In July 2007, I wrote an epic piece titled Fixing the American Auto Industry. In it, I reviewed the state of affairs at Chrysler, Ford, and General Motors (GM) at the time, how they got where they were, and what I felt they needed to do to get back on track. Reading it today, I stand by the vast majority of what I said. I am also sad to say that my dire predictions have essentially come true:
. . . With imagination and guts, the leadership of these venerable corporations can ensure their survival and even regain a leadership position in the industry. If Apple Computer could come back from the brink of bankruptcy to become the computer, music, and electronics leader it is today, the ‘big three’ can orchestrate a similar turnaround.
But it will not be easy, and for that reason I am not convinced that each of the ‘big three’ will still exist in ten years’ time. If I were to hazard a guess, at least one of them will either slide into bankruptcy or be bought-out by a competitor (if they can find any value in it) within the next decade. But I am very optimistic that at least one of them will survive, and that they will do so by implementing some or all of the recommendations I have made in this document—cutting abusive UAW contracts out of their financial equations, improving product quality and value, and being innovative rather than reactive.
All-in-all, I wasn’t all that surprised when two-thirds of the ‘big three’ went bankrupt (Chrysler and GM). Nor was I surprised that one of the ‘big three’ is still surviving and doing pretty well in the market (Ford). That’s basically what I said would happen; though I was a bit surprised at how quickly things fell apart for Chrysler and GM.
I certainly didn’t predict everything though. Fresh off of ‘going private’ under the leadership of Cerberus Capital Management, I would have expected in 2007 that Chrysler would be in the best position to turn itself around. Less than two years later, Chrysler was a bankrupt shell of a company jointly owned by the United States government and Italian automaker Fiat. I am thoroughly disappointed in Cerberus; they had a great opportunity and missed it. I’m also surprised that Ford was able to survive and, indeed, do very well for itself without breaking the UAW union or eliminating a large portion of their dealerships.