Transportation

Flatfooted Automakers Have Only Themselves to Blame

By Jason Leach
Published August 10, 2007

Hey, Buzz. Wake up and smell the fresh air.

We all wouldn't have to buy foreign vehicles if you guys weren't stuck in the 1960's. Believe it not, times have changed.

While North American automakers have been trying to convince people that they need to drive army tanks in their towns and cities, other automakers have been taking skyrocketing cancer rates and pollution-related illness seriously.

The North American auto industry faces job losses and plant closures not because of foreign competition, but because you've been caught flat-footed admiring all the pollution in the Detroit river for the past 40 years.

Jason Leach was born and raised in the Hammer and currently lives downtown with his wife and children. You can follow him on twitter.

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By Ryan (registered) - website | Posted August 10, 2007 at 17:01:42

What makes me sad is that the unions all supported Canada signing the Kyoto Accord just a few years ago and refused to buy the industry terrorism about lost jobs.

Companies like Honda and Toyota are increasing sales and growing market share mainly on the strength of their safe, efficient, well-engineered cars. (For a single example, Honda is coming out with a diesel Accord in 2010 that gets 53 mpg (63 miles per British gallon).

In the meantime, the US automakers continue to pin their hopes on light trucks with outdated technology, poor safety and terrible gas mileage that are cheap to assemble but command a 'macho premium'. The effect of the predictable run-up in oil prices on sales of these gas guzzlers is equally predictable.

Ironically, I also think Flaherty's feebate scheme is a bad idea, but not for the same reason as Hargrove. If you want to regulate efficiency, you need to do it at the point of manufacture, not of sale.

If the Federal government were serious about increasing fuel efficiency instead of scoring cheap and ineffectual political points, they would eliminate the regulatory loopholes that treat SUVs differently than non-commercial personal vehicles and they would establish a strict Canadian corporate average fuel economy (like CAFE in the US).

Even better, Canada could simply adopt California's strict auto industry standards. The automakers already have to follow them for the California market, and Canada, with 32 million people to California's 37 million, is roughly equivalent in size.

That the Harper government steadfastly refuses to do this, preferring to buy votes with its feebates and waiting until 2011 to introduce half-assed standards, is clear evidence of how seriously they take the issue.

The reason the foreign automakers like Honda and Toyota are outperforming Hargrove's CAW employers is that they're operating from domestic regulatory environments that take these things seriously.

Embarrassingly (for the free-market deregulation cheerleaders), those companies are also the industry leaders in sales and profits.

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By Question-? (anonymous) | Posted August 11, 2007 at 02:45:54

Question -How do you transport 4 adult sized people, 2 large dogs, 2 cats, & some luggage & supplies in an economical way?

Answer- I don't know, & neither does the auto industry.

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By peter (anonymous) | Posted August 11, 2007 at 08:44:43

you totally need a hummer.

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By Question-? (anonymous) | Posted August 11, 2007 at 13:01:36

"Oh like TOoo-tally...That would just be Awe-some!" LOL! (sarcasm about Hummers here.)
I think the most I can manage is a Hummer-roo.
(small tin kazoo.)
So far the only vehicle being manufactured that meets my need without being a Big Box on wheels is the hearse. A 2nd. hand hearse might be a good investment. I'm sure nobody has had one up to 150 km./hr. or crashed one into another vehicle, lake, wall. Just paint some flames on it.

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By Mike (registered) | Posted August 13, 2007 at 12:54:59

This probably won't make me super-popular on a Hamilton-area blog, but I agree with everything Jason has said except for one thing: The title should have read Shortsighted Union should replace Flatfooted Automakers.

Not that I'm absolving North American automakers, but rather drawing special attention to the role the CAW has played in this situation. Buzz, after all, is not an employee of a NA automaker, even though it'd be hard to tell based on his comments. You'd figure one of the biggest (and arguably most powerful) unions in Canada would take a progressive approach to the environmental issue, but from my experience working in a CAW shop (I had to sign a waiver stating I'd never be a member of the union even though I paid dues), they are one of the most conservative, shortsighted and narrowly selfish organizations I've ever seen.

And the funniest thing is that the union is digging their own grave (at least for their employees in the auto sector). Trying to paddle against the currents of increased fuel efficiency is not where you want to be on this issue, but the CAW knows something very well: That the NA automakers have not expanded their fleet of small cars because they cannot build them here and make a profit. The high labour and legacy costs for producing cars in union shops in NA means that they need to produce autos with big margins (which are, not coincidentally, SUVs, trucks and full size autos).

So instead of talking concessions, they're talking about protecting their market by any means necessary. The environment can handle a few million more "light trucks" no?

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By jason (registered) | Posted August 13, 2007 at 21:39:07

I'm no expert on the issue, but am interested to know the wages and benefits offered by Toyota and Honda in their NA shops. They are building them like crazy. I've always thought that the reason NA automakers build the big gas guzzlers is because a) that's what the oil/gas companies want, and
b) because the government charges such lower taxes and fees on SUV's compared with small cars (again, a completely stupid policy to still be practicing these days...our governments are so lame).

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By Mike (registered) | Posted August 14, 2007 at 10:46:44

Jason,

From what I remember from the time when I was working for a big-three company and a friend was working for Honda, the wages were comparable, with the CAW ones being slightly higher, but that difference was almost totally offset by union dues. The workers for the Japanese companies seemed to like the corporate culture at the assembly plants more, even though they were frequently hired on fixed-term contracts (which is how some of those companies can boast they never have to fire or lay off employees).

You reasons for making the gas guzzlers makes sense (although I don't know if anyone can prove collusion between makers and petro companies), and the tax thing is an issue I don't know much about.

As the son of a big three head office employee, I've heard quite a bit about the struggles the American companies have been facing, and it seems that a lack of long-term planning plays a large part in the problems. Right now they are stuck on the belief that Americans (who really are the only society on the planet who buy big cars and trucks at such volumes) will keep buying gas guzzlers and carry companies back to profitability as workers slowly retire.

Personally, I would not be surprised if one of the big three doesn't make it out of the next decade.

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By Ryan (registered) - website | Posted August 15, 2007 at 11:30:26

"Personally, I would not be surprised if one of the big three doesn't make it out of the next decade."

I think it's instructive that Daimler essentially had to give Chrysler away for free to get rid of it.

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By genghis (anonymous) | Posted September 07, 2007 at 18:16:17

"Question -How do you transport 4 adult sized people, 2 large dogs, 2 cats, & some luggage & supplies in an economical way? "

I hear the East German "Trabant"
is making a comeback..strap the family on the roof and head out to Rostock for the day.

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