Cue Thelma and Louise

Guest blogger Rodger Low is a marketing and communications strategist with 15 years of automotive industry experience. Based in Los Angeles, he has worked with manufacturers such as Honda, Toyota and Subaru.

As we do with everything at this time of year, let’s take a moment to reflect upon the nation’s biggest manufacturing industry and at the same time its biggest head-scratcher. Just how did we get to the point where the US-based automotive industry seems on the brink of extinction.  The Once-Big-Three have now become the corporate equivalent of the Salvation Army – ringing its bell at every threshold in Washington, DC, and beyond to get whatever “bailout” funds it can get its hands on just to get through the short term.

But let’s take a closer look at the situation, and what has led us down this path to automotive irrelevance. Did this really come out of nowhere, born out of the recent credit crunch? Or were there signs over the past few years that might have prevented any or all of this?  If you listened to the corporate heads plead their case on Capitol Hill recently, they had no way of knowing that this sales slide was going to be so drastic and so prolonged, and that their cash reserves were so low.

After flying into the Capitol in their corporate jets, they essentially told Congress, “It’s not our fault. We make fuel efficient cars, we are forward thinking.” Blame them (pointing to the foreign car companies) or blame them (pointing to the fat cats in the UAW) or blame them (pointing to the tier-three consumer that they happily sold their Explorer or Escalade to with little more than a wink and a smile).  Their goal: to distract everyone and continue to hide the fact that confidence in the way the Detroit Three does business has deteriorated to historic lows, much like their stock value.

When times were good, they sold their F-150’s, Silverados, Navigators and Escalades, racking up profits and driving up share prices, blind to their mounting retiree benefits costs and the shift in environmental awareness. When the U.S. government vowed to raise the country’s fuel economy standards through more strict CAFE regulations, the Once-Big-Three spent millions to lobby against it, claiming it would be too costly for them to completely retool their operations. These companies were shown the warning signs that change was needed…but they chose for short-term profit, rather than long-term viability.

The UAW is equally at fault. When they saw all that corporate green piling up, they had to get theirs, so they negotiated some pretty sweet deals, establishing the Jobs Bank and subsequently creating a labor expense equal to that of many foreign countries. Again, deals designed for short-term gain, not long-term success.

Almost every one of today’s failures by these three companies is a direct result of yesterday’s short-sighted approach. In today’s fast-moving world, that type of “me first” thinking is the fastest way to failure. Unfortunately, the auto industry has become woven so intrinsically into the fabric of our nation’s past and future that we cannot simply let it drive off the cliff.