US industry turmoil: why we should care

Keith Adams

The US Big Three - GM, Chrysler and Ford
The US Big Three - GM, Chrysler and Ford

According to Autoblog, the state that the Big Three in the USA now find themselves in is rather precarious. After collectively going cap-in-hand to congress (in the most eco-cars they could find) and asking for a mere $34bn, it looks like the requests made by the three companies’ CEOs were only partially met to the tune of $15bn.

With a reduced hand-out between the three, it’s looking likely that the continued survival of Chrysler, GM and Ford won’t happen. The mood in Detroit, understandably, is desperate and my thoughts are with my colleagues out there, who face a bleak 2009.

Of course, we’ve already been there – the 1970s were a desperate time here in the UK, as our one major indigenous car manufacturing conglomerate went down the plughole (yeah, I know), as the government went cap-in-hand to the IMF and our media did its best to stir up anti-UK feeling…

Right now, it looks like the US car industry is going through the same convulsions (some would say death throes), except on a much, much grander scale. The feeling that commentators across the globe have is that Chrysler’s already doomed, GM is hanging on by its fingernails, and Ford should struggle through 2009 and 2010 if it continues its current efficiency drive (AKA job and factory-shedding rationalisation programme).

But should we care?

Of course, we’ve already been there – the 1970s were a desperate time here in the UK, as our one major indigenous car manufacturing conglomerate went down the plughole (yeah, I know), as the government went cap-in-hand to the IMF and our media did its best to stir up anti-UK feeling…

Absolutely – if GM goes under (as many think it will because of the crash in demand for new cars, globally), then we’ll be saying goodbye to Vauxhall in the UK and Opel in Germany. Given that unlike Ford, Vauxhall still mass-produces cars in the UK (at Ellesmere Port near Liverpool) then that will be a devastating blow, not just for the region, but for carmaking in the UK in general. Tragically for GM in Europe, this catastrophic failure would happen as it finds form with its current (and upcoming) range.

And Vauxhall’s history is one of the longest in the UK – with the Griffin still very much part of the nation’s psyche. To see that go would be a real and genuine loss…

It’s clear that we’re a long way from seeing the global crisis run its course and we’re standing at the beginning of a significant shift in the history of the motor industry. We’ve already seen Honda’s pull-out of F1 (who will be next?), mass redundancies globally and severely depressed demand (even China is 30 per cent down).

One thing is clear – we’ll be seeing a new world order in the next few years, but where will that be centred? Germany? Japan? China?

Keith Adams
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  1. I can’t see Vauxhall being allowed to go under. Ellesmere Port is a marginal seat and unlike 2005 when the government could have afforded to take a hit electorally in the Midlands, which didn’t happen anyway, this time Labour will be desperate to try and hold every last seat. Also Vauxhall doesn’t have all the negative baggage that MG Rover had so a rescue wouldn’t be as controversial. Lots of comment in the papers today about the Detroit bailout, and as you say the consensus is that Chrysler is toast while GM will come through but a lot smaller. Very sad times for anyone who works in the global motor industry and for those of us who love cars as a lot of famous names aren’t going to be around for much longer.

  2. Ellesmere Port could easily go – Government didn’t act when Luton closed, or when Ford stopped making cars at Dagenham. But it depends on the continued survival of GM. Not much scope for making Astras here if GM is closed down everywhere else. Can’t see the US Govt allowing GM, Chrysler and Ford all to disappear, so the most likely outcome is that they have to agree to downsize, cooperate more, and produce more friendly vehicles, in return for a bail-out. Sounds a bit like BL in the ’70s, doesn’t it? As pointed out in these pages recently, car manufacturers tend not to go under – none of them did between Borgward in c.1960 and MG-Rover in 2005. Instead, they merge and/or get smaller. Quite possible that Ford and GM could reduce their European operations – Saab and Volvo being especially vulnerable, but Ellesmere Port too, but can’t see the Vauxhall name disappearing as its so important in the UK company car market.

  3. Yes, GM has been BL on much bigger and longer scales. However, the circumstances are very different today than when Luton and Longbridge were closed. The current government cannot afford to allow a major employer to go under, GM will survive in a very different form and it’s European operation will continue with the German, British and Spanish government chipping in to keep their factories running. I saw a story during the week that the Swedish government were denying a plan to nationalise Volvo, it could yet come to that!

  4. We’ll have to see whether European Governments bail GM out. I understand the politics, but there must come a point at which using tax payers’ money becomes unaffordable!

  5. Rover chalked up an impressive list of ‘firsts’ over the years: 1st executive car (P6), 1st luxury off roader (Range Rover) 1st big hatchback(SD1). And now perhaps ‘1st to go under’? Could what happened to MGR become more widespread?

  6. I can quite see that Ellesmere Port could be closed. leaving just what was IBC (the Opel/Vauxhall/Renault/Nissan) van plant in Luton as the sole survivor. In which case ‘Vauxhall’ badges will go and ‘Opel’ or ‘Chevrolet’ will be imported instead. In April Vauxhall Motors Ltd changed its name to General Motors UK Ltd…a portent perhaps? The last serious attempt to ditch the name may have been in the winter of 1981/2 and they may take the step at last. After all, itr is Opel and Chevrolet-badging in Eire!

  7. But things are different from the early 80’s. Back then the Vauxhall badge was probably at it’s lowest ebb and few would have mourned it’s passing. Now, as has been said on another part of this site it is a strong and well regarded brand. Ellesmere Port may go but I think the brand will live on.

  8. I dont think its a foregone conclusion that if GM in the States goes under that Vauxhall/Opel in Europe do so as well. The same applies to Ford of Europe if Ford US fails. Both the European subsidiaries are stand alone operations and both are in reasonable (by global automotive standards)shape. Both are far from being basket cases and have modern well regarded products that sell well in their respective markets. It is almost inevitable that they would be snapped up. I have read that BMW and Mercedes are already circling seeing this a golden opportunity to buy volume at a low price.

  9. Throwing dollars at The Big Three seems unfair to Honda and Toyota who are doing so well making cars in the USA. They need to go into Chapter 11 to allow them to solve their horrendous wage/welfare costs although it won’t make the new president popular with the UAW. I too can see Opel surviving, along with Chevrolet (ex Daewoo) Korea and various local assembly/CKD plants, etc. The Russians might buy Chrysler. I can’t see the Japanese taking anything over but can visulaise Porsche/VW, PSA, Renault and Fiat having a good sniff around backed by the tacit support of their respective governments. Bits of the General owned by cheese eating surrender monkeys – how ironic would that be? The Chinese are a bit skint at the moment and may need to consolidate before looking overseas – SAIC and Volvo looks a bit ambitious given how far they haven’t got with MGR. If Ford eventually go it would affect JLR engine supply – perhaps they could go back to Powertrain – oh b*gg*r… I bet JLR is happier being part of Tata at the moment – Tata has its own problems but at least it seems to be being innovative in how to fix them rather than lose a major skills base/facilities by mass redundancies/ closure.

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