GEORGE F. WILL U.S. auto industry in state of flux
DEARBORN, Mich. -- Commuting to and from work must be a blast for William Clay Ford Jr. in his gorgeous green, fully loaded version of the new Mustang that his company is selling as fast as it can make them. But being at work is a lot less fun these days for the entire domestic auto industry.
Henry Ford, the founding father of that industry and this company, grew up in this suburb contiguous to Detroit. Today, his great-grandson, 48, the company's CEO, says "the business model really hasn't changed in 100 years" -- internal combustion engine vehicles, sold through dealerships -- but the industry faces "a very different kind of future."
Much better informed customers will increasingly buy on the Internet, or surf it for information enabling them to arrive at dealerships "much better informed than the person they are talking to." Soon they may be talking about vehicles powered by hydrogen.
Furthermore, Ford says, because "nowhere else do you have 90 minutes of people's undivided attention each day," Silicon Valley wants to equip cars to feed information to drivers -- reading them their e-mails, etc. But should drivers' attentions be so divided? "You do hit the 'tilt' sign at some point," he acknowledges.
The way to get to a glistening future may be to get back to the chrome-covered 1950s, when each autumn boys mounted their balloon-tire Schwinns and rode around to dealerships to savor the excitement of the curtain rising on a new model year. The loss of theatricality is central to the domestic industry's decline.
Robert Lutz, head of GM's product development, says, "We're not in the transportation business, we are in the arts and entertainment business." Ford, perhaps with his Mustang in mind, emphatically agrees: "There's a high emotional component to buying decisions."
And, he insists, there still is a unique emotional facet of working in the automobile industry. Assembly workers, he says, "take it personally if their vehicle" -- the one they assemble -- "isn't selling." Ford, he says, has "third, fourth even fifth generation" workers.
But their relatives worked for a company that was much more in the automobile business than it now is. Today, in America, it is a truck manufacturer -- F-150s and SUVs -- with just one vibrant niche in the automobile market: that Mustang, the scarcity of which, Ford says, fuels the excitement about it.
A glutton for punishment, Ford is vice chairman of another struggling entertainment entity, the Detroit Lions, who have had just three winning seasons in the last decade. Gesturing out the window of his 12th-floor office, toward the Lions' practice facility just a mile away, he notes that when the team reduced the seating at the Ford Field in downtown Detroit from 80,000 to 65,000, sales of season tickets shot up: "Scarcity is not a bad thing."
But not as good as surplus in the form of profits. Worldwide, Ford is still predominantly a car company -- and is gaining market share. But outside America, the company is not functioning as a welfare state, paying the high costs of medical and pension benefits for current and retired employees.
Detroit, which in 1955 was the nation's fifth largest city, recently fell, for the first time in a century, out of the list of the 10 largest, replaced by San Jose. Detroit is America's saddest city: cattle could be grazed in vast swaths of depopulated neighborhoods.
Reversing the decline of "Detroit" -- shorthand for the once-muscular domestic auto industry -- requires two things. One is the trimming of some benefits the United Auto Workers won when the Big Three -- Ford, GM and Chrysler -- were the world's three largest automobile companies. As recently as 25 years ago they had a 76 percent share of the American market and the ability to pass along to consumers the costs of the settlements made with the UAW. Last year Toyota earned $10.9 billion, more than the Big Three combined, and Detroit's market share was an all-time low, at 58.7 percent.
The other ingredient of revival must be better products. Meaning, among other things, cars that better express the emotional rather than just the utilitarian -- the "arts and entertainment" as well as the transportation -- aspect of cars. Meaning products like the chairman's green Mustang in the garage downstairs.
Washington Post Writers Group