I think the history of the American automobile industry can be described in a couple of paragraphs. Here’s my try:
A century ago, the internal combustion engine cut the cost of moving people and goods. Large economies of scale and sleepy antitrust enforcement led to industry dominance by three domestic car makers. Labor unions forced these companies to share their monopoly profits with workers. These monopoly profits meant both the companies and the unions could afford highly placed friends in Congress. The unions overreached; management became complacent. Both the factories and the cars turned into a miserable joke.
Consumers got fed up and foreign competitors clobbered the Big Three. Neither management nor unions understood this quickly enough (over, say, 40 years) and the unions and industry needed a huge government bailout to avoid bankruptcy. This justified their earlier investment in politicians. An anti-bailout crowd swept into Congress (OK, that last bit is a forecast, not history).
If this paragraph does not satiate your interest in the domestic automobile market, may I recommend three fine books?
William J. Holstein’s “Why GM Matters” is a journalistic attempt to place a single American company back on its pedestal. I’m not convinced General Motors matters as much as Holstein thinks, but I am glad I read his book. It is especially helpful if you think the current GM is wholly a hapless desert of innovation. I especially liked his history of the Chevy Volt, the development of OnStar, and a little bit of history about the management and labor teams that have been so much in the news recently.
A must-read for any of us living in the Midwest is Abe Aamidor’s and Ted Evanoff’s “At the Crossroads: Middle America and the Battle to Save the Car Industry.” This book is especially interesting because it focuses so much on what has happened in Midwestern towns over the past couple of years. The narrative of Kokomo Mayor Greg Goodnight’s tireless efforts to bolster support for a bailout while flying off to Yale University to instruct management students is a classic tale. This is a great read.
Far and away, the best comprehensive popular history of the U.S. auto industry is Paul Ingrassia’s aptly titled “Crash Course.” Ingrassia has been the dominant chronicler of the auto industry over the past two decades, with frequent pieces in The Wall Street Journal and elsewhere. His intimate knowledge of the industry shows. This is a lively book that moves quickly from the early days of the industry to the present. He contrasts the performance of GM and Chrysler and Ford with insight as to the role of foreign competition. Ingrassia does a fine job explaining how many of the much-maligned labor rules (e.g., job banks) morphed from a simple way to stem layoffs to a caricature of inefficiency.
These three fine books bring to an end my summer reading. It was time well spent.•
Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at email@example.com.