February 7, 2006

I thought it was Lee Iacocca calling from the west coast, but the voice was a little hollow, so it might have been Jacob Marley, rattling his chains as the ghost of Christmas past.

“Hey you, dummies, waddya doin’ pushin’ those gas-hog SUVs? Their time is gone, it’s small again. Small, get it?”

Lee is in his eighties and he’s seen it all. Mustang through muscle at Ford and then a hop to Chrysler, where he saved their bacon with a matchbox called the K-Car. It even sounds like a box top.

Detroit had its lesson during the energy crisis of the seventies, when they left the back door unlocked by pumping out motorboats disguised as family cars and the Japanese sneaked into the house. Lee seemed to be the only guy in Mo-Town who saw it for what it was. While he publicly railed against the ‘rice-burner’ competition, he knew a gunslinger when he met one.

Iacocca is long since retired, but it’s due in large part to his legacy that Daimler-Chrysler is the only half-American firm on the street that’s making money. All-American Ford and GM fiddled with small cars for a while, but their heart was never in it. They kept repeating the mantra, the myth that only big cars could carry big profit. Too egocentric to see what was happening before their very eyes, they teased the home market and their balance-sheets with persistently upsized cars.

Market share kept shrinking. Ford almost (and probably should have) lost Mercury and GM threw away Oldsmobile. Both companies essentially became truck builders, carrying their losses with SUVs and pickups, all of them built on truck chassis.

Meanwhile Honda, Toyota and the new guys on the block, the Koreans, sucked all the oxygen out of the passenger-car market with distinctive, well-made, highly profitable small cars.

It was very nearly a replay of the seventies.

Unfortunately, this time Detroit was a time-worn old boxer with no punch left, slow on its feet, no reflexes and up against the ropes with cuts over both eyes. The towel has not yet been thrown in. GM made a little money this year, there’s still a little time left. A few Wall Street backers would love to see a comeback. But old boxers get lazy and hate to train. Roadwork is no fun and they’re no longer as hungry as the young guys coming up.

Even the young guys coming up are no longer young. Honda’s been sold here since 1959 and manufactured in the U.S. since 1980, hardly what you’d call the new guy on the block. Toyota pretty much matches that history, so it’s a myth that you can’t manufacture cars in America if you’re not one of the big three. It might not have worked out all that well for Kaiser, Tucker or DeLorean, but the Japanese have done just fine.

It’s probably too late for the big American companies this time around, no matter Lee’s warning call from the west coast.

The things that could have been fixed in the ‘70’s weren’t because life in Bloomfield Hills was just too easy and hey, it was only a knockdown, a lucky punch. The match wasn’t over. Mo-Town had been the champ too long. Daimler-Benz may have invented the car, but Henry invented the method and Madison Avenue invented the market.

It was our game.

If there’s hope for American manufacturers, it may be found at Chrysler’s Dundee engine plant. A Chrysler alliance that includes Mitsubishi and Hyundai, the plant will produce 840,000 engines a year with only 250 hourly workers. Chrysler currently employs 750 workers to build 350,000 engines at its Mack Avenue plant in Detroit, down from 2,500 on the line at their old engine plant in Kenosha, Wisconsin.

That’s at least the right direction, from one worker per 140 engines to one worker per 3,360 engines.

If Chrysler (or Ford or GM) can make similar progress in their design, engineering and non-engine production, the world will be their oyster. But there’s more to thinking small than small cars. Small has to be across-the-board and that’ll take some heavy-duty training for an aging boxer.

Back to the future.

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