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Big Three New World

Mar 11, 2017

GM is bailing out of Europe. The company is cashing in its Euro-chips and choosing to focus more on other markets. And GM’s not alone in that. While it might look like the Detroit car makers are turning tail and running, Daniel Howes of The Detroit News explains why it could be a good thing for Michigan.

Credit user paul (dex) / Flickr

General Motors is leaving Europe after some 90 years. It’s dumping brands in Germany and Britain. It’s walking away from a market stretching from the west coast of France to the east coast of Russia. That’s a land mass covering 14 times zones and hundreds of millions of people.

Who cares, right? Doesn’t affect your community. Doesn’t impact Michigan’s unemployment rate. But it does matter – because of what it says about the hard lessons learned by Detroit’s largest automaker and its crosstown rivals. Bankruptcy, humiliation and new leadership can do that.

GM’s getting out of the car business in Europe because rising investment demands and lower profit margins aren’t very compelling. Fiat Chrysler is abandoning the small-car market and ending U.S. production of cars. Ford Motor is exiting compact car production in the States because there are more profitable ways to use its plants here.

Homers naturally have trouble with this self-imposed rationalization. Detroit doesn’t do that, or it didn’t. They lament the end of the titanic battles of yore over market share and bragging rights. They talk about the past as if it was an uninterrupted arc of success. Where have they been the past, oh, 15 years?

In denial, evidently. How easily time, bailouts and profitability dims memory. How easily folks forget Detroit’s arrogance, embrace of mediocrity and obsession with size – all of which changed more slowly than in the real world of competition. The result: bankruptcy, forced restructuring and waves of layoffs and plant closings.

Pine for those good ol’ days? No thanks. The American industrial machine that marked post-war Detroit will never be what it was, or like it was. That’s because the conditions that made it possible no longer exist.

Economies of vanquished enemies in Germany and Japan were long ago rebuilt, largely thanks to U.S. help. China now is the largest auto market in the world, bypassing the United States. And foreign-owned competitors together sell more vehicles here than the good ol’ Big Three do.

Detroit’s leaders are different cats. They show next-to-zero interest in preserving the massive size and cross-town rivalry that raised four generations of auto-making families. The C-suites today are far more interested in reality — returns on investment, growing share prices and fattening bottom lines — than their forebears would recognize.

That’s something Michigan should care a whole lot about. Because as much as the industry has shrunk over the past decade, its people and its success are still the backbone of the state economy.

And their willingness to make hard calls about what NOT to do anymore, like waste time and money in Europe, are as important as what they decide to do.

The most important things to remember about Detroit’s Golden Age past are its cautions for the future. Today’s auto bosses are making the kind of decisions their predecessors wouldn’t, mostly because the post-war auto industry played everywhere.

Competition and a truly global market changed those assumptions. And the good news for Detroit is that some of its leaders are learning those lessons. I’m Daniel Howes of The Detroit News.