vroom doom

From Kent Hughes, “Are the Wheels Coming Off the American Auto Industry,” The Chronicle of Higher Education. Washington: Jul 14, 2006. Vol. 52, Iss. 45; pg. B.11:

Where is the industry headed? Hybrids that run on both gasoline and batteries are already on the road. Ethanol is widely used in Brazil, where flex-fuel engines can run on gasoline, ethanol, or any mix of the two. Serious research continues on hydrogen and fuel cells, although breakthroughs don’t seem imminent.

In the near term, Maynard in her End of Detroit points to three possibilities: further shrinkage, perhaps leading to bankruptcy; GM and Ford securing antitrust approval to form a single, dominant company; or GM and Ford following the Chrysler example and finding a foreign partner.

Maxton and Wormald see two choices for the old-line American industry. Without change, it faces a kind of “graceless degradation,” not unlike the shrinkage scenario of Maynard. Their alternative is a fourth revolution, to succeed Henry Ford’s mass production, Alfred P. Sloan’s mass customization (a model for every consumer need), and Toyota’s lean production. The new revolution would be an unbundling, with specialized suppliers and assemblers, and new competitors in the industry. Instead of the integrated auto companies of the past, Maxton and Wormald foresee many companies, each with a narrow core competence in one aspect of the industry — say, engines, or design, or even assembling and then branding parts made by others. Sectors of the electronics industry have pursued such a path — the companies without factories that design semiconductors and have them made by others, or Dell, which assembles parts made by a number of companies.

The stakes go well beyond the interests of industry and labor. The Big Three are woven into thousands of supply chains — steel, springs, logistics planning — that remain an important market for new innovations and do much more U.S.-based research and development than do their rivals based abroad. Without painful change by the Big Three or some public-sector intervention, current trends will continue to favor foreign manufacturers.

Hahahahahaha!!  The answer is they are going straight to heck!  In an automated handbasket, no less.

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