Edmonton Sun Article
When I bought my first car, a Toyota Tercel, in Winnipeg in 1985, they were so popular there was only one left in the city. It was red. I snapped it up.
Two decades later, Japanese vehicles are even more popular. For the first time, Japanese automakers made more vehicles in North America last year than General Motors, according to a new Scotiabank report.
Faced with ongoing losses in market share, GM reduced its vehicle production in North America to 4.6 million vehicles in 2005. In contrast, Japanese automakers boosted their vehicle assembly here by 12% to 4.8 million cars and light trucks.
In 1985, when Japanese manufacturers were starting to produce vehicles in North America, and when I happily drove my spiffy Tercel off the lot, GM produced 7.4 million vehicles - 6.8 million more than offshore manufacturers with plants on this continent.
However, the gap has narrowed consistently since then, according to the Scotiabank report.
And while GM has announced plans to close plants and shed a significant chunk of its workforce by 2008, Japanese and other Asian automakers are expanding in North America.
Things look pretty bleak for General Motors. How could this happen to an American icon?
"By and by, they're going to run out of cash," says University of Maryland business professor Peter Morici, who flatly declares GM will have to declare bankruptcy. "They got fat and lazy and they negotiated overly generous contracts with their workers. If you pay people more money than they're worth, you're going to go out of business."
Including wages and benefits, GM workers make about $75 an hour, says Morici. There's also traditionally been a cushy no-layoff policy. "If they don't need a worker, they just get paid for playing checkers," he says.
Generous retirement and health benefits have also been bleeding GM dry, Morici adds.
But that wouldn't matter so much if GM made vehicles people actually wanted to buy. The Japanese automakers have the edge when it come to reliability and design, he says.
"They need radical change to shake up their bureaucracy, slim it down (and) design more attractive products," he says of GM.
The argument for buying domestic vehicles has always been that you should buy the cars your neighbours build and support the local economy.
Well, I grew up in St. Catharines, Ont., which has two GM parts plants (one is closing), and still bought an import. I liked the design, it was fun to drive and everyone told me Japanese cars were superior.
The experts don't disagree. GM vehicles are "mediocre," says Morici.
My Tercel was made in Japan but Toyota makes a significant percentage of its vehicles in North America now. So even if you pick an import, you're supporting the local economy.
"There's a myth out there that Americans can't get along without American-made cars," says Morici.
GM is in such financial trouble, it's losing about $6,000 a car, while Toyota is making money, he points out.
I drove my Tercel for 10 years and then bought another Japanese car, a cool Mazda Precidia in 1995. Soon, it will be time to car shop again. Since a relative works for GM, perhaps I should buy a domestic car this time. Er, maybe not.
"General Motors' future is becoming very questionable and you have to consider whether the warranty will be there," warns Morici. "If the union wants fewer factory jobs in the United States and Canada, it should continue to hang tough in its negotiations and all of its workers will be at McDonald's before they know it."