Doldrums Cut Share

When 7 out of 10 people say they know someone who has lost his or her job in the auto industry within the past year, it quickly discredits the wishful claims that the industry has overcome its infamous cyclicality.

But that's exactly what our supplier survey found — 70% of both supplier and OEM respondents say they personally know someone in the industry who landed in the unemployment line.

Yes, it's been a rough year in the auto industry. The top brass are trying to put a positive spin on it by insisting that new vehicle programs remain on track, despite the enormous resources necessary for such an endeavor.

More than three-quarters of OEM respondents and a whopping 83% of supplier respondents say they have seen at least one major new program delayed or canceled due to slow industry sales.

From Detroit, it's easy to see the industry's doldrums. But from places like Marysville, OH; Georgetown, KY; and Smyrna, TN; the picture looks a lot brighter for Honda America Mfg. Inc., Toyota Motor Mfg. USA Inc. and Nissan Motor Mfg. Corp.

Are these Japanese transplants canceling programs, like the Big Three? Hardly. They're throwing every product they can at the U.S., and the strategy is sure to swipe more market share from Detroit's Big Three.

We offered another open-ended question to our survey respondents: The Big 3 have been losing market share since the 1970s. What must they do to reverse the trend?

Supplier responses, beyond the obvious “Improve quality”:

“Concentrate on quality and not cost. Let engineering run companies and not accountants!”

“Forget rebates and massive marketing campaigns. A car should sell itself. Build less-complicated cars. We don't need traction control, ABS and stability control on passenger cars. Reduce overhead. Too many engineers specialized in finite areas/systems. Reduce CEO salaries and benefits. ”

“Decertify union.”

“Stop the hemorrhage in the luxury car market, but will they ever make a profitable midsize to compete with Camry and Accord?”

OEM responses:

“Big Three? What's left of the Big Three must produce cars as good in quality, and appeal to low margin market shares like Honda & Toyota… Duh.”

“Limit imports and prevent foreign companies from adding capacity in this country (government).”

“Quit adding junk most consumers don't use.”

“Reduce/eliminate executive bonuses.”

“The biggest problem is the unions. The workforce as a whole does not perform to the quality level of work that is required in today's cars. Their ethic and mentality is still in the '70s.”