There is a precedent for all of this. From 1979 to 1982, the UAW agreed to a series of concessions, including wage cuts, pay freezes, the elimination of cost-of-living allowances and other steps meant to save Chrysler and help GM and Ford get back on their feet. There are two reasons why this happened: One is that the UAW had to give in or Chrysler would die. It was a pragmatic situation that Lee Iacocca played to his advantage. The other reason is the work by a number of creative executives and union leaders who arrived on the scene just when they were most needed. At the UAW, it was the president, Douglas Fraser, the vice president in charge of Ford, Donald Ephlin, and the Canadian union leader, Bob White, all of whom knew that the futures of their workers were in doubt unless things changed.
At Ford, the revolution was brought about by Peter Pestillo, the labor relations vice president who had come to Detroit with a strategic plan to change the atmosphere and find new ways for labor and management to work together. Fraser and White are long retired, Ephlin is dead and Pestillo is winding up his career as chief executive of Visteon, the auto parts supplier that was once part of Ford. But the 1982 agreement between Ford and the UAW, which GM later accepted, was a landmark in that it traded concessions in return for the union getting a look at the company’s books and, ultimately, a say in certain affairs in its manufacturing plants. The agreement proved that the UAW and the Big Three could face reality and move forward. Eventually, the union won back all their pay, and relations between the union and the companies turned rocky again, culminating in the devastating strike at GM in 1998 that shut down the company for seven weeks and cost it billions of dollars in lost sales.
For such a revolution to take place in the auto industry again would require the companies and the UAW to sit down together and find new ways of doing business. People who are familiar with his style say that Gettelfinger realizes the threat that the imports pose. But he can’t step forward alone—and especially not without the support of his union members. That would be political suicide, because those workers have a say in whether Gettelfinger will get reelected. He’s got to get help from CEOs and other leaders at the auto companies, who would also have to pledge to overhaul the way they do business.
That might be too much to expect from Detroit companies, permeated as they are with the culture of bigness. But as Chrysler is trying to change its focus from domestic to import, as GM is trying to become the strongest American player, on a par with the best imports, as Ford searches for an identity, there is hope that eventually some kind of change can come about. In the meantime, there will be hundreds more automotive jobs created in this country by 2010. They just won’t be at Detroit’s Big Three.
Jim Olson of Toyota doesn’t completely discount the possibility of minor actions, on the part of the union or the Detroit companies, to stymie the imports’ growth. One such showdown has been over fuel-economy regulations. In 2002, the UAW tried to convince members of Congress to impose standards that would have required auto companies to improve their fuel economy according to a set percentage. That would have hurt import companies more, because the fuel economy of their vehicles is generally higher than that of Big Three automobiles. The effort was defeated, however. Said Olson, “We’re always wary. They can get us in little ways, with sharp elbows and heels to disadvantage us, but they aren’t able to drop a big thing on us.”
Besides, he noted, every major automotive company building vehicles in the United States except Honda is a member of the Alliance of Automobile Manufacturers. Representatives of the group meet twice a month to talk about issues in Washington and elsewhere, which has removed some of the Detroit companies’ incentive for attacking their foreign counterparts. “It’s difficult to do that with someone that you meet with every two weeks. You can’t hide it anymore,” Olson said.
THE PEOPLE
One of the places where Detroit has come to expect change is at the top. In times of crisis, the Detroit auto companies replace CEOs almost as frequently as sports teams do coaches (which, in the case of the Detroit Lions, owned by the Ford family, has become an annual occurrence). It’s become a favorite pastime among company insiders, the media and the Wall Street community to lay odds on whose star is rising and whose is falling. And almost no attention is paid to the import companies’ own leadership developments. But a very important one is taking place at Toyota.
Yoshi Inaba, the president of Toyota’s U.S. sales operation, is considered a candidate to become the next chief executive, succeeding Fujio Cho, who turns 65 in 2003. Inaba is a relaxed, smiling executive who speaks perfect English and is a keen student of the auto industry. He has directed Toyota’s operations in the United States during its most aggressive and successful period, seeing its sales top 1.75 million a year, owing in part to its expansion into the truck market and its ever-growing collection of factories in the United States, Canada and Mexico. Were he to replace Cho, it would mark the second time in recent years that a Toyota executive had taken the top job after holding a key position in the United States—and it would be only fitting, now that the United States is Toyota’s leading market.
Understandably, Inaba doesn’t think it’s appropriate to discuss succession issues where his own future is concerned. But he’s one of the few people at the company who will discuss the future of another Toyota executive—Akio Toyoda, 46, the latest member of the company’s founding family to play a role at the automaker, and a man who many feel will become its eventual CEO. “Whoever is next [as chief executive] is bridging to Akio Toyoda,” Inaba said. Roughly the same age as Bill Ford, Jr., Toyoda could be as important to his family’s company as Ford has been to his. And indeed, the pair of automotive scions could be in place at the same time, since Ford plans to be at his family’s company the rest of his career.
It has been nearly 10 years since a Toyoda family member ran the company, and in that time both Cho and Okuda raised Toyota’s profile on a global level, bringing it beyond its Japanese roots. In view of his background, Toyoda is most likely to stay with that path. Named to the company’s board in June 2000 as its youngest member, Toyoda’s journey has been unusual compared with that of other family members, but in a sense completely appropriate for a future CEO given the direction Toyota is taking. He attended prestigious Keio University, outside Tokyo, but earned an MBA degree at Babson College in Boston (the alma mater of Edsel Ford II). Toyoda joined Toyota in 1984 as a regular trainee, and then served as vice president at NUMMI. In 1998, Toyoda founded Gazoo.com, a cybermall that became one of Japan’s trendiest Web sites; it sold CDs, DVDs, used books and PCs and included a link to Toyota’s financing Web site. Toyoda’s latest assignment has been with the automaker’s Chinese operations, which will be critically important both to feed the developing Chinese market and as a potential source of production. Toyoda, who sports glasses and close-cropped hair, has said that he doesn’t feel qualified to talk about his future. “I try not to think about my heritage. But I’d be lying if I said nobody around me is conscious of it,” he told Business Week in 2001. Sounding impossibly modest, he went on, “I’m just happy doing whatever I can for the company as sort of a jack-of-all-trades.”
If he ascends to the CEO’s job, Toyoda would take charge of a company that has gone well beyond its Japanese roots. Inaba has said he feels that Toyoda would embrace Toyota’s emerging global philosophy. “Toyota is now a giant company striving for change,” Inaba points out. “Whoever comes next should go along those lines.” In the same way that he expects Toyoda to take charge, Inaba also would like to see an American in the job he holds. That would be a step forward for a Japanese company in the United States: Neither Toyota, Honda nor Nissan has Americans completely in charge here. But Inaba thinks the time is coming, if Toyota is truly to be considered an American player. “I wish I could tell you that we were much more Americanized. There are still a lot of hurdles to face to truly call us an Americanized company. But this culture within Toyota can be perfectly carried forward through an American CEO,�
� he said.
Toyota has no shortage of candidates for that job among its American managers and, significantly, no shortage of talented Americans throughout its operations, much to Detroit’s chagrin. It’s a sign of imports’ enduring success that these companies continue to lure the best and the brightest from Detroit to join their operations. Among those hired by Toyota in 2002 was a manufacturing executive named Jamie Bonini, who had been with Chrysler for 15 years. Bonini, 40, was by all accounts a rising star in the American automobile industry. A graduate of Princeton University with a master’s in mechanical engineering from the University of California at Berkeley, he was profiled on the front page of the Wall Street Journal in 1997 for his work helping to streamline the auto company’s Windsor, Ontario, minivan plant. He played a key role in developing the Chrysler Operating System, based on the Toyota Production System. As a reward, Chrysler sent him to Brazil, where he was the codirector of a prestigious engine production venture the company launched with BMW.
Bonini loved Chrysler and had no intention of leaving, especially as the company pushed forward under Dieter Zetsche. But in 2002, he joined Toyota, taking an assistant manager’s job inside the engine and transmission factory in the Georgetown, Kentucky, complex. The position would be seen as a demotion in the hotly competitive world of Detroit, where executives spend as much time managing their careers as they do managing their operations. But for Bonini, it was a start in a company that he hopes will be “a good long-term fit,” he said. “I came to Toyota knowing it was going to take several years in my early time in the company to really understand the philosophy and lead with that philosophy,” Bonini said.
He made his decision to leave Chrysler after months of discussions with Sam Heltman, the executive in charge of human resources at Toyota Manufacturing North America. As interested as Toyota was in Bonini’s skills, Heltman said he wanted to make sure that Bonini would embrace Toyota’s culture and that he’d be happy inside the company, starting out in a job beneath his abilities but that would give him a chance to learn how Toyota worked. Bonini, for his part, said he was impressed by the thorough interview process, which involved his family, too. “I really love manufacturing. I love working on the shop floor. I thought I was a really good fit with what Toyota was trying to do.”
Within days of joining the company, Bonini was on a plane for Japan, where he finally visited Toyota’s factories not as an outsider looking for tips on how to improve Chrysler’s operations, but as a Toyota employee. After his 15-year career in manufacturing, the trip was a seminal experience. “The difference is that Toyota has been at this for such a long time. The skill level is so high, they are able to practice it at a higher level of detail and precision,” Bonini said. Returning home, one of his first tasks was to participate in a continuous-improvement session on the assembly line in Toyota’s West Virginia engine plant. There, managers and workers had studied the employees’ wrist motions as they put engine parts together and had measured their movements down to a fluctuation of 10 centimeters. Bonini had taken part in plenty of such kaizen exercises, but “not to that level of improvement,” he said, his voice showing that he was impressed.
In their own way, American consumers can sense that difference, too. They are not buying imports reluctantly, or for a single reason such as fuel economy, as they might have done 20 years ago. That was a reason Detroit could understand and make allowances for. But two decades or more after the energy crises that caused Americans to sample Japanese cars, they now are willingly and enthusiastically buying import cars and trucks, because the vehicles meet their needs and satisfy their expectations. The fundamental damage to Detroit has already been done.
To be sure, the end of Detroit’s influence on the American automobile industry is a tremendous loss for Detroit. A quick drive around Detroit and its suburbs gives a sense of just how important the auto industry is to the region. In every corner of Wayne, Oakland and Macomb Counties are office parks and low-rise buildings that are home to suppliers, engineering firms, advertising companies and public relations agencies who owe their existence in some way to GM, Ford or Chrysler. Every time a budget is cut, every time a new car project is canceled, each time incentives have to be raised in order to move metal from dealers’ lots, thousands of people feel the pain.
But there is a victory in all of this for American consumers. The imports’ success is being enjoyed by the people who have bought Hondas and Toyotas, Hyundais and BMWs, and who love their vehicles. Yes, the demise of Detroit is a tragedy for Michigan and other states that depend on the Big Three companies. But investments by foreign companies are a boon to Alabama, Tennessee, Kentucky, Texas, California and other areas. As for the argument that the profits earned by foreign companies go back to their home countries, consider this: In the 1990s, as it shut two dozen plants in the United States and eliminated 75,000 jobs, GM invested more than $1 billion in new plants all around the world. During the same period, Toyota invested more than $1 billion to expand its Georgetown, Kentucky, plant, build a truck plant in Princeton, Indiana, and start up an engine plant outside Charlestown, West Virginia, creating more than 20,000 jobs. Which decision was better for the U.S. economy? Which did more to raise the standard of living for people in the United States? By any measure, most people would say the money was better spent here. In June 2003, Detroit News columnist Daniel Howes argued that because of its growing market clout, Toyota had a responsibility to fund the charities, schools and cultural institutions in the Detroit area in the way that Big Three auto companies had done for years. If it was to be considered the industry’s leading company, Howes said, Toyota had to assume a leadership role in Detroit, the epicenter of the American automobile universe.
That misses the point. Toyota has no such responsibility to Detroit, nor do any of the other foreign manufacturers. Their responsibility lies wherever their customers live, their dealers sell cars and their workers manufacture vehicles. The American automobile industry no longer rests in one place; its influence is being felt all across the United States. And what’s more, import companies’ popularity has resulted in a much better American automobile industry. It may no longer be in Detroit’s sole control, but that is what happens in a country like the United States, where consumers are free to buy whatever they like. And they have those choices because of the efforts of countless Americans who have played a role in creating vehicles to suit American buyers’ tastes.
No one has enjoyed his role more than Robert McCurry, the Toyota executive, now retired, who set the company on its expansion path during the 1980s and 1990s. “Once I was there for about a year and got to know the people in Japan, I knew it was a great company. I knew they were going to be very successful. I was happy to be a part of that,” he said. Having worked in Detroit, he found that Toyota’s “system, their honesty and doing what you wanted done, was phenomenal. I knew they could accomplish what they wanted to accomplish. They’re loyal to quality, both at Toyota and at Lexus. They’ve accomplished that reputation, and that’s why they continue to grow, grow and grow.” Detroit, he said simply, “lost that.”
If the Detroit companies are to win back customers, they can’t simply flood the market with new vehicles and hope that will somehow generate more sales. Nor can they simply dump cars onto rental car lots, because the rental companies are only a last resort. Detroit’s survival cannot be based on leveraging history and making promises about a grander “next year” that somehow never comes to pass. To get it right, GM, Ford and Chrysler have to do what their foreign counterparts do: They must make every vehicle they develop uniquely special and targeted precisely at the consumers who will own it. They must make a concerted effort every time out. Every pickup, every car model, every minivan has to be the best of its kind ever built, and every generation after that must be the same. Detroit companies have to put in the kind of effort that Honda did with the Odyssey minivan; take the risk that Nissan is taking with the Titan pickup; stretch the imagination as Toyota ha
s with its Camry and all its derivatives.
There can be no more compromises, no excuses about the need to save money, no halfhearted moves with a vow that “this will hold the place until next time.” Customers have moved far, far beyond that. And they know the difference as soon as they get behind the wheel. They don’t have to make choices based on patriotism or guilt. There is no need to make allowances or wait around until Detroit is ready with its entries. Customers can walk into any import showroom and drive home in whatever they desire, confident that they’ve chosen wisely and, just as important, as excited about their new car or truck, minivan, SUV or crossover as their parents and grandparents once were about cars from Detroit. Unlike past generations, Americans now stand an excellent chance that however long they choose to keep their vehicles, they will be rewarded with reliability. Whether the company that makes their vehicle is based in Japan, Germany or Korea, American consumers know they can find something that fully meets their needs. And that knowledge has ultimately spelled the end of Detroit.
NOTES
THIS BOOK IS BASED primarily on hundreds of hours of original research, along with my reporting on the automobile industry for the New York Times from the years 2000 to 2003. In most cases, direct quotes are drawn from the interviews that I conducted in the United States, Canada, Europe and Japan. I visited manufacturing plants in Alabama, Indiana, Kentucky, Michigan, Mississippi, Ohio and Ontario, as well as a number of factories in Japan. Almost all of these interview subjects agreed to speak on the record, but there were some people who felt more comfortable being interviewed without attribution. The articles and books mentioned below supplemented my reporting in specific chapters, and my thanks go to the journalists who shared their work with me.
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