Saturday, July 01, 2006

Shattered Confidence

Wednesday, June 28, 2006
Shattered Confidence
Even loyal customers say Big Three must catch up
Bryce G. Hoffman / The Detroit News

Michiganians are losing confidence in the U.S. auto industry, the engine that has driven the state's economy for the better part of a century.

More than half believe U.S. automakers are doing only a fair or poor job of building the vehicles people want to buy.

"There was a time when we never would have bought a foreign car," said Caroline Burns, 68, a retired nurse from Portage, near Kalamazoo. Now, she drives a Honda.

Burns was one of 600 likely voters interviewed for this year's Detroit News/WXYZ-TV Mood of Michigan survey. The biennial poll, a scientifically conducted telephone survey, has gauged voter concerns every state election year since 1996.

With General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group struggling to compete against surging foreign rivals, state residents fear Detroit auto executives and labor leaders have lost touch with the harsh realities of today's global marketplace, and that the days of stable, well-paying factory work are long gone.

Sixty percent of those surveyed fear Michigan automakers won't be able to improve their financial situation or employment picture.

"We're a little worried," said Burns, who was among 30 percent of respondents who said they are "very concerned" about the future of the domestic auto industry.

She blames the United Auto Workers.

"It's because of the demands of the unions that our auto industry is where it's at now," she said. "They need to recognize there's been a change."

Burns drives by an abandoned auto factory nearly every day. She said American automakers have not been able to keep up with their foreign rivals.

While many survey respondents share her sentiment, 39 percent still rated the cars and trucks coming out of Michigan today as "pretty good," according to the poll, which was conducted June 13-20 by Lansing-based EPIC/MRA and has an error margin of plus or minus 4 percentage points.

Michael Putnam is one of them. The 67-year-old retired environmental supervisor from Jackson bought a Japanese car in the 1970s, but switched back to American brands when he realized how much Michigan's automakers needed his help.

"They've made a lot of progress on quality," said Putnam, who has an Oldsmobile, a Lincoln and a Mercury. "There were times when I bought cars that weren't as well made as their foreign competitors."

Like Burns, though, Putnam is very concerned about the future of U.S. automakers.

"I'm doubtful they can survive unless they make significant changes," he said. "You've got to overhaul the entire system."

Putnam worries that the industry's problems are dragging the rest of the state down, too. "People without skills were able to get good jobs on the line," he said. "That time is just gone."

Putnam said there is plenty of blame to go around for the loss of those salad days.

He faults management for making poor product decisions and union leaders for saddling Michigan automakers with contracts that put them at a competitive disadvantage. And Putnam said both sides have been too greedy.

"These outrageous wages for the top end of the companies are just egregious," he said. "Their expectations are too high. They need to get back to reality."

Auto industry insiders are less pessimistic about the prospects for Michigan's automakers. They point to aggressive turnaround campaigns under way at both GM and Ford that are largely off the radar screen of the average Michigan voter.

"People who don't know anything, don't know anything," said David Cole, chairman of the Center for Automotive Research, an industry think tank in Ann Arbor. "And most people don't know what's really going on at the Big Three. They're just responding to the press."

But the auto industry's role in the state's economy is changing, said Dana Johnson, chief economist for Comerica Bank.

Both the number of auto-related jobs in Michigan and the industry's contribution to the state's gross product -- the value of all goods and services produced here -- are in decline, Johnson said. Today, the auto industry accounts for about 5 percent of all jobs in the state and 10 percent of Michigan's economic output.

"There's no question it's true the state is becoming less dependent on the auto sector," Johnson said, though it is still disproportionately important to Michigan compared to other states. "(But) that's good because we are developing a more diversified (economy)."

Public perception does matter, however, particularly in an election year. And in Michigan, public perception is changing.

Mich. views on labor change

That's especially true when it comes to voters' view of organized labor.

Marcine Glowicki, a 54-year-old special-education teacher from Forester Township in Sanilac County, comes from a strong union family but today has mixed feelings about unions, particularly auto unions.

"You really do need a union, but they tend to take things to an extreme," Glowicki said. "They kind of go overboard and ask for the impossible. It's costing jobs."

Glowicki is one of the 30 percent of respondents who said they are "somewhat concerned" about the future of the domestic auto industry. She is trying to help them out.

She has owned Japanese automobiles in the past, but bought a Chevrolet TrailBlazer in January and hasn't been disappointed with her purchase.

"I decided that I better start supporting our American car companies," she said. "They need some help now."

Jennifer Kardatzke, 31, of Adrian is one of the 33 percent of those surveyed who said they disapprove of trade unions and among the 35 percent who said unions "mostly hurt" relations between employers and their employees.

"My husband paid a lot of union dues and never got any help from them," Kardatzke said.

Vera Brown, a retiree from Detroit, has a different view that is still more reflective of the state as a whole.

"Unions are helping, because they're behind the workers," said Brown, 73, who was one of the 62 percent of respondents who approve of unions and the 49 percent who said they "mostly help" labor-management relations. But even Brown said the power of the unions is waning.

Such comments reflect a change in the U.S. labor movement that is much bigger than Michigan, said Roland Zullo, a research scientist at the Institute of Labor and Industrial Relations at the University of Michigan's Labor Studies Center.

"What we're seeing over the past couple of decades is a decline in our industrial unions," Zullo said.

He pointed to last summer's decision by the Service Employees International Union and the Brotherhood of Teamsters to leave the AFL-CIO as proof of this trend.

But Zullo also questioned how much most Michiganians really know about labor unions.

"Someone who's not intimately involved in these battles looks at (the situation facing the domestic auto industry) and attributes some of the blame to the unions," he said, though he added that such perceptions could become a big factor in the upcoming election -- particularly since Gov. Jennifer Granholm has struggled to bring foreign investment to Michigan. "Having the UAW's base here may not help with that. At least the public perceives it that way."

Labor is changing, too

But observers like Cole say today's labor leaders have a different perspective than their more militant predecessors. He said the leadership of the UAW understands that the game is changing.

"The unions will have a much more positive role," Cole said.

Essy Samimy, 47, hopes so.

An automobile designer who lives in Troy, Samimy said the key to the domestic auto industry's recovery is overcoming the legacy costs that put them at a competitive disadvantage with their overseas rivals. That will require concessions from the UAW and help from Uncle Sam.

Samimy, who works for one of the Detroit-based car companies, wonders why the Bush administration is not doing more to help the U.S. auto industry. He would like the federal government to do more to address things like health care costs and also thinks Washington could do more with research-and-development tax credits to encourage the development of alternative fuel technologies.

But some Michigan residents think the glory days of the Big Three are over.

"They're obviously not doing very good because they've lost so much market share, yet the foreign companies that have plants in the U.S. are doing well," said Michael Edwards, a 50-year-old physician from Birmingham who drives a Toyota Camry. "They will emerge from it, but as smaller, more focused companies."

You can reach Bryce Hoffman at (313) 222-2443 or


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