Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 28, 1992 TAG: 9202280407
SECTION: EDITORIAL PAGE: A-6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
SIGN OF TIMES
GENERAL MOTORS, still the world's biggest manufacturing firm, announced the biggest corporate losses ever ($4.5 billion last year) on the same day it named 12 of 21 plants it will shut down in an effort to make money again. Adding to the unease such news produces is the tradition of GM as a metaphor for U.S. industrial might.Detroit can't blame Japan for its troubles. And not only the U.S. automobile industry must adjust to a changed domestic and global economy. It is a different world from 10 or 20 years ago. A key part of that difference is, yes, foreign competition.
But to say, as many do, that this competition is unfair begs the issue. America became a manufacturing giant more than a century ago while competing with other nations. We are still an economic and industrial power. But we lost our edge, in part, through complacency and inability to recognize and react to changing markets.
Detroit may exemplify that: Its auto companies, especially GM, were so big and successful for so long that they came to view success, and a lion's share of the auto market, as a birthright.
So it has been with many industries - but hard times make their own industrial policy. Many manufacturers have preceded Detroit in downsizing, becoming more efficient and more competitive. Like the airlines - one of the service industries that now dominate the U.S. economy - Detroit has been undergoing a shakeout.
The U.S. auto industry will survive, but it will be smaller and leaner. In these times, this seems the route to recovery, though it is a tragic human waste leaving multitudes of victims.
The pain may obscure important and heartening developments. The downsizing announcements suggest that GM's leaders are finally seeing its crisis in all its seriousness. American automakers have been working hard to reduce or eliminate quality problems that plagued their products 10 or 20 years ago. This model year, GM introduced 16 new vehicles, two of which ranked among the top 10 in a survey of customer satisfaction.
And there is much room still for progress. While GM needs 32 to 36 hours to make a Chevrolet Lumina, Ford is producing Tauruses and Sables with 17 worker hours per vehicle. At roughly $31.50 an hour for wages and benefits, that's a big disadvantage now for GM, but also an indication of the gains it should be able to make with increased productivity.
GM has remained nicely profitable in markets outside North America, such as in Europe. Part of the difference may be that General Motors has not assumed its market share overseas was fixed. In this country, experience is finally obliterating this defeat-assuring assumption.