Problems remain for Detroit ThreeNew labor agreements will help, but U.S. automakers face other obstacles in their struggle to survive, says Fortune's Alex Taylor III.NEW YORK (Fortune) -- More and more these days, you hear that the public's patience with Detroit has run out. The recently negotiated labor agreements at General Motors and Chrysler, the argument goes, relieve a big chunk of their health care burden and give them more flexibility in manning plants and planning production. With their cost disadvantage vis-à-vis the Japanese greatly reduced, American automakers now have to build cars and trucks that Americans actually want to buy. In other words, it is time to put up or shut up. It is an appealing argument - but it is wrong. Sure, the Detroit Three have made some boneheaded decisions in the past and run their companies by looking in the rear-view mirror for far too long. But some of their biggest problems are not of their own making and solving them is out of their control. So what's holding the Detroit Three back now?
Probably the smartest thing to do now is to stop thinking about a Detroit Three altogether. Their fortunes have been diverging for several years and are on the cusp of real change. Under the steady leadership of Rick Wagoner, GM has remade itself into a truly global company that has made a big bet on future technology. Ford, meanwhile, has hocked itself to its eyeballs as it tries to figure out what it wants to be when it grows up. And the shades have been drawn under private ownership at Chrysler, while CEO Bob Nardelli figures out how to get the place ready for a sale or an IPO in three or four years. Frankly, I'd be satisfied just to see all three companies get through the next two years in reasonable financial condition. Despite the rosy GDP numbers for the second quarter, the economic headwinds are stiff. Thanks to the subprime mortgage crisis, consumers can't use their houses as piggybanks any longer. Filling up at the pump is becoming increasingly painful with oil at $95 a barrel. And the combination of high government deficits, a growing current account deficit, and the weak dollar don't bode well for the future. So don't expect life to be getting significantly better for the U.S. auto industry anytime soon. But you can count on one thing: It will be different. |
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