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Jay Leno tells Asia about Detroit’s zombies

Jay Leno tells Asia about Detroit’s zombies
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First Published: Mon, Nov 17 2008. 11 38 PM IST

Updated: Mon, Nov 17 2008. 11 38 PM IST
Few countries seem more worried about Barack Obama’s presidency than South Korea.
There’s plenty of enthusiasm on the streets of Seoul about a change of leadership in Washington. Yet, Koreans are worried about Obama’s plans to bail out Detroit’s Big Three auto makers. Obama singled out Korea as an unfair auto trader last month. Newspapers and television programmes here are filled with reports about what the US’ largesse means for manufacturers. Case in point: A 7 November article in The Korea Herald headlined: “Obama’s protectionism weighs on Korea.” Koreans, and folks in the rest of Asia, should have little to worry about if Obama and Congress rescue Detroit. To understand why, just ask Jay Leno.
It says much about these times when comedians offer better insights than our elected leaders. Tonight Show host Leno and his ilk are poking fun at an industry that was once the pride and joy of the world’s biggest economy. It also says much when folks in Seoul repeat his jokes over a few beers, as many are these days. Henry Ford probably never envisioned US autos becoming a global punchline.
“I saw a guy on Hollywood Boulevard say to a hooker ‘What can I get for an extra 50?’ She said ‘100 shares of General Motors’,” Leno joked last month.
The funny man isn’t without some serious arguments. “The type of vehicles America makes best are, unfortunately, not the type of vehicles that people really want anymore,” Leno, a self-described car nut and collector, wrote in June in Portfolio.com.
Leno added that we live in a world in which young people have “grown up on Honda, Hyundai, Kia, and Toyota. To lure them to the American brand, you’ve got to give them something exciting, something bold, something different”.
Demands are growing for a bailout because more than three million jobs are tied to Detroit’s survival. The US auto industry has become a safety net all its own, much like the zombie companies Japan kept afloat in the 1990s to avoid massive job losses. Even so, the concern is that huge job losses in Detroit will worsen the US recession. Any public-support package is far from a threat to Asia. In fact, it’s likely to help Asian competitors. As many auto experts point out, it would be better to let General Motors Corp., Ford Motor Co. and Chrysler Llc. file for bankruptcy were they to run out of cash. Hyundai Motor Co., Toyota Motor Corp. and other Asian auto makers should fear this scenario more than a bailout.
Enabling Detroit
Bankruptcy would force auto makers to get under the hood and address weaknesses, excesses and barriers to becoming more globally competitive. They would emerge leaner, more innovative and a greater threat to Asia.
A bailout takes the onus off executives to change, allowing them to maintain their bad old ways. Any bailout should come with strict agreements on altering business-as-usual in Detroit and demands that top management step down.
The reason most Koreans don’t buy American cars has nothing to do with the 8% tariff on imports. Nor do trade barriers keep Japanese from buying American. The quicker US lawmakers own that fact, the quicker they will stop enabling Detroit from moving into the 21st century and become competitive. The popularly mentioned reasons for Detroit’s funk—a lack of quality products, negligible innovation, dismal fuel efficiency and ignoring consumer preferences—also help explain why Koreans don’t buy American cars.
None of this is to say Asian markets are as open as they could be. Japanese, Koreans and Malaysians could do more to make it easier for Detroit to get cars into their nations. That doesn’t mean consumers will buy cars that are made more for American streets than Asian ones.
If Detroit had only poured more profits from the sport utility vehicle-sales boom of the 1990s and early 2000s into research and development, it wouldn’t be a national disgrace. Congress’ protection of the industry, like the Chinese protected uncompetitive banks or the Soviets coddled inefficient factories, hasn’t served the US economy.
Obama’s pre-election rhetoric continues to worry Koreans. They’ve been waiting for passage of a free-trade agreement with the US. Obama has pointed out that the US imported about 770,000 Korean vehicles last year versus about 5,000 American vehicles in Korea.
Perpetuating complacency
A caveat worth noting here, says Korea’s ambassador to the US Lee Tae Sik, is that at least 200,000 of those cars were made in Alabama. Meanwhile, Hyundai is busily building the hybrid cars Detroit says it can’t afford to.
What a difference a decade makes. In the late 1990s, US officials helped bail out a Korean economy in chaos. Back then, many Americans still rolled their eyes at the idea of buying Korean cars. And yet, Koreans are passing Americans by. No one is saying US auto makers have it easy as global growth slides. Japan’s economy, for example, is now officially in recession. Detroit’s labour union agreements and pension liabilities pose daunting challenges.
This is hardly a new problem. Who can forget former US president George Bush’s humiliating trip to Tokyo in 1992? His goal was to get Japan to increase US car imports.
Now, it’s Korea’s turn. Detroit’s problem also isn’t the sliding value of the dollar. It’s that in 2008, after years of losing market share, the US still makes cars Asians don’t want. The best situation for Korea would be the US perpetuating that complacency.
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First Published: Mon, Nov 17 2008. 11 38 PM IST