BOOK REVIEW: 'Crash Course' Takes Us Down the Auto Industry's Road from Glory to Disaster
Reviewed By David M. Kinchen
Huntingtonnews.net Book Critic
Whether it was Benjamin Franklin or Albert Einstein who first said "the definition of insanity is doing the same thing over and over and expecting a different result" doesn't matter. The phrase applies to the Detroit auto industry as described by Paul Ingrassia in "Crash Course: The American Automotive Industry's Road from Glory to Disaster" (Random House, 320 pages, $26.00).
Last year's bankruptcies of General Motors and Chrysler Motors can be traced to the actions such auto industry pioneers as William C. Durant, who formed General Motors in 1908 and GM visionary Alfred P. Sloan Jr. who created the system whereby a buyer could potentially start with a Chevrolet and move up the product lineup to Cadillac. Walter Chrysler beginning in the 1920s did the same thing and so did Ford with the acquisition of Lincoln in the 1920s and the creation of Mercury in the late '30s -- and the Edsel in the '50s.
Ingrassia traces the "insanity" that led to the downfall of the once powerful "Big Three", with a very readable tale of hubris, denial, missed opportunities -- Ford was offered Volkswagen free of charge by the British authorities after the defeat of Nazi Germany and Ford turned them down -- and self-inflicted wounds that culminated with President Obama bailing out GM and guiding the takeover of Chrysler by Italian auto giant Fiat. The cost to American taxpayers exceeded $100 billion -- enough to buy every car and truck sold in America in the first half of 2009.
Ingrassia reveals why Obama personally decided to save Chrysler when many of his advisers opposed the idea. Ingrassia tells the dramatic story behind Obama's dismissal of General Motors CEO Rick Wagoner and the angry reaction from GM's board—the same people who were idle bystanders while the company became a hollow shell. He tells the sad story of the once promising Saturn experiment, along with the ditching of Pontiac, Oldsmobile and Saab, and the almost ditching of Buick.
On June 10, 2009, following the April 30 Chapter 11 bankruptcy declaration, the sale of most of Chrysler assets to "New Chrysler", formally known as Chrysler Group LLC was completed. The federal government financed the deal with $6.6 billion in financing, paid to the "Old Chrysler", formally called Old Carco LLC. -- a name Ingrassia says only a lawyer could love.
The transfer does not include eight manufacturing locations, nor many parcels of real estate, nor equipment leases. Contracts with 789 U.S. auto dealerships, who are being dropped, were not transferred. Fiat -- which abandoned the American market in the 1980s because of the miserable quaity of its cars (they're much better today, Ingrassia says) -- will hold a 20 percent stake in the new company, with an option to increase this to 35 percent, and eventually to 51 percent if it meets financial and developmental goals for the company. Fiat is expected provide Chrysler with much needed fuel-efficient "world" cars -- which are sadly lacking in the Chrysler lineup.
Only Ford escaped bankruptcy, thanks to decisions that included Chairman and CEO William Clay Ford Jr. stepping down as CEO (he remains chairman) in favor of long-time Boeing executive Alan Mulally, who sold off Jaguar and Land Rover and ruthlessly slashed costs and produced vehicles that Consumer Reports said exceeded the quality of Toyota. Ingrassia says while Ford didn't declare bankruptcy, it effectively pursued an "out-of-bankruptcy" restructuring that endeared itself to many American buyers disgusted with the bailouts of GM and Chrysler.
In retrospect -- always a good viewing position -- the self-destruction of Detroit seems inevitable, as Japanese manufacturers Toyota, Nissan and Honda produced fuel-efficient, quality-built vehicles that appealed to millions of American buyers.
The decision by the Japanese to build plants in the U.S. was as wise as the dysfunctional corporate cultures of the Big Three was unwise. The Japanese didn't have to bleed themselves dry with Detroit's perverse system of inverse layoffs (which allowed union members to invoke seniority to avoid work). They didn't have the "legacy" of retired workers with "Cadillac" health insurance plans that GM, Chrysler and Ford had, thanks to gold-plated contracts negotiated with the United Auto Workers of America (UAW).
Ingrassia not only investigates the boneheaded executives, he profiles a car dealer named Gene Benner who sells Chrysler products in South Paris, Maine, and a father-son autoworker team working in the Chrysler plant in Belvidere, Illinois. Their actions and reactions are are chronicled throughout the book.
Summing up, "Crash Course" is an excellent compact history of the triumphs and tragedies of the American auto industry that should be read by everyone who wants to know where are dollars have gone to rescue an important segment of American manufacturing. It appealed to the car nut -- and former auto editor -- in me because Paul Ingrassia is one of the best qualified journalists to cover the subject.
About the Author:
Paul Ingrassia is a former president of Dow Jones Newswires, a unit of Dow Jones & Co. Ingrassia was awarded the 1993 Pulitzer Prize for Beat Reporting, along with Joseph B White of The Wall Street Journal, for their often exclusive coverage of the management turmoil at GM. They also received the Gerald Loeb Award in 1993 in the deadline/beat writing category for the same coverage. The following year, Ingrassia and White authored "Comeback: The Fall and Rise of the American Automobile Industry".
Publisher's web site: www.atrandom.com