With regard to the question raised in Robert J. Samuelson's Oct. 19 Washington Post column, "Do American Manufacturers Have a Future?", the answer is simple: yes. The real question is: "Who will be part of it" ?
Take the automotive industry as an example. The domestic industry is suffering from structural problems:
1. The cost disadvantage of the Big Three (DaimlerChrysler, GM and Ford) against the internationals such as Toyota and Hyundai in North America is close to $6,500 per car -- that includes union negotiated wages and fringe benefits, manufacturing process inefficiencies.
2. Wrong products: The key focus of the domestic carmakers in recent years has been in the SUV segment, with traditionally high margins. Other segments, such as the mid-sized or small cars, have been pretty much neglected.
3. Lack of innovation: Alternative propulsion technologies (hybrid, diesel, hydrogen) have been primarily developed by overseas manufacturers and, with steadily rising fuel costs, consumers are looking for alternatives.
Incentives given by the Big Three, such as the employee-pricing program, were short-term initiatives designed to keep sales going and to clear inventory. As a result, future sales were cannibalized; price points destructed and inventory levels rose again rapidly.
Until these structural problems are fixed, the domestic carmakers face a grim future.
But will American manufacturing be lost? Not really. The international carmakers are heavily investing into North America. Hyundai, Kia, Toyota and Honda are planning to expand their capacities in the U.S.. Their vision is to be seen as domestic car manufacturers to sell vehicles "MADE IN USA" with pride.
