Here’s Who You Can Blame For The Auto Industry’s Collapse

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All right, well, I wonder what happened. What happened to Mr. UAW? Remember the guy at the beginning of the month of April that Fox News would parade on after Liberation Day and he’s, UAW worker. And he’s got his hat on and his Trump hat and his Trump shirt. And yeah, used to rah rah Trump and he’s terrible at greatest things ever. And we saw manufacturing jobs leave the country.

Yeah, the usual rant and raving and all of a sudden, oh yeah, yeah, you got Fane there, head of the UAW, again, supporting Donald Trump. He did. Oh, there are Lebanese tariffs. This is gonna be great. This is gonna be fantastic. They lie, they lie, they lie, and it just never stops. The myths surrounding manufacturing. Oh, it makes for a nice story.

It makes for a nice story. know, the problem is what these manufacturing myths and stories that these politicians create. I love myths. I love Greek mythology. I do. There’s actually a lesson to be learned from the various different Greek myths. I use the mythology a lot in some of the stories that I write. Think about American myths, capitalism, manufacturing myths.

It’s just that, okay? The stories contrived to push an agenda for a certain side or a belief system that’s never true. Never true. I need a new car. Yeah, yeah. Again, I’ve had this car for five years now. It’s got 115,000 miles on it. Probably should have gotten rid of it long time ago.

German car. So I took it in, not to, you know, I’ve got a great mechanic down here. Honest. He’s like, listen, he’s like, I’m not trying. I said, there makes no sense in fixing this thing. They don’t make these cars the way any car, the way that they used to be able to drive cars for 200,000 plus miles. No longer the case. I said, okay. I said, you know, he’s like, I’ll just put it on car van. I was, I’m not going to do that. I’m not going to stick somebody with a crappy car.

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gonna go and trade it in somewhere. Whatever I get for it, I get for it. Anyway, neither here nor there. I’m asking buddies of mine, buddies of mine. Again, this is a car that I’m gonna use for my kids at college. Buddy of mine’s got a Ford Bronco. Recently got a Ford Bronco, the new remodel. Oh, looks all nice. Take the doors off, cool. He’s like, don’t do it. Don’t do it. It is a P-O-

S. Okay. Same buddy of mine also has one of those those massive Suburbans. Yeah, he had he basically lost his suburban for several months. Water got in through the sunroof. Eventually, it got into the car and leaked all over the place. They had to tear the entire interior apart almost they had to scrap the entire thing.

Alas, I have a Jeep Cherokee, Jeep Cherokee, that’s the Stellantis, which is a Dutch company, but think the car’s made here in the United States, so it’s gonna make an American car. Having any problem with that, and I think I’ll probably get another one of those when all is said and done. I did buy a Cadillac 2008. Oh yeah, I remember the new 2008 Cadillac CTS. Go take a look at it, that model at that point in time. It was a hot looking car.

And it was, engine wasn’t bad, ran fine, have too many problems. Interior, leather wore off, fall apart, was crap. It was crap. Anyway, and that was under three years, under three years. Anyway, take that, we’ll put that aside at this point in time. We have this myth, this belief system that…

Yeah, the Japanese and then the Chinese, they came and they wrecked manufacturing here in the United States. It was a combination of Okay. It’s a combination of things, combination of crappy corporate culture at American auto manufacturers. And yeah, unions. Unions. Great line, great line that I use all the time, the Gordon Gekko.

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Teldar paper speech. You either do it right or you get eliminated. We stopped doing it right. was a great piece today by Amal Naj, Wall Street Journal. He was a, again, he’s been around. He was a reporter at the Wall Street Journal. This was an editorial piece today in the 1980s and time.

He wrote about our inability to adapt to competition.

Again, that happens. What happens when you can’t adapt to competition? You get eliminated.

By putting eye popping tariffs on imports, President Trump hopes to bring manufacturing back home. What his administration overlooks is US industry’s culpability in the current state of affairs. It’s an open question whether American companies can change course. Again, a malnage, this is something we’ve been preaching here on the program for some time. President Reagan tried.

His administration used a variety of tactics in the 1980s to restrict steel and auto imports, giving US manufacturers time to remake themselves in the face of a formidable foreign onslaught. But domestic manufacturers failed to rise to the occasion and failed miserably. As I witnessed as a reporter for the journal covering America’s industrial belt as its most pivotal moment of decline.

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That failure foreshadowed what has become a national concern today. Our extraordinarily heavy reliance on manufacturing offshore and industries critical to our national security and economy. Last year, steel autos, machinery, electrical equipment and pharmaceuticals together accounted for 77.5 % of the country’s $1.2 trillion trade deficit. Take the auto industry. Only about half of new cars sold in the US

and 2024 were manufactured locally. And many of these had imported parts. In the 1980s, it was common refrain that if General Motors, America’s largest industrial enterprise, sneezed, the rest of the country caught a cold. Steel and a host of other industries depended on the car industry’s wellbeing. So did many.

US workers and consumers, but in the face of growing foreign threats, American manufacturers seemed in denial. Again, this happens a lot. It’s natural. Think of other companies that decided to be in denial. Kodak? How about Smith and Corona?

typewriter company, Polaroid company after company. No, no, no. This is the way we do it. There was a story about Xerox, Xerox and the things that they invented that, know, like the mouse and whatnot that they sold for nothing to guys like, you know, Bill Gates and Steve Jobs took the tech. It wasn’t the,

The original DOS disk operating system, I think Bill Gates bought it for 50 grand. Yeah. Anyway, they all believe that, fricking General Motors, you who you mess with us, we’re GM. We’re GM, can’t knock us off our pedestal.

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again, it’s the height of arrogance. You ever see those areas surrounding the city of Detroit, the mansions, the type of wealth, what those executives were making at that point in time? Send their kids to University of Michigan, right around there. know, regular turnstile right back there, executive C-suite, General Motors, Ford, Chrysler. Right, how’d that work out?

thing is, sorry, sorry, Mr. Union guys, you didn’t help either. I mean, I talked about this during the auto bailouts, where eventually the American auto manufacturers based upon the contracts that they had, they weren’t even car companies anymore. They were benefits companies that made cars.

There were basically benefits companies, pension and healthcare companies that also, yeah, we make cars too.

The United Steelworkers and the United Auto Workers viewed US import restraints simply as a means for protecting their jobs and their wages, which were twice those in Japan. The unions also resisted companies’ attempts to revise outdated union job classifications to combine tasks into one employee’s workload to bolster productivity.

Business leaders failed to win over labor unions with a promising master plan to protect their future as well as the companies against imports. Firms couldn’t articulate one. If anything, automakers sent a confusing message about the fight with foreign competition. Even as they asked workers to sacrifice, the companies got in bed with the enemy.

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GM signed deals with Japan’s Isuzu and Suzuki to import their cars into the United States and subsequently formed a joint venture with Toyota. Other automakers struck similar deals with Japan’s Japanese competitors, including joining hands to build cars in the United States. GM then lobbied, shamelessly lobbied to raise import quotas so it could bring in cars from Japan.

The American companies profess that they wanted to learn from the Japanese before launching a new, new high tech factories themselves. I remember all of this on TV with the Japanese way and the exercising for all this stuff. Even if taken in good faith, bad call. US automakers would eventually invest billions in new technology and automation to remake their Henry Ford era.

assembly operations. But I remember Saturn. I remember Saturn. And my brother Michael wrote his college thesis on Saturn. that was GM’s with Saturn, Ford’s was Alpha, and Chrysler’s was Liberty. They aimed to reduce drastically the parts and labor that went into a car to close the gap on the Japanese cost advantage of $2,000 a vehicle. And they planned to do it in four years.

1986. GM unveiled its $600 million plant in Hamtramck, Michigan on Detroit’s East Side to showcase industrial high technology. Yeah, but the robots broke down easily and were prone to error. They welded the wrong joints, missed spots when spray painting cars. Sometimes they sprayed each other.

Workers couldn’t get the complicated machines with their programmable instructions and electronic centers to communicate with each other and pass tasks on to the next station. Quote, I have bolted 50 wrong bumpers, Cadillac on an Olds and Olds on a Buick, a Buick on a Cadillac. A worker bolting robot chosen parts told me on a visit to the plant. The final blow to American automakers came when Japanese manufacturers set up plants across the United States.

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The Mazda plant just south of Detroit began producing cars for 25 % less than a GM on American soil with American workers. The US auto industries demise inflicted collateral damage on other domestic manufacturing steel makers with their umbilical cord tied to Detroit.

and hobbled along after automakers lead without much thought to foreign competition until it was too late. There had been little talk in boardrooms of modernizing their age old blast furnaces or adopting new technologies and production approaches, such as electric arc furnaces to make cheaper steel from scraps. In the early 80s, domestic customers from a can and appliance to automotive part producers turned to foreign suppliers for better prices.

and quality. Again, you either do it right or you get eliminated. They pick their jibs. Gee, I wonder why. Ford abandoned its storied rouge steel plant in Dearborn, blaming the union. In succession, steel businesses closed, merged, or disappeared into companies steelworkers had never heard of.

These were manufacturers whose names had evoked the might of American industrial power with their miles long factories converting iron ore into mammoth blast furnaces and rolling mills, Bethlehem steel, Jones and Loughlin, national steel and Republic steel. The last of the great American steel makers, US Steel. Remember Hyman Roth? We’re bigger than US Steel. Yeah, once the world’s largest is now fighting for its life.

In 2023, it agreed to be owned by Nippon Steel.

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with it. That deal should go through. The robots that US automakers had embraced also fell by the wayside. The American inventor of industrial robots, Unimation, along with others that jumped into the business such as Westinghouse and General Electric quit. Japan, which licensed the technology from the US, is now a major robot manufacturer.

along with South Korea and China. Our basic approach was wrong. This was the head of Westinghouse’s Advanced Technology Group in 1990. It was a classic case of trying to merge an entrepreneurial organization into a relatively slow moving, large American corporation. Bloat! Fat!

fat and lazy corporate execs.

Far from learning from their mistakes, US owner makers repeated them as foreign competition intensified. The early 1990s, GM, Ford and Chrysler spent billions to develop electric cars. GM unveiled its first commercial electric car in 1996, but eventually these manufacturers gave up because they couldn’t see the future. It was as if Henry Ford had built his Model T before the discovery of gasoline.

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Again, also as well. And one of the things that Naj Fait fails to mention in this column is the fact that government regulations and cafe standards and all that crap didn’t help also. GM’s chairman, Roger Smith admitted in 1986 that the carmaker was mistaken in believing it could fundamentally change manufacturing with technology in one fell swoop.

Thousands of little innovations in manufacturing have nothing to do with automation, but find fruitful application through trial and error. What’s known in industry as continuous improvement. Aimed at cutting costs and enhancing quality, these innovations evolve over time. Humans, not technology, drive the process. In the future, Smith vowed, solid human partnerships will form the ground floor on which high technology systems will be built.

American manufacturers have always known that remaking domestic manufacturing would be hard. It would require winning labor concessions, investments in training workers and new skills, creating a factory culture that fostered creativity and innovation on the floor level, and taking a longer view on the investments to fight competition. Companies instead, hey, no, we’re gonna do, that, we’re just gonna locate offshore. They took their business where they couldn’t make money.

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Again, they didn’t worry about trade and balances and they’re not gonna worry about trade and balances now. That is the reality. And again, I’ve written extensively about this over the years. column I wrote, talked about it before here on the program. This is July of 2007, even blue chips die. Now, again, this is 2007, okay? At this point, time.

We were warning everybody something wicked this way comes. Again, at that point in time that CNBC was throwing a party, Dow had just hit 14,000. Maria Bartiromo, remember having, it looked like she just got a 500 % raise. Everything was just fantastic. All sorts of great stuff. Yeah, Fox News had fireworks explosions on their television.

At that, I wrote in the column after all that I said, we predict that Markowski Investments Watchdog on Wall Street, that Walmart and General Electric are no longer going to exist.

How can you say such a thing? Because I can. How can one say that two Dow components, what GE was a Dow component, cornerstones of our economy, titans of industry will no longer be in business. And they won’t be the first titans to fall and they won’t be the last, but sooner or later, they’re going to go out of business. And I talked about the Dutch East.

India Company dutch east india company, you know, they had a they had the largest like military In the world for a point and they had a they had a bigger military than the uk government did for crying out loud They were founded in 1602. Um In 200 years, they paid an 18 percent dividend Yeah Yeah, um again People if you’re not innovating

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If you’re not innovating, if you’re not getting better, if you’re not perpetually growing and reinventing yourself, and if you sit on your fat buttocks and get happy based upon where you are, you’re going to get eliminated. Gonna get eliminated. I was miffed at George W. Bush with his auto bailouts. Then Obama did it again. Why?

Why? Could have been a great opportunity to reset manufacturing here in the United States, but again, nobody wants to deal with the reality of what needed to be done. Column, I wrote about this as well, 1960s, early 1970s, excuse me, Walmart, Wall Street gave us what was called the Nifty 50. It was a list of stocks that investors could buy and hold forever. Yeah.

Again on that list, Polaroid Burrows, Joe Schlitz Brewing, Kmart International Harvester. Yeah, where are they today? Where are we today? 1990s, we were told, this time it’s different. New economy, earnings don’t matter anymore. Enron, another company that we called out as a fugazi. Name Fortune Magazine’s most innovative company, six years straight. Six years straight.

At that point in time, again, the Treasury Secretary of the United States, Hank Paulson, in 2007 said, this is far and away the strongest global economy I have seen in my business lifetime.

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then what happened?

then what happened? Anyway.

Tariffs are not going to solve structural issues here in the United States. They’re just not. Again, we do many things very well here in the United States, much better than other places. And I do believe that we need to continue to lean into that.

Can we improve and bring back certain manufacturing into the United States? Yeah, I do believe that’s the case as well. I do. But populism is not gonna do it. Populism is not gonna do it. Holding a ridiculous press conference at the White House with a bunch of UAW workers. You know, it’s the same bloody thing. It’s like props. Remember when Obama?

Remember when Obama did the Obamacare and then he had all of the doctors wearing their white coats there? And you got, of course you had a couple sensitive ponytail guys, doctors up there as well. And he did this liberation day. Hi, bringing the union workers here too. And the props show.

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Would I like to see main event? Yeah, sure. But the right way by being more competitive.

By being more competitive. Again, we have addressed this here on the program. We gotta start this in the eighth grade. This is a multi, multi, multi year process that needs to take place. is something that’s not gonna happen overnight by any stretch of the imagination. We don’t have the workers right now. the cart before, Donald Trump’s doing the same thing.

with the electrify the country green wackos are saying, we’ll put everybody in electric cars. Really? How? On what grid and where are they gonna park? where, I mean, it’s the same exact thing. Watchdog on wallstreet.com.