Automakers look to Washington, try to outlast mistakes of past

Source: Agencies  |   2008-11-9  |     ONLINE EDITION

AT Ford Motor Co they called it "Blue," a team set up around the year 2000 to design an array of small, fuel-efficient cars to compete with the Japanese.

It didn't get far because no one could figure out how to make money on low-priced compacts with Ford's high labor costs. Besides, the automaker was racking up billions in profits by selling pickups and sport utility vehicles. Times were good and gas was cheap.

"Blue" is only a small blip in automotive history, but it tells a big part of the story about why Detroit automakers are in a mess so critical they could be only months away from bankruptcy.

Democratic leaders in Congress asked the Bush administration yesterday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the US$700 billion bailout to include car companies.

Critics say leaders over the years at Ford Motor Co, General Motors Corp and what is now Chrysler LLC were slow to take on unions, failed to invest enough in new products, ceded the car market to the Japanese and were ill-prepared for the inevitable rise in gas prices that would make their trucks and SUVs obsolete.

"There's been 30 years of denial," said Noel Tichy, a University of Michigan business professor and author who ran General Electric Co's leadership program from 1985-87 and once worked as a consultant for Ford. "They did not make themselves competitive. They didn't deal with the union issues, the cost structures long ago, everything that makes a successful company."