Larry Elder asks “who drove this Chevy off the levy? in his Investor’s Business Daily (IBD) column posted today, noting that General Motors “once employed more than 500,000 workers and had a 50% market share" before crumbling into bankrupcy and ownership by the U.S. government and the United Auto Workers union.
While attending law school in Michigan in the 1970’s, Elder writes that foreign automakers “steadily shaved off market share” from the Big Three automakers. He then describes how America’s appliance makers responded by studying Japanese manufacturing methods before noting “domestic makers of large appliances still dominate the U.S. market” today while “the automotive Big Three manufactured excuses.”
Elder compares the response to foreign competition by the appliance manufacturers to the response by the Big Three, who turned to Washington instead. He writes:
“The Big Three then turned to Washington. Their lobbying paid off through protectionist policies: "voluntary" import quotas (forcing American consumers to pay more for Japanese cars); domestic content rules (requiring foreign automakers to use a certain amount of American-produced equipment in their cars); and demands that foreigners "open" their markets to American car products or stand accused of "unfair trade."
“All of this shielded the Big Three from the rule of business that determines success or failure: improve or die.”
After describing the experience of his uncle Thurman who worked as a machine operator at a GM plant in Cleveland as an example of poor work practices at Big Three plants, Elder concludes:
“Back in Michigan in the '70s, I read article after article about how the Big Three should/could/would respond to the foreign invasion. But in practice, I saw excuses and pleas for protectionism.
“Why," I asked my roommate, "doesn't GM offer a boatload of money, steal Toyota's No. 2 executive and put him in charge?" My roommate laughed, "Because he doesn't speak English and wouldn't be able to understand the American market." I said, "And General Motors does?"
“Today I know my idea of stealing a Toyota exec was bad. GM should have picked up the phone, asked the government to buy a majority share in the company, handed the office keys to the president of the United States, and said, "Here. You run it."