Crash Course, The American Automobile Industry's Road from Glory to Disaster by Paul Ingrassia. Published by Random House Inc., New York, c. 2010.
Crash Course is a narrative of the development and decline of the American auto manufacturing business from the end of World War II to the bankruptcy filing of General Motors which started on Monday June 1, 2010 at 6:03 am at U.S. Bankruptcy Court, New York, New York.
The author, Paul Ingrassia is a long time journalist covering the American auto industry. He was the Detroit bureau chief for The Wall Street Journal. In 1995, with Joseph B. White he wrote "Comeback: The Fall and Rise of the American auto industry."
Is there a conflict that the author published a book in 1995 about an apparent business recovery and the same author publishes a book 15 years later describing the crash of the same American automobile industry? No. A few good years of sales in the '90s covered up structural problems that became insoluble when gasoline prices went up and car sales went down a few years later.
Crash Course is selected vignettes of the automobile industry. In one event after another, the American auto manufacturers were boxed in with high fixed operating costs, then a drastic decline in volume of sales, and finally very few desirable car models.
One of the stories in Crash Course is the General Motors second effort to make a small car to compete with imported cars like the Volkswagen. Chevrolet designed the Vega 4 cylinder small sedan. Chevrolet prepared to manufacture the car in Lordstown, Ohio with production beginning in 1970.
The same Lordstown factory was also studied by Emma Rothschild who wrote Paradise Lost The Decline of the Auto Industrial Age.
I have reviewed her book in this blog: Review of Decline of the Auto Industrial Age
Crash Course tells the story of Lordstown with additional details. Where Emma Rothchild found the Lordstown factory an example of the problems with the the mass automobile manufacturing culture, Mr. Ingrassia adds details and shows business consequences that are both mundane and grim warnings of the upcoming problems with making autos in America in the American way.
Chevrolet had spent about 2 years designing the Vega and advertising it's engineering innovations. Shortly after the Vega went into production at Lordstown, the United Auto Workers called a strike. The strike lasted 67 days, it stopped Vega production and distribution. The strike as an event shows that the UAW Union treated the Vega introduction as an opportunity to force General Motors to sign a new labor contract when the company seriously needed to get a major new manufacturing iniative started.
Right around the same time, General Motors reorganized the Lordstown factory management. GM gave control of the factory to a new entity called GM Assembly Division. The effect of that change was to add a new layer of bureaucracy between the Vega designers and the car assemblers.
Within the Lordstown factory, there had been a major effort to incorporate robotic machines. The goal was to improve build quality and reduce labor content in the cars. Unfortunately, the setup changed many assembly jobs into machine loading tasks.
According to Crash Course, the Lordstown factory also had one of the youngest workforces in General Motors. The factory was one hour drive away from Kent State College where 4 students were shot to death on May 4, 1970. The Vietnam War and the draft were both in effect. Recreational drugs were known and used at that time. The social climate, draft pressures and a robot dominated work environment all affected the workforce. When the strike ended, the Lordstown plant began manufacturing Vega cars.
Lordstown management raised the number of cars built per hour from 60 to 90. It was called "the fastest factory in the world" according to Ms. Rothschild. There was an explosion of car quality problems. Cars were made with keys broken off in the trunk lock, dents in the fenders, cuts in the upholstry. The engine had cylinder problems resulting in the car becoming famous as having a "throwaway engine block".
The Lordstown Vega story happened 40 years before the GM bankruptcy. Let me try and list the ways that this incident foreshadows the coming problems:
- General Motors was re-organizing itself. The change at this factory played a small role in a failure to build good small cars. The corporation became more complicated but not more productive.
- The union was using strike tactics that conflicted with the goals of the Vega project. The strike damaged the product introduction and contributed to the subsequent speed up of the production line later.
- The effort to automate car manufacturing combined with the production pressures created by the strike timing combined with the Vietnam draft and Kent State killings made a work environment of epic crumminess.
- The Vega was several hundred pounds and several hundred dollars more expensive than the imported Volkswagen it was supposed to compete with in the marketplace.
- Once the engine problems and manufacturing problems were fixed, the car was a decent cheap 4 cylinder sedan.
- The strategic goal of making a quality and cost competitive American small car was undermined by the actions of GM management and the Union management and the assembly workers.
I think one of the things that is missing from Crash Course is numbers and description of the huge American consumer buying push over the last 70 years. What is the economic rocket motor that has caused the American public for at least the first 50 years to buy the stuff the American automobile manufacturers have offered?
In this blog I have explored one of the factors propelling the usage of automobiles in America. I found a cost advantage of using a private car compared to the cost of a public bus when the value of the traveller's time is included in the cost computation.
Another thing that puzzles me after reading Crash Course is why does General Motors (or the other two American makers) not learn from past management and engineering successes? Here is what I mean: All the car makers have had instances of good small engines and good small cars. Why doesn't years of experience result in new designs that are better than the old designs?
Here is another way of putting it, the puzzle in Crash Course is how could all three American auto makers have all gone so deeply into a jam of rising costs, difficult labor relations and plausible energy problems?
The powerful picture created in Crash Course is the Big Three became boxed in, they finally all leaned towards a "big vehicles for big profits" product mix and they marched ahead with a cost structure that would not proportionally decrease if sales decreased.
Here is my list of puzzles about the automobile business that Crash Course approaches:
- The car business is still a vigorous trade despite the economic problems experienced by the Big Three. How strong is the continuing demand for cars?
- The financial problems of the Big Three would probably make some very interesting tables and graphs. Both GM and Chrysler bankruptcies have accounting stories that needs to be told.
In a Wikipedia article about General Motors, one view point is that the accounting methods introduced by Alfred P. Sloan in the 1930's eventually allowed excess production in later years. The accounting design left management blind to excess inventory that became a great burden when car sales began declining.
- One of the seminal decision points of the entire narrative is the finding by American car makers that "Small cars (energy efficient cars) result in small profits."
This is a specific pivotal point where the journalism should describe the problem in much more detail. There are many examples of abandoned efforts: What is the theme revealed by the Falcon, Pinto, Escort, Vega, Corvair, Sprint, Aveo, Valiant, Dodge Omni, Dodge Colt and domestic Volkswagen.?
What is required to make a domestic small car to match a Toyota Corolla or a Honda Civic? Why can't a domestic small car go 200K miles and not draw curses from it's owner as one cheap thing after another breaks, falls apart or rusts away?