Wednesday, January 31, 2007
Detroit Automakers Only Have Themselves to Blame
Record breaking losses by Ford and similar reports from General Motors and DaimlerChrysler are fueling their efforts to make scapegoats out of Japan and other foreign-owned automakers. With Democrats in power, the Big Three hope to accomplish through political pressure what they have been unable to achieve through business acumen. Though they claim that the yen is undervalued by 15% to 25% because of massive intervention by the Bank of Japan, an LA Times editorial by Daniel Griswold of the Cato Institute argues that Detroit's woes are of their own making. A report from the Treasury Department last month said that Japan has not manipulated its currency for unfair trade advantage, adding that the Bank of Japan has not intervened in foreign exchange markets since March 2004. Detroit's steady losses have actually been driven by the success of foreign-owned automobile plants in the U.S. Today, two thirds of Japanese nameplate cars sold in the United States are made domestically rather than imported. Every one of the top 10 selling models of cars and light trucks in the U.S. are made in here. Detroit's real competition is not factories in Japan but in California, Ohio, Kentucky, Tennessee, Texas, Mississippi and South Carolina. The Big Three have hurt themselves with overly generous union contracts, an overemphasis on trucks and SUVs, and a distinct lack of style. Haunted by homegrown problems, the Big Three are looking for someone to blame. They should be looking closer to home.