Another Turn in Ford’s Turnaround (aka Ford’s Death Spiral)

The above article describes Ford’s plans to cut production and lay off more workers in response to recent further declines in sales driven by high gas prices.  In the past, such shifts in the market, away from one product line (SUVs and trucks) toward another product line (smaller cars) wouldn’t have been such a big deal.  Just throttle back on one factory and add shifts at the other.  But it doesn’t work any more.  Why?  Because high gas prices aren’t the problem.  The problem is that the U.S. market for small cars is glutted with suppliers from Japan and Korea who offer no comparable market in return for access to ours.  The result is predictable – a slow death for U.S. car-makers who are being steadily eaten away by parasitic trade “partners” who come to the trade table with nothing but an appetite. 

Last month I posted the following about an article that touted Ford’s “turn-around” plan, and re-characterized it as a death spiral at the same time that industry analysts incorrectly hailed it as Ford’s redemption:

It’s not my intention to pick on Ford here.  Their situation is merely a proxy for what’s happening to U.S. car-makers in general.  My point is that the government has little time left to act if it wants to save the last vestige of American manufacturing by abandoning its experiment with “free” trade and returning to the sensible trade policies that once built this nation into the world’s preeminent industrial power.  And the UAW needs to recognize that it has been reduced to a stooge of the free trade cheerleaders by its “if you can’t beat ’em, join ’em” approach of advocating for workers’ rights in trade deals. 


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