Could 2009 happen again?
That’s the underlying question posed in “Live Another Day,” a compelling documentary on the government-led auto industry bailout that took two of the three Detroit automakers, General Motors and Chrysler, through a quick-rinse bankruptcy and the third, Ford, within a hair of the same fate.
The short answer is yes; history often has a way of repeating. But chances of a second, simultaneous Detroit Three meltdown? Probably a long shot at best.
The reason? Things have changed.
In fact, conditions are far different from those that precipitated the decades-long march to the Detroit trio’s near demise, ultimately triggered by the 2008 banking crisis that dried up financing and forced a cash-hemorrhaging and humbled industry to seek an $80 billion government lifeline.
“Live Another Day,” based on the book “Crash Course” by Reuters Managing Editor Paul Ingrassia and which opens in theaters nationwide Sept. 16, points the finger at a popular target: the UAW, suggesting its bloated labor contracts, myriad job classifications and programs like the Jobs Bank that paid workers to do nothing were both a major cause and the very symbol of the Detroit Three’s rust belt reputation.
The labor union is the one common denominator among the three Detroit automakers, points out Didier Pietre, a co-producer/co-director of the film, in a Q&A with auto writers following a special media screening last week, rattling off a list of automakers without UAW representation that managed to get through the Lehman Shock without government help.
The movie also suggests the more lucrative contracts negotiated by the UAW in 2015 are a sign the lessons of the Great Recession already have been forgotten, and it might not be long before the feeding-from-the-trough mentality that pushed the Detroit Three to the precipice returns to fuel a second go-around in bankruptcy court.
As the guy who led Delphi Automotive, GM’s former parts-making arm into bankruptcy ahead of the Detroit Three, Steve Miller was a sort of canary in the coal mine of the Great Recession. Featured extensively in the film, he tells media following the screening he doesn’t believe we’ll ever see the 2008 economic conditions repeated, meaning it’s unlikely the Detroit Three ever again will face a simultaneous spiral to such financial depths.
Also unlikely is a return to the world in which GM, Ford and the former Chrysler once thrived. Much of the labor and management greed, corporate arrogance, misguided strategies, organizational bloat and careless manufacturing practices blossomed in the 1960s and 1970s when the Detroit Three had no rivals in North America and most global markets were closer to distractions than real competitive battlefields and critical profit centers.
Today, the three Detroit automakers are unique in many ways, and they no longer march in total lockstep or with the narrow visions of 40 years ago. Global everything – sales, production, engineering, purchasing – now is the name of the game, and overseas markets such as China are at least as important as the U.S. is to the bottom line. Management is keenly aware competition doesn’t just mean other car manufacturers. It now comes in the form of disruptive new players such as Apple, Google and Uber and in the race to perfect new technologies such as electrified powertrains and autonomous drive.
And the UAW’s negotiating power is diminished as a result. Yes, the union got itself a better wage deal in its latest round of contracts. But it no longer bargains in a vacuum where its three targets represent the only game in town. Leadership knows it has to be competitive with wages and benefits at U.S. operations of Toyota, Honda, Nissan, Hyundai, Mercedes and others that now account for nearly half of the vehicles produced in the U.S. annually.
If its membership hasn’t already gotten the message production easily can shift to lower-cost countries such as Mexico should things get out of hand, it will as the market begins to soften over the next few years. Want to get a barometer reading on labor’s declining might? Just watch how things shake out in Canada between the Detroit Three and Unifor over the next few weeks.
All that doesn’t mean GM, Ford and FCA will remain intact forever. FCA CEO Sergio Marchionne already is making a pitch for his company to be absorbed by another, and continuing regulatory measures, stiff competition, rapidly changing consumer demands and fluctuating economies will continue to pressure the weak.
Instead, each automaker is subject to its own fate, and it’s less likely now than seven years ago all three could perish in one fell swoop.
[email protected] @DavidZoia
