How on earth did this happen?
General Motors, the 100-year-old car company that once employed more than 500,000 workers and had a 50 percent market share, just crumbled into bankruptcy. The government now runs it.
Chrysler, 30 years ago, teetered on the brink of bankruptcy. If it had been allowed to collapse, the remaining Big Two would likely have purchased much of Chrysler's plants and equipment and hired at least some of its workers. Instead, Congress provided financial aid to "rescue" the company. By not letting Chrysler fail, two major things occurred. First, a feeble company remained alive, only to limp from financial crisis to financial crisis for the next several decades. Second, it sent a message not only to Detroit but also to the rest of America: Expect a taxpayer bailout if the government deems a business "too big to fail."
After World War II, manufacturers in Japan sought out the advice of W. Edwards Deming, an American quality-control expert. American businesses ignored Deming's theories on continual improvement, but Japanese companies lingered on his every word.
Today outstanding Japanese companies receive the Deming Application Prize for excellence in total quality management.
Back in Michigan in the '70s, I read article after article about how the Big Three should/could/would respond to the foreign invasion. But in practice, I saw excuses and pleas for protectionism.
"Why doesn't General Motors," I recall asking my roommate, "offer a boatload of money, steal Toyota's No. 2 executive and put him in charge?" My roommate laughed, "Because he doesn't speak English and wouldn't be able to understand the American market." I said, "And General Motors does?"
Today I know that my idea of stealing a Toyota exec was bad. GM should have picked up the phone, asked the government to buy a majority share in the company, handed the office keys to the President of the United States, and said, "Here. You run it."
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