Time to Stop Making Nice

Commentary

They say nice guys finish last.

And nobody on the global auto industry stage appears nicer these days than the Americans.

While the rest of the world, particularly Asia, plays fast and loose with the rules of trade, the U.S. clings blithely to the romantic notion that free enterprise, like love, conquers all.

Consider the milestone first-quarter event that saw Toyota overtake General Motors in global sales. It marked the first time in seven decades that an auto maker other than GM found itself on top.

GM product guru Bob Lutz says the lead change never would have happened if GM had the same access to Toyota’s home market that the Japan-based auto maker enjoys here.

Incidentally, Japan last month reported a record trade surplus of ¥1.63 trillion ($13.6 billion), driven to a significant degree by vehicle exports to the U.S.

And industry analysts claim Japan’s monetary policy suppresses the yen so much it amounts to a per-vehicle subsidy of $3,000 to $9,000.

Meanwhile, the United Auto Workers union notes Korea exported 554,000 vehicles to the U.S. last year, while reverse traffic amounted to just 4,000 vehicles – an $11.6 billion U.S. trade deficit.

Yet the Bush Admin. seeks to preserve this imbalance in a trade agreement with Korea – even as the domestic manufacturing footprint of Detroit auto makers shrinks in the wake of restructuring, and major suppliers slash payrolls in a mad dash to source their products from low-wage markets overseas.

Then there are the profit-draining health-care benefits paid to retirees and surviving spouses, which add upwards of $1,500 to the cost of each GM, Ford and Chrysler vehicle. Industry estimates suggest Toyota, Honda and Nissan are on the hook for less than a third of that amount because, despite considerable investment in U.S. plants, they still employ fewer people and have still fewer retirees.

Critics accuse Detroit auto makers of capitulating to the UAW during the heady days when they dominated the market they now share almost evenly with their Japan-based competitors. Therefore, they deserve the predicament in which they find themselves.

How ironic, as GM CEO Rick Wagoner once noted, to be condemned for practicing responsible corporate citizenship.

Remember also the U.S. and flush-with-cash Mexico are the only nations in the 30-member Organization for Economic Cooperation and Development that do not have national health-care insurance.And there are no reasonable prospects for change.

Now, federal legislators are pondering a more aggressive, albeit timely, fuel-economy mandate. It calls for auto makers to achieve an average rating of 35 mpg (6.7L/100 km) across their entire range of products – cars, SUVs, vans and pickups.

The wider the product range, however, the more onerous the task. And guess which auto makers have the widest product range?

Note to Washington: Loosen up. Our honeymoon with the open market is over.

Detroit has been forced to remain the perfect gentleman while its competitors have been getting down to business.

Nice guys just don’t stand a chance in such a world.

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