not have a UAW union and thus the automakers could pay them less, or they would push for placing robots in renovated U.S. factories as a way to eliminate human jobs in a process called “superautomation.”[51]
Shaiken believed that the U.S. auto executives used the Japanese modernization, and the U.S. industry’s lack of it, to pressure the UAW into agreeing to layoffs so that the U.S. companies could remain competitive with Japan.[52] Once U.S. factories were closed, U.S. auto makers opened factories abroad and in countries where there were workers with no skills. Thanks to superautomation, modern auto factories built in areas where there were no skilled workers did not need them because of the robots in the factories. Shaiken uses the example of Chrysler building an engine factory in Mexico in 1981.[53] These changes in the U.S. industry lead to permanent job loss.[54]
As the U.S. auto companies were closing their factories at home, the Japanese were opening auto factories in the U.S. The first Japanese auto factory to open in the U.S. was in Marrysville, Ohio in 1982.[55] There are several reasons that the Japanese were interested in opening factories in the U.S. First was as a way of fending off any type of trade restriction such as the Voluntary Export Restraint (VER).[56] Secondly, it promoted support for the Japanese industry because when they opened a new factory in a new area and created jobs, they often made alliances with the local populations and politicians.[57] Finally, the Japanese were, and have, been sure to open factories where there was no presence of labor unions. This, according to author David Halberstam, allowed the Japanese to “retain some of their cost advantages”[58] because they did not have to abide by union contracts. The Japanese transplant factories in the U.S. were becoming a success, and by 1990, they were producing 1.5 million cars.[59]
The U.S. auto industry barely survived the 1980s. The industry which was once known as the pinnacle of innovation and cutting edge technology became sluggish in incorporating much needed changes. The factory floor breakthroughs, which were celebrated in the early days of the industry, were eliminated as the industry grew larger and replaced skilled jobs with unskilled labor and automation. The tides turned, and the Japanese became what the U.S. once was in the production of automobiles. Though the U.S. would make a resurgence in the 1990s with the production of SUVs, it became clear that they had not learned their lessons from the late 1970s and 1980s. The automotive market is not a fixed one. Former GM Chairman Alfred Sloan’s practice of coming up with an improved model car every year at a higher cost has been abandoned by the U.S. auto industry and picked up by the technology industry, most prominently by Apple. In order to continue into the future, the U.S. auto makers must hold onto innovative thinking such as in the early days of the business and adhere to market fluctuations. If the U.S. auto makers hearken back to the days when they were the world leaders of technology and make the production of high quality, desirable cars a top priority, they would be able to win back the reputation and respect they once had.
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[1] Brown, Lester R., Flavin, Christopher, and Colin, Norman. The Future of the Automobile in an Oil-Short World (New York: World Watch Institute, 1979), 19.
[2] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 19.
[3] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 21.
[4] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 29.
[5] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 29.
[6] Jerome, John. The Death of the Automobile: The Fatal Effect of the Golden Era, 1955-1970 (New York: W.W. Norton and Company INC, 1972), 200.
[7] Rothschild, Emma. Paradise Lost: The Decline of the Auto-Industrial Age (New York: Random House, 1973), 245.
[8] Rae, John. The American Automobile Industry (Beverly: Twayne Publishers, 1984), 117.
[9] Rae, John. The American Automobile Industry, 117.
[10] Rae, John. The American Automobile Industry, 147.
[11] Denzau, Arthur. “Made in America: The Japanese Auto Cartel.” Society 24 (1987): 30-35. Accessed December 11, 2010, 30.
[12] Iacocca, Lee. Iacocca: An Autobiography (New York: Bantam Books, 1984), 163.
[13] Iacocca, Lee. Iacocca: An Autobiography, 165.
[14] Iacocca, Lee. Iacocca: An Autobiography, 164.
[15] Iacocca, Lee. Iacocca: An Autobiography, 172.
[16] Iacocca, Lee. Iacocca: An Autobiography, 174.
[17] Iacocca, Lee. Iacocca: An Autobiography, 175.
[18] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003 (New York: Penguin Books, 2003), 682-683.
[19] Binder, Alan. General Motors in the 20th Century (Southfield MI: Ward’s Communications, 2000), 16.
[20] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 682.
[21] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 684.
[22] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 684.
[23] Iacocca, Lee. Iacocca: An Autobiography, 161.
[24] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 685.
[25] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 685.
[26] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 702.
[27] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 702.
[28] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 705.
[29] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler (Garden City: Anchor Press, 1984), 286.
[30] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler, 286.
[31] Iacocca, Lee. Iacocca: An Autobiography, 252.
[32] Iacocca, Lee. Iacocca: An Autobiography, 255.
[33] Iacocca, Lee. Iacocca: An Autobiography, 253.
[34] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry (New York: Simon and Schuster, 1995), 93.
[35] Ingrassia, Paul, and White, Joseph B. Comeback: The Fall and Rise of the American Automobile Industry, 90-91.
[36] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 91.
[37] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 93.
[38] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster (New York: Random House, 2010), 86.
[39] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 90.
[40] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 87.
[41] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 87.
[42] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler, 292.
[43] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[44] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[45] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[46] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 189.
[47] Halberstam, David. The Reckoning (New York: William Morrow and Company, 1986), 690.
[48] Halberstam, David. The Reckoning, 690.
[49] Halberstam, David. The Reckoning, 693.
[50] Halberstam, David. The Reckoning, 692.
[51] Halberstam, David. The Reckoning, 692.
[52] Halberstam, David. The Reckoning, 691.
[53] Halberstam, David. The Reckoning, 691.
[54] Halberstam, David. The Reckoning, 692.
[55] Halberstam, David. The Reckoning, 717.
[56] Denzau, Arthur. “Made in America: The Japanese Auto Cartel,” 30.
[57] Halberstam, David. The Reckoning, 715.
[58] Halberstam, David. The Reckoning, 716.
[59] Holshua, Hohn. “Auto Industry Adjusting to a Painful New Reality” The New York Times (1986): 4. Accessed November 1, 2010.
What Goes Around Comes Around: The Boom and Bust Cycles of the U.S. Auto Industry 1979-1989
In 1979, the United States Auto Industry was bouncing back from a crisis that shook its foundations in the early 1970’s. The Arab Oil Embargo of 1973 lead to gas shortages throughout the U.S. and placed a heavy toll on the U.S. auto industry. The price of gas skyrocketed, and driving American-made cars during the shortage meant that people had no choice but to spend the better part of their time in their cars on line at a gas station. Fuel economy in most U.S. cars during the Arab Oil Embargo was pitiful, but that all changed as U.S. car buyers began to opt for foreign, more fuel efficient and reliable cars. The American auto companies began to try to push increased production of their own small cars, compacts, such as the Chevy Vega, Ford Pinto, and AMC Gremlin. This did stabilize the industry for the time being, as their production of compacts competed with foreign small cars. However, in 1979 the industry was struck with another oil crisis. This time it was initiated due to the overthrow of the Iranian Shah. The 1979 oil shock did not last as long as the one in 1973, nor was it as wide spread, but its effect on the industry was much more crippling. Chrysler, one of “the Big Three” U.S. auto makers, filed for Chapter Eleven bankruptcy, sales at Ford and GM dwindled, hundreds of thousands of workers were laid off as U.S. factories were closed, and most frighteningly, GM would not post a profit for a financial calendar year. Yet, all the while, foreign car companies, especially Japanese companies, were seeing both the skyrocketing sales and the opening of their own factories in the U.S. It would take strong, disciplined leadership and production methods, with the desire for actual mechanical and design innovation, to lead the U.S. auto companies back from oblivion. Nevertheless, even if these miracles were granted to the U.S. auto companies, their true test would be to see if they would last.
Perhaps the crisis of the U.S. auto industry would have been averted if the U.S. had not developed such a dependence on foreign oil. Since 1970, the production of oil from the U.S. was declining, and in order to keep American cars on the road, large amounts of foreign oil had to be imported into the U.S.[1] This necessity for foreign oil meant that the U.S. was more vulnerable to the new, major source of oil in the world, the Organization of the Petroleum Exporting Countries (OPEC). A majority of these countries are located in the Middle East where government stability has not always been strong. Because of high tensions in Iran in 1979, they ceased their exportation of oil to the world market.[2] This restriction of oil lead to world shortages and the 1979 oil shock in the U.S. That same year, the World Watch Institute released a report titled: The Future of the Automobile in an Oil-Short World. The report covered the oil crisis and the looming news that no one wanted to acknowledge: the world’s supply of oil will one day expire. At the end of the 1970’s “the world’s annual use of oil began to exceed the discovery of new reserves.”[3] In the report, it is made clear that in order for the auto industry, especially in the U.S., to survive, major changes would have to take place. The report specifically mentions that U.S. cars were becoming heavier, more powerful, and have become “laden with such energy consuming devices such as automatic transmissions.”[4] The World Watch Institute found that it would be necessary for the U.S. auto industry to change with the times and not continue to make bad fuel economy decisions, such as installing V8 engines in ninety percent of its vehicles, as it did in the 1960’s[5]. The era of cheap gas was over, and Detroit was going to have to make changes to remain competitive with the tiny, once openly-mocked foreign imports.
Though the oil crisis was at the forefront of a siege against the U.S. auto industry, there were other domestic factors that threatened it. Chief among these threats were: the push for car safety by the U.S. government, pollution, tradition in auto manufacturing, and lack of innovation and foresight. According to author John Jerome, in his book The Death of the Automobile: The Fatal Effect of the Golden Era, 1955-1970, increased U.S. federal government intervention for the improved safety, and fuel emissions, of automobiles was costing the industry money. The National Traffic and Motor Vehicle Safety Act, passed in 1966, was what put auto makers in their places. The passage of the Act allowed the government to hold the auto makers to higher standards for safety and pollution control.[6] This placed more financial strain to the U.S. auto makers because it added the expensed of installing new anti-pollution and safety devices on all of its cars. This lack of foresight and sluggish response to the new safety laws by the auto makers is an example of their loss of innovation and the desire to continue to produce a better product. Economist and Historian, Emma Rothschild, warned of this in her 1973 book Paradise Lost: The Decline of the Auto-Industrial Age. Rothschild explains: “All the troubles and hopes of the automobile business lead back to a pattern of industrial inertia… the auto industry faces the direst and least tractable problems of social obsolescence.”[7]
With the auto industry being held accountable for its actions by the U.S. government, it was also losing popularity on another issue: its lack of innovation. As Rothschild explains, when the auto industry was in its youth, it was the cutting edge of technology, something of which nearly everyone wanted to be a part. By the early 1970’s, U.S. cars were getting bigger and consuming more gasoline, but they had not had any major design or mechanical changes. Their status in society as class symbols did not mean as much as they had in the 1940’s or 1950’s. However, by the end of the 1970’s it was becoming clear that foreign cars were of a much higher quality than American cars, thus attracting more American buyers. Author John Rae suggests that the American people have always had a predilection for larger cars as opposed to other countries.[8]
U.S. auto manufacturers pushed to keep American buyers buying big cars because the production of large cars is cheaper than smaller ones.[9] However, it took two oil shortages in the 1970’s for the industry to learn that the desires of the American market were turning away from large cars towards compact cars at an alarming rate. Rae explains that a possible explanation of the lack of response in the U.S. industry was that despite the surge in the purchases of foreign cars, “from 1945 until the oil crisis of 1979, sales of motor vehicles in the U.S. moved steadily upward.”[10] Therefore the “Big Three” in Detroit never saw foreign cars as a major threat to the selling of their cars to the American people. In essence, they were caught mercilessly off guard by the effects of the 1979 oil crisis and had no way of stopping the flow of imports until the intervention of the U.S. Federal government. In 1981 an agreement was made by the U.S. government and the Japanese auto makers, the Voluntary Export Restraints (VER). The agreement put a limit on the number of imported Japanese cars coming into the U.S. each year, with the intention of giving the struggling American auto companies a chance to get back on their feet.[11]
Chrysler, the smallest of the “Big Three” U.S. auto makers, was most in need of government interaction by the late 1970’s. Though Ford and GM were not immune to the external and internal threats to their companies, Chrysler’s problems were more dire than the other Detroit auto makers. To make matters worse for Chrysler, it not only had its own issues but was also subjected to all of the threats that Ford and GM faced. For example, while Ford and GM’s major issues were of a lack of innovation, efficiency, and the threat of imported cars, Chrysler’s major problems were a lack of organization, efficiency, and leadership. By 1978 Chrysler was nearly beyond all hope of lasting as a company.
It was that year that former Ford President, Lido Anthony Iacocca, became the CEO of Chrysler. In his book, Iacocca: an Autobiography, he explains just how bad things were at Chrysler when he took over. Chrysler had a surplus of 80,000 unsold cars sitting on the Michigan State Fairgrounds, in what was called a sales bank, “representing $600 million in finished inventory.”[12] Despite this massive inventory, Chrysler was still producing cars which had not been modified in years. Iacocca knew that there would have to be drastic changes made to the organization of business at Chrysler in order for it to survive. 1979 was the year in which Chrysler embarked on a complete overhaul of the way it conducted its business.
The 80,000 unsold cars in a sales bank, no change in the design of a Chrysler made car, a faulty business strategy with car rental companies, and massive debt all faced Lido Iacocca in his first year as CEO of Chrysler. Aside from the $600 million in unsold, finished Chrysler cars the other largest source for Chrysler’s deepening debt was how it made business with rental car companies. Instead of selling their cars to car rental companies Chrysler leased cars to companies such as Avis and Hertz. At the end of the lease contract, Chrysler would then buy back their cars and sell them at auction. According to Iacocca that practice lost $88 million for Chrysler in 1979.[13] These reckless practices, which cost the company hundreds of millions of dollars, infuriated Iacocca. His first major hurdle was to eliminate the sales bank.
The sales bank operated as a wholesale dealer such as Costco. Chrysler would call its dealers from around the country at the end of every month with special offers to sell dealers multiple cars at a low price. Iacocca knew that it would not be easy to eliminate this practice because Chrysler’s dealers had become dependent on buying cars from the sales bank because of their low prices. He made it known that he was eliminating the sales bank because it needed to be eradicated to save money. Iacocca told Chrysler dealers that they had no choice but to buy Chrysler cars from the corporation, and that he had no choice but to sell cars to them. Therefore the elimination of the sales bank and halting of building cars without requests for them from dealers was established.[14] This, Iacocca explains, was not an immediate success. He had to get someone on his management team that would be able to work with the Chrysler dealers for their and Chrysler’s betterment. Gar Laux, a retired Ford executive and partner in a North Carolina Cadillac dealership, was perfect for the job.[15]
Hiring retired Ford executives was a key strategy for Iacocca. He knew most of them and knew that they were hard-working, intelligent men. It is then no surprise that when Iacocca decided to tackle Chrysler’s design issue he hired another retired Ford executive, Hans Matthias.[16] Matthias brought quality and harmony back to the production of Chrysler cars. Matthias and Iacocca made quality a top priority, and they even made a pact with the United Autoworkers (UAW) at Chrysler. According to the UAW-Chrysler Management Quality Program: “Quality cannot get mixed up with other bargaining and be compromised by the usual adversarial relationship between workers and management.”[17] This meant that Iacocca was getting Chrysler on the right track to once again producing a car that the American people would want to buy. Yet Chrysler’s massive debt was still putting a toll on the auto maker, and it was becoming increasingly clear that in order for them to survive they were going to go to the U.S. government for help.
As Iacocca was preparing to appear before Congress to request a massive federal loan, Ford and General Motors were having problems of their own. For the last half of the 1970’s Ford posted billion dollar losses after gaining a reputation for building the worst quality cars of the “Big Three.”[18] GM, in 1981, posted its first financial calendar year loss since the Great Depression losing $763 million.[19] The two larger Detroit auto makers were in need of innovation and new leadership of their own to guide them through the 1980’s foreign and domestic threats to their industry.
GM was able to hold off on taking drastic measures until the mid-1980’s, but Ford needed to take immediate action by as soon as 1980 to be able to continue being a major car producer. In that year, Ford’s market share went down to sixteen percent.[20] This was alarming because since the 1930’s, Ford had been able to keep a market share of around twenty five percent. Though 1980 may have started off as a year with terrible news for the Ford Motor Company, it was also a year for transition for Ford. Henry Ford II retired as the CEO of Ford that year, and the position was passed along to Philip Caldwell. Caldwell’s tenure at Ford brought back the modernization and innovation for which German and Japanese cars had become known and adored.
The President of Ford, Donald Peterson, was leading an effort to make new Fords have a different look than the boxy, sharpe-edged cars of the 1970’s. Peterson used the talents of the vice president of styling at Ford, Jack Telnack, to get the new look that he wanted.[21] The new cars which were scheduled to debut in 1982 were edgeless and did not resemble a box. Called the “aero look,” the design was made to actually be aerodynamic, thus improving fuel economy in Ford cars.[22] This new design strategy was just one way Ford was actively attempting to improve the quality of its cars which was something that Fords were not known for in the 1970’s. The best example of this would be the huge safety issues with the Ford Pinto its exploding gas tank.[23]
To further show that top executives were taking production quality Fords seriously, in 1980, while the company was still reeling from debt, Ford chose to close a modern factory in New Jersey because it was not producing a high enough quality product. The other factory which was under consideration for closure was an older one in Virginia. Ford decided to renovate the factory in Virginia and keep its doors open because the work environment there was strong and, as a result, so was their product.[24] This sent a message to Ford factories all across the U.S.; those producing poor quality products would be the first to close if needed.[25]
There were so many major changes to Ford in the early 1980’s that it hardly resembled the company it was in the previous decade. It was the only major U.S. auto maker to analyze carefully and use the reasons for the market shift to foreign cars to their advantage. The saving grace for the Ford Motor Company in the 1980s, for example, was the Ford Taurus. All of the executives who were responsible for the design and production of the Taurus had foreign experience with Ford.[26] They knew and understood what foreign car companies were doing to improve their vehicles. Author Douglas Brinkly puts it best in his book, Wheels for the World, “The 1986 Taurus was 1,600 pounds lighter than its 1970’s predecessor, the LTD, while delivering only slightly less horsepower from an engine one half as big.”[27] Ford was rebounding, finding better, cost-cutting ways to produce modern, efficient cars. One GM designer even said that the Taurus gave Ford a two year head start in design, and so by 1987 the Taurus was the most popular car in America.[28]
If the Taurus was the single saving grace for Ford, then the K-Car and minivan were the innovations that also saved Chrysler from collapsing. Lee Iacocca was successful in his case to receive a federal loan from the U.S. government, but that meant that the pressure was on for Chrysler to prove to the American people that they meant it when they promised to once again be a competitive auto manufacturer. Chrysler received an impressive, but necessary, $1.2 billion in loans from the U.S. government in 1979.[29] The loans were given with the requirements that Chrysler would have to reduce $3 billion in internal cost to prevent layoffs and a corporate wide pay freeze worth $622 million with concessions from UAW members and another $161 million from salaried workers.[30] Chrysler began to do all it could to save money, and cut costs all the while still managing to produce cars that Americans would actually want to buy.
In his autobiography, Lee Iacocca mentions just how important the success of the K-car was for pulling Chrysler out of the hole. It was the first American made car, he says, that was roomy enough to fit a family of six and light enough to get twenty five miles per gallon in city driving and forty one miles per gallon on the highway. For an American made car at the time, those numbers were quite impressive.[31] The K-car sold very well for Chrysler and by 1981 twenty percent of the compact market belonged to Chrysler.[32] Though the K-car may have saved Chrysler in the early 1980s, Iacocca makes an interesting comment in his autobiography which was written in 1984 and foreshadows one of the reasons for the decline of Chrysler in the late 1980s. “Today the K-car serves as the foundation for almost everything we do. Virtually all our other cars have been derived from its platform, including the LeBaron, Chrysler E Class, Dodge 600, the New Yorker, and to a lesser degree our sports cars.”[33]
Chrysler’s production of similar looking cars with different labels was also heavily practiced by GM. Author Paul Ingrassia calls them the “look alike cars.”[34] GM had been the better off of the “Big Three” until the mid-1980s, when finally the fluctuating auto market and poor leadership caught up with them. In 1981, GM executive Alex Mair released a study which he had just finished on the future of GM in an increasingly global auto market. Mair’s report showed that GM was incredibly wasteful in its production of automobiles, and the Japanese had surpassed them in efficiency. Mair’s report estimated that GM was wasting $681 million per year in inefficient practices such as producing and storing car parts when there were no orders for them to be placed on cars that were being manufactured.[35] That led to a surplus in auto parts which needed to be stored and cataloged.
Mair’s report also concluded that the Japanese automakers were not only producing more efficiently, but also better quality products. Mair and his team came to this conclusion because they took apart cars from their competitors, especially the German and Japanese cars, and compared the parts to those in GM cars. One of the finds that Mair’s team made was from a Honda. The connecting rods that Honda was using, which connect an engine’s piston head to the crankshaft, Mair found to be of a better quality than GM’s connecting rods. This was because Honda had their connecting rods made per order of cars, unlike GM’s custom of making only one kind of piston rod and then manually modifying them to fit each individual engine model, not only raising production time but cost.[36] Mair warned GM Chairman Roger Smith of the dangers of GM continuing to produce cars in the manner in which they had been doing for years. Smith’s responses were to modernize the corporation, update factories in the U.S., but not change production methods, only replacing workers with robots.[37]
In 1986, for the first time in over sixty years, Ford, one-third the size of GM, posted higher profits than GM.[38] Roger Smith’s response to this was to build up GM as a corporation. This was also done in the 1980s by each of the “Big Three” automakers, but Chrysler and Ford were making improvements in their cars and production process in a way that GM was nowhere near matching. Between 1984 and 1989, GM, Chrysler, and Ford bought $20 billion worth of acquisitions combined.[39] For GM, Roger Smith acquired Electronic Data Systems (EDS), a company which GM had been contracted with in the past for all of its electronic and robotic systems and software. With the acquisition of this company, GM also gained a new executive board member, Ross Perot, who was the founder of EDS and remained in charge of it under GM’s ownership.[40] The purchase of EDS worried UAW workers at GM because they thought that GM was going to use the technologies from EDS to replace human workers. The UAW and GM made a contract in which it was specified that if GM replaced a worker with a robot, the worker would be paid ninety five percent of his or her salary until GM found a new position for them.[41] Unnecessary acquisitions and bad business deals such as giving Ross Perot $700 million in 1987 to leave GM’s board and EDS and to stop criticizing GM in the media deepened their debt.
By 1987 Chrysler, which had paid back its loan from the government in 1983,[42] was returning to trouble. By the mid-1980s, the price of gas had once again become very low in the U.S., and Americans wanted to buy larger cars again. Chrysler’s answer to the American consumer’s desire was to stretch out the K-car horizontally.[43] Making the cars longer, but not wider was cheaper to do because it did not require any restructuring of the chassis or axels.[44] Author Paul Ingrassia writes in his book, Comeback: The Fall and Rise of the American Automobile Industry that a stretched out Chrysler Imperial was “so long and thin that it looked like a Virginia Slims cigarette on wheels.[45] This attempt to save money, a strategy that Iacocca used to save the company in the early 1980s, was now hurting Chrysler. There was no innovation coming from them to keep up with newer models from other car manufacturers. Ford suffered from the same lack of change. By 1988, the Ford Taurus, which had become the most popular car in America, did not change in appearance.
To make matters worse, Chrysler had bought the failing American Motors Company (AMC) in 1987 for $200 million. However, with their purchase they also bought $700 million in debt, and $3million in unpaid pensions.[46] The total amount that Chrysler was now involved in with AMC was $1.2 billion. That was the same amount of money that Lee Iacocca borrowed from the U.S. government in 1979. Chrysler had brought itself back to the brink of disaster less than ten years after government assistance.
Had the top executives of the U.S. auto industry read David Halberstam’s book The Reckoning when it came out in 1986, they may have been more prepared, and possibly able, to avoid their decline in the late 1980s. In chapter fifty of Halberstam’s book, he looks at and analyzes Harley Shaiken’s take on the U.S. auto industry. Shaiken is a MIT professor, and ex-GM assembly line worker. Shaiken, who was studying the decline of American heavy industry, thought that there were different reasons for the loss of U.S. jobs aside from Japanese competition. The focus was mostly on the Japanese, but Shaiken wanted to focus more on what the Americans were doing in response to the advances that the Japanese had been implementing.[47] Shaiken points out that the Japanese were hailed for their modernization by critics of the American auto industry, but that made sense because the Japanese auto manufacturing companies and their factories were not as old as those in the U.S.[48] One of the most amazing things that Shaiken points out is that the Japanese were able to move ahead of Americans when they were at a disadvantage technologically during the 1970s.[49] The reason for this was that the Japanese were being innovative when the Americans were not. Shaiken argues that the U.S. auto companies used the Japanese modernization as an excuse to close down their older factories in the U.S. and open new ones in South American or Eastern Asian countries.[50] The perks for doing this is that those companies did not have a UAW union and thus the automakers could pay them less, or they would push for placing robots in renovated U.S. factories as a way to eliminate human jobs in a process called “superautomation.”[51]
Shaiken believed that the U.S. auto executives used the Japanese modernization, and the U.S. industry’s lack of it, to pressure the UAW into agreeing to layoffs so that the U.S. companies could remain competitive with Japan.[52] Once U.S. factories were closed, U.S. auto makers opened factories abroad and in countries where there were workers with no skills. Thanks to superautomation, modern auto factories built in areas where there were no skilled workers did not need them because of the robots in the factories. Shaiken uses the example of Chrysler building an engine factory in Mexico in 1981.[53] These changes in the U.S. industry lead to permanent job loss.[54]
As the U.S. auto companies were closing their factories at home, the Japanese were opening auto factories in the U.S. The first Japanese auto factory to open in the U.S. was in Marrysville, Ohio in 1982.[55] There are several reasons that the Japanese were interested in opening factories in the U.S. First was as a way of fending off any type of trade restriction such as the Voluntary Export Restraint (VER).[56] Secondly, it promoted support for the Japanese industry because when they opened a new factory in a new area and created jobs, they often made alliances with the local populations and politicians.[57] Finally, the Japanese were, and have, been sure to open factories where there was no presence of labor unions. This, according to author David Halberstam, allowed the Japanese to “retain some of their cost advantages”[58] because they did not have to abide by union contracts. The Japanese transplant factories in the U.S. were becoming a success, and by 1990, they were producing 1.5 million cars.[59]
The U.S. auto industry barely survived the 1980s. The industry which was once known as the pinnacle of innovation and cutting edge technology became sluggish in incorporating much needed changes. The factory floor breakthroughs, which were celebrated in the early days of the industry, were eliminated as the industry grew larger and replaced skilled jobs with unskilled labor and automation. The tides turned, and the Japanese became what the U.S. once was in the production of automobiles. Though the U.S. would make a resurgence in the 1990s with the production of SUVs, it became clear that they had not learned their lessons from the late 1970s and 1980s. The automotive market is not a fixed one. Former GM Chairman Alfred Sloan’s practice of coming up with an improved model car every year at a higher cost has been abandoned by the U.S. auto industry and picked up by the technology industry, most prominently by Apple. In order to continue into the future, the U.S. auto makers must hold onto innovative thinking such as in the early days of the business and adhere to market fluctuations. If the U.S. auto makers hearken back to the days when they were the world leaders of technology and make the production of high quality, desirable cars a top priority, they would be able to win back the reputation and respect they once had.
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[1] Brown, Lester R., Flavin, Christopher, and Colin, Norman. The Future of the Automobile in an Oil-Short World (New York: World Watch Institute, 1979), 19.
[2] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 19.
[3] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 21.
[4] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 29.
[5] Brown, Flavin, and Norman. The Future of the Automobile in an Oil-Short World, 29.
[6] Jerome, John. The Death of the Automobile: The Fatal Effect of the Golden Era, 1955-1970 (New York: W.W. Norton and Company INC, 1972), 200.
[7] Rothschild, Emma. Paradise Lost: The Decline of the Auto-Industrial Age (New York: Random House, 1973), 245.
[8] Rae, John. The American Automobile Industry (Beverly: Twayne Publishers, 1984), 117.
[9] Rae, John. The American Automobile Industry, 117.
[10] Rae, John. The American Automobile Industry, 147.
[11] Denzau, Arthur. “Made in America: The Japanese Auto Cartel.” Society 24 (1987): 30-35. Accessed December 11, 2010, 30.
[12] Iacocca, Lee. Iacocca: An Autobiography (New York: Bantam Books, 1984), 163.
[13] Iacocca, Lee. Iacocca: An Autobiography, 165.
[14] Iacocca, Lee. Iacocca: An Autobiography, 164.
[15] Iacocca, Lee. Iacocca: An Autobiography, 172.
[16] Iacocca, Lee. Iacocca: An Autobiography, 174.
[17] Iacocca, Lee. Iacocca: An Autobiography, 175.
[18] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003 (New York: Penguin Books, 2003), 682-683.
[19] Binder, Alan. General Motors in the 20th Century (Southfield MI: Ward’s Communications, 2000), 16.
[20] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 682.
[21] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 684.
[22] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 684.
[23] Iacocca, Lee. Iacocca: An Autobiography, 161.
[24] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 685.
[25] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 685.
[26] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 702.
[27] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 702.
[28] Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress 1903-2003, 705.
[29] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler (Garden City: Anchor Press, 1984), 286.
[30] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler, 286.
[31] Iacocca, Lee. Iacocca: An Autobiography, 252.
[32] Iacocca, Lee. Iacocca: An Autobiography, 255.
[33] Iacocca, Lee. Iacocca: An Autobiography, 253.
[34] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry (New York: Simon and Schuster, 1995), 93.
[35] Ingrassia, Paul, and White, Joseph B. Comeback: The Fall and Rise of the American Automobile Industry, 90-91.
[36] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 91.
[37] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 93.
[38] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster (New York: Random House, 2010), 86.
[39] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 90.
[40] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 87.
[41] Ingrassia, Paul. Crash Course: The American Automobile Industry’s Road from Glory to Disaster, 87.
[42] Moritz, Michael, and Seaman, Barrett. Going for Broke: Lee Iacocca’s Battle to Save Chrysler, 292.
[43] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[44] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[45] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 188.
[46] Ingrassia, Paul, and White, James B. Comeback: The Fall and Rise of the American Automobile Industry, 189.
[47] Halberstam, David. The Reckoning (New York: William Morrow and Company, 1986), 690.
[48] Halberstam, David. The Reckoning, 690.
[49] Halberstam, David. The Reckoning, 693.
[50] Halberstam, David. The Reckoning, 692.
[51] Halberstam, David. The Reckoning, 692.
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