Auto Companies Gunning For the Future

December 16, 2008 at 1:14 pm

As the U.S. auto industry enters crises mode, begging Congress for a $25 billion cash infusion, CNN International reports that Japan’s big three auto companies — Toyota, Honda and Nissan — may be better positioned than their U.S. counterparts for the challenges of the future. This is because they employ different business and management styles.

U.S. manufacturers in Detroit have kept the same business models for the past 20 years (i.e. make ’em big and proud), favoring SUVs and other large size cars and trucks and focusing on shorter-term profitability. Meanwhile, in sharp contrast, Toyota and Honda have been investing in research and development, with an eye toward helping their companies grow. Going green has proven to be an asset. Fuel-efficient and hybrid vehicles like the Toyota Prius or Honda’s zero-emission car take into account the changing needs of a global market.

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Another reason Japan is not feeling the same economic crunch, according to the CNN article, is because they pay their non-union automakers a bit less and don’t necessarily offer the same level of benefits. There is a lot to be said for the American style, which provides workers with fairly good wages (starting at $14 per hour) as well as full pension and health care plans.

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Finding a way to reconcile the two styles may be difficult, and it’s one of the first problems President-elect Obama faces in his new administration: How to protect the livelihoods of middle class auto workers while acknowledging that the same old gas-guzzlers from Ford, GM and Chrysler aren’t cutting it anymore.

Sarah S.

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