In the D part three: decline of the American auto industry

In this post I’ll be looking at the declining fortunes of the American auto industry brought about by a combination of external factors and an inability to move with the times.

When the best is too good – advanced technology in the US motor industry

British style with American V8 power

One of the most successful engines in the history of the British motor industry was the Rover V8. It entered service in 1967 and added some power to the stylish looks of the Rover P5B coupe and the newer, technologically advanced P6. Perhaps more importantly, it was the high performance engine of choice for a variety of small sports car manufacturers, as well as being used by many enthusiasts to upgrade the power-plants of project cars.

For it’s time the Rover V8 was an advanced design – a very compact unit with all-aluminium construction making it one of the most lightweight V8’s ever made. If you’re familiar with the Rover K-Series engine, this sounds exactly like the kind of engine that Rover would have designed, however it was actually an American design that Rover bought the rights to. Buick had introduced the engine in 1963 but was finding it expensive to produce and it was suffering from reliability issues due to bad maintenance from customers and mechanics who weren’t used to dealing with all-aluminium engines. The US steel industry was also unhappy about the use of aluminium for engine production and had considerable political and economic influence at the time.

Buick reverted back to older cast-iron engines and sold the engine design to Rover, where it remained in production for over 35 years. When production finally ended, it had become so iconic that the BBC’s Top Gear filmed a tribute to the engine and showed all the cars that it had powered over the years.

The story of the Buick/Rover V8 is one example of how the American auto industry was unquestionably capable of producing advanced technology, but other factors held back this ability and the cars that entered production often played it safe compared to their European and Asian competitors.

In a similar vein, Ralph Nader wrote a groundbreaking book in 1965 called Unsafe at Any Speed that detailed how US manufacturers paid little attention to safety factors and preferred to spend money on annual restyling of their model range to maintain sales. Many of the improvements in standard safety equipment and fuel efficiency that were implemented over the last 50 years only arrived after US Government legislation mandated it.

It’s often the case that to stay in business you need to make competitive products, while investing in R&D; to make sure those products are still competitive in the future. If that process is constrained, it will almost inevitably cause problems somewhere down the line…

Energy crisis hits

The first oil crisis of the 1970’s began in October 1973 and lasted until March of the following year, resulting in fuel rationing across the USA. At it’s worst period in February, 20% of petrol stations were empty. Attempts were made to distribute fuel across the states based on estimated requirements, but this wasn’t completely successful and long queues at petrol stations were commonplace.

The shortages brought the heavy fuel consumption of American cars into stark reality – the average fuel economy for an American-made car of this era was about 13.5mpg, and the price of crude oil had increased fourfold to $12 a barrel. Highway speed limits were lowered to 55mph to try and reduce fuel usage but it was only a small step in the right direction – it was estimated that Americans were wasting 150,000 barrels of oil a day idling their engines while queuing for hours at petrol stations.

The bigger they are…

The oil crisis arrived at a time when the cars being built in Detroit were monsters of the road. As an example, the 1971 Cadillac Eldorado was 5.7 metres long. To put this into perspective, even a modern BMW 7-series is only around 5 metres in length. The Caddy weighed 2.5 tonnes and was powered by an 8.2 litre V8. Exact fuel economy figures are unavailable but are estimated at between 6 and 8 miles per gallon.

Despite its big block V8 the performance of the Eldorado was seriously impacted by its weight – 0-60 in just under 12 seconds and a top speed of around 120mph. Although the Eldorado is an extreme example, cars of lower US size classifications like mid-size and even compacts were far bigger than their European and Asian equivalents.

Cadillac Eldorado convertible

Prior to the oil crisis US manufacturers had an 80% share of the home market and GM alone owned half of that share, but the American public’s new-found concerns over fuel economy had a dramatic effect on sales as they looked at European and Japanese imports. In 1975, US production fell 24.5% on the previous year while the market share of imports started to build quickly.

The scramble to respond

The AMC Pacer - not as small as it might look, powered by a 3.8 V6

American manufacturers rushed to downsize their models in response to changing consumer tastes, but this proved difficult. It was a massively expensive process to redesign the entire model range, and almost all engines available were of the large, torquey, low-revving variety – the kind that are very heavy on fuel. Some progress was made though – by the end of the decade the big Cadillac Eldorado above was 70cm shorter and had shed half a tonne in weight, but attempts to produce a genuinely small car were still somewhat at odds with the rest of the world. The AMC Pacer is a well known example from this era and was still 4.3 metres long and powered by a 3.8 litre V6!

The US auto manufacturers had been completely blindsided by the oil crisis and the dramatic effect it had on the priorities of its customers. As demand and production fell, huge job losses and plant closures took place across the industry throughout the 1970’s. Detroit was heavily dependent on the car plants for jobs and tax revenues so was particularly hard-hit by the decline.

A second oil crisis

Problems in Iran led to another oil crisis in 1979 and again the price of a barrel of crude oil increased massively, this time from $15 to $40. By this time imported cars were starting to use fuel-saving technology such as four valves per cylinder and multi-point fuel injection, in contrast to the pushrod valves and carburettors still used by large-capacity US engines. The downsized full-size models being sold by Chrysler, Ford and GM were proving unpopular with domestic customers, and Japanese and European brands continued to gain acceptance with the American public.

Auto design – what the hell went wrong?

Rising fuel costs ended the era of stunning muscle cars, and the revised smaller models just didn’t hit the mark. There appeared to be a major loss of optimism and confidence across the industry. It wasn’t just weight and engine power that these new models  lost, it was the entire sense of purpose, attitude and style. What is most surprising is how similar different makes and models ended up looking throughout the 1980’s, considering the very strong individual identities of earlier models.

US car styling comparison

Bland and indifferent American car design lasted throughout the 1980’s (with a few exceptions) and still continues today to some extent. It’s only very recently that the Mustang has regained it’s identity and road presence, with others like the Chevy Camaro and Dodge Challenger following suit – but this has been achieved by harking back to the classic designs of the 70’s muscle-cars.

Fighting back against the unions

As well as falling demand, job losses were also caused by the historical bad deals made by the manufacturers and unions back when times were good and there was no end in sight for the motor city heyday. Under Walter Reuther, unions were spectaculary successful in negotiating employer-paid pensions, medical insurance and generous unemployment benefits. Agreements made on pensions in particular were short-sighted because they were a concession that could be made without affecting current profits – it was a deferred benefit – but eventually these concessions would become due and the industry could no longer afford it. The end result was the strategic migration of manufacturing from the US to countries like Mexico with non-unionised workforces that would accept less pay and benefits.

Manufacturers also aimed to mitigate their expensive labour costs via investment in automated production facilities, with robots eventually reducing human involvement in car assembly by more than half. As migrant workers arrived in Detroit in the late 1950’s expectant of well-paid manufacturing jobs, the entry level posts they were seeking were already starting to disappear due to outsourcing and automation.

Rounding it all up

Packard plant, Detroit (closed since 1958)

The sledgehammer blows of falling sales, international competition, uncompetitive product ranges and an expensive workforce made life very difficult for the US auto industry, but what were the direct effects on Detroit and the surrounding area?

Well, the Dodge Main plant in Hamtramck once employed 30,000 people but was shut down in 1980 – 18 months ahead of schedule due to disastrous sales. Ford’s River Rouge plant in Dearborn was so large it once had 90,000 workers but continued heavy job losses have reduced the workforce to only a few thousand today.

Despite being the birthplace of the factory assembly line when Henry Ford moved Model T production there in 1910, Ford’s Highland Park is now just another of the many shuttered and decaying manufacturing plants that occupy the city. The building is now recognised as historically important and there is a campaign to turn it into a museum to commemorate it’s unique contribution, but funds have yet to be made available.

60 miles away from Detroit, down the Telegraph Road (yes, the Telegraph Road as made famous by the Dire Straits song) is the city of Flint where 30,000 jobs were lost in a series of GM plant closures in the late 1980’s. In a city of 150,000 residents this was a huge blow and happened at a time when General Motors were announcing record profits. This apparent contradiction made headlines around the world and was the subject of Michael Moore’s début documentary – Roger and Me. Since 1989 many more auto industry jobs have been lost in Flint, bringing the total to 80,000.

It wasn’t just the big three manufacturers who closed up shop – component suppliers like Fisher Body and AC Spark were also forced to cease production.

The effects on Detroit have been devastating. Hospitals, schools, cinemas, theatres, train stations and thousands of residential properties all lie empty within the city, just like the car plants the city once thrived on.

In my next post in this series I’ll cover the present-day state of the city in more detail, and look at whether there may be any reason for optimism amongst the urban decay.

One comment

  1. Pingback: In the D part three: decline of the American auto industry … | Michigan Not Mexico

Leave a Reply

Your email address will not be published. Required fields are marked *