Bankruptcy, now!

I’m a car guy. Always have been. I’ve lived, breathed and dreamed about things automotive for almost all of my life. Years before I even reached the legal age to get a learner’s permit, I was digesting car books from cover to cover, building scale-model cars from kits and lusting after a ’49 Mercury coupe just like the one James Dean drove in “Rebel Without A Cause.” That car, which is now at home in Reno, NV at the National Automobile Museum, was the essence of cool for a car-crazy kid growing up in the 1950s.

I’ve owned, enjoyed and occasionally cursed all manner of automotive iron including a brand new 1966 Mustang, an MGB roadster of the same vintage (but not so new), an Olds Cutlass 4-4-2, a ’68 Dodge Charger which had a fuel gauge you could actually see move downward when you stomped on the go-pedal, an ’85 Volvo Turbo sedan that was the quintessential “sleeper,” a wickedly-quick Taurus SHO, three Jeep Cherokees, one Jeep Grand Cherokee, an F-100 pickup, a Ranger pickup and a Nissan pickup, among others.

Though I’ve owned foreign and domestic, I’ve always rooted for the guys in Detroit as a matter of national pride. I know that they can build great cars. I’ve owned two Accords, and the ’06 Ford Fusion I currently drive is as solidly-built, comfortable and quiet on the road as either of those Hondas. It even goes them one better when the two-lane blacktops here in the Ozarks turn twisty, because it handles much better than the Accord or the Camry. The Fusion is a better driver’s car, and given the competitive segment of the market in which it competes, that’s saying a lot.

So it’s no small irony that just when Detroit starts to figure out how to build cars that measure up to what their competitors design in Europe and Japan, they run out of money. American automakers have some good product out there, and even better offerings are in the pipeline. If you doubt what I’m saying here, test drive a Cadillac CTS. When I was a kid I never dreamed that you would be able to buy a Caddy with a standard shift and BMW-class handling for thousands less. GM’s engineers put some Corvette into that Cadillac, and it shows. Ford did extensive marketing research and interviewed thousands of consumers before it designed the Fusion. So don’t listen to the crap that moron Michael Moore is selling about the big three not listening to its customers.

Detroit’s problem has never been with its designers, engineers or market researchers. It’s the guys up on the top floors who make the decisions who have dropped the ball. When Ford CEO Alan Mulally arrived in Dearborn after having turned around Boeing, he couldn’t believe that the company was wasting so much money by designing, engineering and building cars separately in several different parts of the world. Even worse, engineers and designers in Michigan weren’t even talking to their counterparts in Germany and Australia. It was the old “Not Invented Here” syndrome, an ailment which has plagued the Big 3 for decades. He put an end to it at Ford, and rather quickly, too, considering how loathe the captains of the American auto industry have been to change the inbred ways they had of doing business. For years, buyers of Ford’s bread-and-butter Focus model have been forced to settle for a car which isn’t bad, but it’s not the same Focus that won so many awards in the rest of the world. The 2010 model of the Focus will be essentially the same the world over. The Fusion, as good as it is, isn’t as good as the Mondeo, a similarly-sized Ford which is another award-winner for the company’s foreign divisions. So the Mondeo and the Fusion will fuse sometime around 2011 or 2012.

So it’s not only high labor and benefits costs which are hurting Detroit, it’s bad decisions from the top down such as a refusal to take advantage of economies of scale by consolidating the efforts of its engineers and designers from around the world. Like Ford, GM has its overseas divisions and is beginning to cut down on the duplication of effort among its various divisions. Both companies are building better cars than they have in the past. Other bad decisions by top management have been equally responsible for the sorry state of affairs our domestic automakers find themselves in. Continuing to rely on higher-profit trucks and SUVs and getting caught with their pants down when oil prices spiked is another. It also didn’t help when the captains of this industry showed up in Washington D.C. begging for a bailout after stepping off of their respective plush corporate jets. Now a chagrined GM has announced that it’s selling off part of their bizjet fleet. Memo to the CEO: Take a cue from Gov. Sarah Palin. The time to get rid of the trappings of office are when you first take the job, not after the Gulfstream V generates bad PR for you.

I’m one of those who believes that bankruptcy is the best medicine for for what ails Detroit. Reorganizing will open an opportunity to sit down with the unions and renegotiate those high costs of labor and health care that the companies keep saying are tilting the playing field in favor of their competitors. It will also buy some time for those better products currently in the pipeline to make their way to the marketplace. I think that Ford and even GM can survive austerity programs, if they have the courage and the foresight to implement them.

About Chrysler, I’m not so sure. That company doesn’t have the strong foreign operations that GM and Ford have, and product-wise, the pentastar company has been lagging. While GM and Ford produced the Malibu and Fusion respectively, both strong entries into the most competitive class in the auto industry, the Dodge Avenger and Chrysler Sebring are turkeys. The V6 engines in many MoPar models gets poorer gas mileage than the V8s from the competition. Sure, the Dodge Challenger is a sweet ride, but it won’t save Chrysler. Nor will the ugly-duckling Jeep Compass nor the me-too Dodge Nitro. Someone will buy Chrysler just to get their hands on the Jeep brand. The lion’s share of rest of the company’s models will likely get the ax.

So from the point of view of a car guy, let them eat bankruptcy. It’s a bitter pill to swallow, but it might just save two-thirds of the Big 3. Otherwise, I fear, we will wind up with an American version of British Leyland, and we know how well that turned out. I’m telling my congresscritters that as far as an automaker bailout is concerned – bankruptcy, now! What will you tell yours?

– JP