Detroit, Mich. — While the Obama administration congratulates itself on cleverly manipulating bankruptcy law to preserve UAW power and guarantee that a “new” GM emerges from Chapter 11 to build Obama’s Tomorrowland electric vehicles, a New York Times story Monday reminds Americans that the corporation they now own must move product to survive. But new GM will be facing a second wave of Asian imports that — like the Japanese a generation ago — is undercutting Detroit in quality and price.
“Many smaller automakers are gaining a bigger share of the market, most notably Hyundai and Kia,” writes Detroit correspondent Micheline Maynard. “Their gains appear to be a replay of what occurred four decades ago, when upstart automakers from Japan started selling cars in the United States. At the time, American carmakers dismissed them, but today they control nearly 40 percent of the American car market.”
The Korean automakers’ gains (a combined 2.3 percent increase in market share in the last year alone) are proof that the Koreans are learning from the Japanese lesson of 40 years ago — and that the Obama administration is not.
Contrary to the Obama strategy of shielding Big Labor from real reforms by rigging the bankruptcy process, both Hyundai and Kia are building non-union plants in right-to-work states, giving them not only cheaper labor overhead, but much more flexible factories that can adapt to changing market needs. While the Obama administration crows that the UAW’s 2011 contract will make its wages “almost as competitive as Toyota’s” ($28 an hour), the Korean automakers are paying their American workers $21 an hour.
Slave wages? Hardly. The average U.S. manufacturing wage is $15 an hour. As The Weekly Standard’s Fred Barnes reports, when Kia took applications to hire 2,900 workers in its new West Georgia plant last year, 43,000 people applied.
And what is Kia producing in West Georgia? A small hybrid? An expensive, next generation electric plug-in? Nope. The Sorento SUV.
Like its successful sibling, Hyundai, Kia is producing basic cars that Americans want. At cheaper prices. With superb quality. And they are building customer loyalty without manufacturing a single, trendy, green, Thomas Friedman-approved vehicle. Hyundai, reports the Times, has received “an image boost from its luxury Genesis model, which was named the North American car of the year at the 2009 Detroit Auto Show.” Genesis fuel economy? Just 23 mpg.
The Obama administration is building GM to perform in a political environment where expensive fuel technologies are developed and unions preserved. If it were serious about gaining share in the market, it would be building affordable cars with proven customers in right-to-work states.