Detroit’s Impaired Vision

Detroit’s Impaired Vision

In the end, it wasn’t shoddy products or high wages that put the US auto industry on the ropes. It was a failure to innovate for global markets.


In September 1833, a Yankee clipper sailed into the steamy port of Calcutta with a surprising cargo: at least 100 tons of ice packed in enough sawdust to survive a four-month voyage. An enterprising young New Englander, Frederic Tudor, had seen a need and risen to the challenge. For four decades the Tudor Ice Company, with outposts in several Indian ports, gave the boxwallahs of the East India Company ice to cool their gin and save the meat from spoilage. When the ice trade was finally rendered obsolete it was another American export, refrigeration, that did it in.

Fast-forward about 150 years to Bangkok, another torrid port, where rapid development was letting Thais yearn for their first refrigerators, or motorbikes, or cars. But by the early 1980s, there seemed to be no creative Yankee traders in sight. Compact, quality household appliances came from Europe; the mammoth American refrigerators were useless for small spaces. Motorbikes and cars came mostly from Japan in sizes just right for the narrow, meandering Bangkok back streets. When Malcolm Forbes rode his Harley-Davidson into town to promote American cycles, Thais gawked at the monster machine that took up most of a car-parking space outside the Oriental Hotel.

When American diplomats in Southeast Asia were asked why Americans were missing obvious opportunities, the answer almost invariably was that companies in the United States had, and would always have, a big consumer market on their doorsteps and did not need to export.

Japan soon rewrote that script. By the time Japanese cars (not to mention photographic and electronic goods) were flooding not only Asian cities but also European and American towns as well, the competition was over. Admittedly, there were also Asian countries, such as India, that banned imports in the name of economic self-reliance, keeping doors closed to US companies. (And US companies weren’t ready, anyway, when those doors finally opened.)

Hard times for American car companies and other manufacturers are not a recent development; they were a long time in coming. It wasn’t because American cars were shoddy products doomed to self-destruct. Ask the Cubans about that. And in Vietnam, for years after the end of the “American” war, Jeeps and vintage vans stayed alive and reliable with the help of local ingenuity.

Instead, the last half of the American automotive century is a story of missed opportunities, narrow vision and an arrogant assumption among automakers, backed by supportive US government spending on highways, that they knew best what American drivers wanted, and the rest of the world might as well get used to wanting that, too.

Yes, wages of American auto workers were high, but that was not the only, or perhaps even the underlying, problem. Skilled workers could just as well have been making smaller, cheaper cars for export as the bigger, tougher models that would suck up gas on American roads. Automakers may now be manufacturing offshore in Brazil or China, but that is not the same as selling an American-made product abroad built by American workers.

Japanese automakers are now also feeling the squeeze of a global recession. Ironically, they too may have put too much faith in the American market. But they will adapt.

Meanwhile, we haven’t heard much from Detroit about global strategies as automakers struggle to survive. Chances are that when there is a turnaround in the automotive industry, carmakers in Asia and Europe will already be a step ahead. They know they have to know what sells across borders.

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