Originally Posted by dtownfb
This article appeared in today's (12/17/2018) CNN Business page. It looks at the US auto industry through the lens of plant capacity for the domestic and the growth of foreign automakers plants in the US. It speaks to the true issues GM, Ford and Fiat Chrysler face which is a rapidly changing market and plant over-capacity. Couple this with a continuing decline in market share and high legacy costs, they can no longer absorb fluctuating sales. BTW, overall US car sales were down 5% in 2017 after a record 2016 (fairly even this year).
I guess now is not the time to invest in Ford or GM.....
I don't find this convincing.
The real issue has long been that foreign competitors produced a more advanced and higher quality product while the Big 3 were always a step back in both.
Playing catchup is never enough and none of these firms had the vision to leapfrog their foreign competitors. Overcapacity is never an issue if your product offerings and build costs are kept in line and labor costs are only a small part of the cost of a finished vehicle. Legacy costs have no impact unless you're shrinking your company because you can't come up with competitive product and must discount heavily, as the Big 3 did.
This was a failure of senior management and its roots lie in the seventies, when these American companies found that mediocre was good enough.
They never did see the changes that were coming commencing in the eighties, when mediocre was no longer good enough.