Necessity drives automaking changes

LANSING, Mich. | Jim Woodard retired as an executive from General Motors Corp. in March 2008 after more than 39 years, much of it spent in labor relations as a liaison with the company and its hourly union workers.

Watching at the production facilities in Lansing where he worked his entire career, Mr. Woodard, 58, saw car models evolve over the decades. He looked on as union contracts were negotiated. He winced as, in recent times, losses mounted and factories closed.

Mr. Woodard acknowledges that GM’s strategy over the years sometimes has been poor, but he thinks the company finally turned it around and now deserves a chance to return to profitability.

“When I first hired in for GM a couple of days after I turned 18, if you were a worker, you did what you were told and in a lot of cases you didn’t care what you did. You just wanted a paycheck,” he says of the past culture of blue-collar malaise that tainted the once-proud image of workers in the land of Henry Ford.

“But in the last few years, the environment there was so much improved- clean, bright, even the language on the floor had changed. I was proud of that. We were working as a team … and trying to make our best product. Our competition wasn’t Chrysler or Ford - it was the foreign transplants.”

That change is the result of a major shift by U.S. auto manufacturers to improve the quality of their vehicles and offer considerable wage concessions in their union contracts.

But the improvement is too little, too late, industry experts say.

The situation for the automakers grew dire last year as the economy declined sharply on rising oil prices and narrowing credit markets - a combination of events that forced the car manufacturers to seek federal money and consider bankruptcy. Even with the money, the long-term future remains uncertain.

Industry analyst John Bulcroft, president of Advisory Group, says bluntly that the troubles of the U.S. automakers are of their own making.

“Fat, dumb and happy - you can sum up what’s happened to them in three words,” Mr. Bulcroft says. “They got fat when times were good, dumb because they didn’t keep up with what was going on [in the marketplace], and they were very happy to give the union what they wanted along the way.

“I think what happened is, as they went along, they were selling products pretty well, particularly in the light truck/SUV category. And then they had to produce other automobiles - the smaller cars - in order to meet Corporate Average Fuel Economy standards. Well, they didn’t give a damn what their other small cars were like. They just had to make some, and they turned out a lot of crap and they just didn’t care.”

Their foreign counterparts, meanwhile, were making smaller vehicles of higher quality and establishing a reputation in that market segment - even as the lack of quality of American-made small cars began to hurt the reputation of the Big Three automakers in Detroit.

The U.S. automakers, Mr. Bulcroft says, were “making about $7,000 on some of these big trucks and losing money on their small cars.” At the same time, he says, they were showing significant fealty to the United Auto Workers.

“When the union said they were striking, they said, ‘Please don’t. We’ll give you anything you want,’” Mr. Bulcroft says. “So they got less and less competitive in terms of what it was costing them to produce an automobile. Over the past couple of years, they have woken up, but it’s too late.”

The Bush administration in December released $17.4 billion in federal bailout loans to GM and Chrysler.

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