Detroit's high-tech look
NEW YORK and General Motors have always had a special relationship. The General Motors Pavilion, with its futuristic exhibits, was one of the highlights (along with United States carmakers Ford and Chrysler) of the great World's Fair of 1939 in that city, which helped usher in a new age in American technology. Now, General Motors recently came back to the Big Apple with a dazzling display of futuristic cars at a special auto show at the Waldorf-Astoria Hotel. The scores of media observers who looked at GM's high-tech vehicles of the future will surely carry the message of the exhibit home to their local communities: That message is that General Motors, and by implication the American car industry, is once again at the forefront of US technological excellence.Skip to next paragraph
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American carmakers are expected to have a good year in 1988, despite the stock market downturn. And 1987, when final earnings reports are out, will presumably look good - with collective earnings expected to be in the $9 billion range. That would still represent one of Detroit's better years. Car and light truck sales are expected to drop somewhat during 1988. When consumers get skittish, after all, they hold back on big-ticket items. Just-released sales figures, for example, show that US car sales declined almost 11 percent during 1987, although truck sales rose slightly. But automakers remain outwardly optimistic that the declines will continue to be modest and that the Big Three US carmakers - GM, Ford, and Chrysler, which is absorbing American Motors - should still do relatively well.
GM's challenge is that Ford is now out front in earnings, although GM still sells more products. Barring any major change, Ford's solid economic performance will presumably extend into 1988.
GM is in the midst of a major cost-cutting program. Management has been trimmed. Marginal facilities are being closed. New products - and new technologies - are being stressed.
That's all to be welcomed, by GM and the US industry in general. And it is necessary for Detroit, which has for so many decades played a key role in the world auto market. Imports, mainly Japanese, will likely capture an even bigger share of the US market this year. In 1987, they accounted for about 31 percent of sales. That is expected to move up a percentage point or two this year. All major Japanese companies are moving ahead with plants in the US. That policy benefits both nations. Competition is healthy. Moreover, low-cost imports, from Korea and Brazil, continue to pour into the US.
The upshot? GM and other US producers must avoid any inclination to put on the brakes in their efforts to modernize, economize, and innovate. Important contract negotiations will take place later this year at Chrysler. An amicable settlement would be in the best interests of management and labor.
Detroit, to its credit, clearly controls the US truck market. But continuing modernization is needed in the automobile sector. Detroit must remain lean and competitive if it is to continue to play a vital role in the world auto market.