Friday’s news that Ford Motor Co. is planning to close plants and lay off workers had a familiar ring to it. According to the Wall Street Journal, “Like GM, Ford is foundering amid a decline in popularity for sport-utility vehicles, rising gas prices, increased foreign competition and heavy labor and health-care costs.”
It’s all too easy to hear such news and think, bang, there goes another nail in the coffin of the American manufacturing worker, hammered down by cheap offshore labor. Hard to make a buck in the global economy, isn’t it?
Such is the conventional wisdom of globalization, and there’s plenty of truth to it. But when voiced by Fortune 100 corporate executives it’s also a massive cop-out, a case in which anti-globalization rhetoric is co-opted as part of a coverup for strategic missteps.
Here’s an exercise for those following this story at home. Every time you read one of these stories, ask yourself, so, why isn’t Toyota also in big trouble? Isn’t Toyota also afflicted by rising gas prices, increased foreign competition and heavy labor and healthcare costs (for its Japan-based workers)? Shouldn’t Toyota also be closing plants and laying off workers? (Among its worldwide holdings, Toyota operates eight plants employing upward of 20,000 workers in the United States.) But instead, Toyota is the most profitable car company in the world.
The comparison isn’t completely fair. For one thing, in the U.S., Toyota’s plants are nonunion. So comparing the company’s U.S. operations to G.M. and Ford’s woes is like comparing (nonunion) JetBlue’s success to Delta’s failure. It doesn’t scan neatly.
But Toyota’s nonunion U.S. plants are hardly the whole story, just as increased labor costs for Ford don’t explain all that company’s troubles. Could there be any connection between the two companies’ varying states of health and the fact that Toyota makes cars that people actually want to buy?
OK, there’s plenty of controversy in the automotive world over whether hybrid cars are more a success of brilliant marketing than anything else. Whether hybrids are really good or bad for the environment in the long run, worth their premium price tags, and get the gas mileage that they claim are questions that are hotly debated (and worth lots of further investigation in this forum, since the whole issue of energy use and conservation is crucial to the future of the global economy). But it’s hard to deny that while Ford and G.M. were raking in billions of dollars selling ever more gargantuan gas guzzlers, Toyota was pouring R&D into new designs destined to flourish in an increasingly energy-conscious world. And now they can’t make Priuses fast enough.
Globalization makes it harder to compete, but it doesn’t mean success is impossible. You just have to be smarter. Can we be excused for hoping for better performance in the smarts arena from Ford and G.M., icons of capitalism headquartered in the world’s premier economic superpower?
The fact that workers end up getting screwed by executives who focus on quarterly profits at the expense of long-range planning is nothing new — and certainly not the fault of “globalization.” But Detroit already got its ass handed to it once by Japan in the 1980s. The car companies don’t appear to have learned a whole lot from their mistakes, except that blaming cheap foreign labor is always a good way to deflect outrage that would be better focused on their own boardrooms.