Yesterday afternoon, Karen Tumulty over at Swampland e-mailed to ask if I had anything to say about Toyota passing GM in global sales in the first quarter of 2007. I tried but I really couldn’t. Anybody who reads the business press has known for a couple of years that this was about to happen. Also, everybody in the auto business had long ago begun looking upon Toyota as the true industry leader, even though GM still sold more cars. Plus, Toyota makes lots of cars and employs lots of people (albeit far fewer than GM) in the U.S. And GM’s doing great right now everywhere but the U.S.
But still, after having slept on it, I get it: This is an historic moment. Automobiles are the defining product of the modern industrial economy, and the clear No. 1 in the auto industry is now a non-U.S. company. (And while U.S.-based corporations are clear leaders in the post-industrial economy, if there truly is such a thing, I don’t think Google is ever going to employ nearly as many people as GM did at its heyday.)
Why’d that happen? One reason is the big postwar mistake the U.S. made by encouraging corporations to take complete responsibility for employee health-care and retirement savings. That has saddled GM and its “Detroit Three” brethren with a huge drain on financial resources and managerial attention that their competitors don’t have.
Another reason is the old story that the Detroit oligopoly grew fat and complacent in the postwar decades and was no match for lean and aggressive competitors from overseas. That tale seemed to have come to a happy end in the 1990s when U.S. automakers rebounded spectacularly. But in retrospect that rebound appears to have been the temporary side-effect of super-low gas prices that favored the big vehicles on which Detroit still had a near monopoly. Now the reality of global competition has returned.
Finally there’s trade policy, which John Edwards brought up in his reaction to the Toyota news on Tuesday. Surely it has played some role. And past saber-rattling on trade is part of the reason why Toyota now does so much manufacturing inside the U.S. But at the same time, if we had entirely held back the flood of imports in the 1970s and 1980s, just think how crappy our cars might still be. Global trade may not be an unmitigated good, but it’s still a good.