The End of Detroit Read Free Page B

open-mindedness helped BMW spar with Lexus in 2002 as the best-selling luxury brand in the United States, and Panke is now aiming to increase sales in the years ahead as he broadens BMW’s lineup. Even as he does so, he is pledging that a BMW will always be a BMW.
    Carlos Ghosn, the charismatic chief executive at Nissan, is perhaps the most instantly recognizable automotive figure, aside from GM’s Robert Lutz, in the industry today. With his hawklike face and quick, clipped speech, the Brazilian-born executive of Lebanese descent has become so popular since arriving in Japan in 1999 that he has starred in a series of comic books. Under Ghosn’s leadership, Nissan has undergone a transformation. When he joined Nissan upon its alliance with the French automaker Renault, the Japanese company was saddled with more than $20 billion in automotive debt. Its product lineup was dotted with also-ran vehicles that required thousands of dollars of incentives to sell. And Nissan was bogged down by a corporate culture rooted in the past, with too many interlocking ties to suppliers. Today, Nissan has eliminated its debt. It has become one of the leanest, fastest-moving companies in the world, mirroring Ghosn’s own impatience to push Nissan forward. In 2003, Nissan opened a new factory in Canton, Mississippi, where it has begun building a crucial new series of vehicles, including the Quest minivan, the Titan pickup truck and two big SUVs. In addition, Nissan has even more vehicles coming, all developed swiftly and sharing components with Renault. By the middle of the decade, Ghosn is expected to take control at both Renault and Nissan, coordinating the attack of what he hopes will become one of the world’s leading automotive giants.
    Whether based in Tokyo or Munich or California, executives of these foreign companies share the same enthusiasm and drive and belief that their companies, though not the world’s largest (at least not yet, in Toyota’s case), can have a tremendous influence in individual markets such as the United States. In doing so, they shield themselves from the economic forces that have been Detroit’s own undoing. With its emphasis on size and economies of scale, Detroit has always been vulnerable to the boom-and-bust cycles that have been a part of the car industry since its inception. As long as Detroit could rake in enough profits during good times to make up for the losses it encountered during lean years, that never mattered. Before imports’ push began, Detroit’s solution to any softening of sales was simply to shut down its plants to keep its vehicle inventories in line with sales, laying off for months on end. No more: Current United Auto Workers labor contracts at GM, Ford and Chrysler require the companies to pay their workers nearly all of their income, whether they are on the job or not. Moreover, the companies are limited from permanently closing factories without the union’s agreement, and must finalize any such moves during contract negotiations, a process that ensures generous benefits for workers who are losing their jobs.
    These contracts, as well as the pensions and health care that GM, Ford and Chrysler provide for their workers, active and retired, have led to a penalty of $1,200 per vehicle that must be overcome before they can book the first penny of profit. That is not the case at Toyota and Honda and the other foreign firms, whose non-union employees are for the most part at least a decade younger than their counterparts in Detroit, and whose health care and retirement costs are structured in a far different way.
    Detroit has spent countless hours and millions of dollars trying to figure out the imports’ secrets, studying their marketing methods, dissecting the way their vehicles are assembled, replicating the way they are manufactured, all without being able to truly understand their approach. Each Detroit company has entered into joint ventures with Japanese companies—GM with