Car Talk

The North American auto industry of today is a jarring amalgam of contradictions. Cars and their makers are dismissed as anachronistic, smokestack relics of a blue-collar carbon age, yet they simultaneously represent a futuristic, AI-powered, green transportation ­utopia that humanity has pinned its very survival on. This disconnect reveals itself most forcefully in the current state of General Motors, the world’s largest corporation for most of the twentieth century. In 2018, this avatar of rust-belt manufacturing sold an astonishing 8.4 million vehicles and had global revenues of $147 billion (U.S.). Meanwhile, Tesla, Elon Musk’s epitome of automotive disruption, sold a grand total of 350,000 vehicles, with revenues of $18 billion (U.S.). Despite this yawning gap in sales and revenues, Tesla’s market capitalization of $61 billion far exceeds GM’s $55 billion.

Adding insult to injury, while it was once America’s largest and most important employer, GM recently weathered a 50,000-worker strike in the United States, which caused barely a ripple in the economy and had even less of an impact upon the public consciousness. The impending closure of GM’s last Oshawa assembly plant, after a century in that Ontario city, has been widely lamented as the end of an era but is also seen by many as an inevitable consequence of capitalism’s relentless creative destruction. Nonetheless, even with Oshawa’s demise, manufacturing remains Canada’s largest goods-producing sector and automobiles its greatest value-added export.

On its face, Wrecked: How the American Automobile Industry Destroyed Its Capacity to Compete, by Joshua Murray and Michael Schwartz, seems to grapple with this disconnect. And, indeed, it opens with the industry’s long-term problems, the sector’s 2008 meltdown, and the subsequent government bailouts. Yet Wrecked has its own disconnect, in that it simply does not address the industry’s current and contradictory anachronistic-futuristic predicament. Rather, the book seeks answers for questions we’re no longer asking about the sector and its future — questions attuned more to the industrial realities of the twentieth century than to the paradigm-shifting ones of the twenty-first.

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How we explain the North American auto industry’s huge losses, declining market share, bankruptcy, and bailouts has tremendous policy implications that go well beyond the sector itself and speak to the realities of sustainable manufacturing. Instead of focusing on the usual ­culprits — the financial crisis, industrial maturity, bad management, and, above all, the culture of unions — Wrecked concentrates on Japan. Murray and Schwartz argue that the Japanese system of “geographic clustering, machine flexibility, long-term sole suppliers, and just-in-time delivery”— compared with an ossified and dispersed production system — is the key to understanding the dilemmas that face U.S. manufacturers. (They don’t consider, unfortunately, European automakers or the game-changing Tesla.) In this way, they offer a condemnation of U.S. management and a defence of American workers — a defence rooted in a traditional Marxist assessment of class conflict, historical events, and path dependency.

Central to their telling is a historical comparison of adaptable Japanese manufacturing with more rigid U.S. production practices. Pioneered by Toyota, flexible manufacturing emphasizes close partnerships with suppliers, low inventories, just-in-time deliveries, shop-floor collaborations between management and workers, and a relentless commitment to efficiency and productivity. Schwartz has been toiling away on this issue for decades, including with a seminal Enterprise and Society article on Chrysler and old Detroit in 2000. With Murray, he convincingly makes the case that American companies employed their own form of innovation-inducing flex manufacturing before the Second World War. Based on a deep reading of secondary sources, the two authors demonstrate how U.S. automakers prefigured Japan’s post-war sector: by utilizing outside parts makers to innovate on their behalf; by having a productive, collaborative, and cooperative relationship with these parts makers; and by helping them improve quality and productivity, instead of simply chasing cost-cutting.

But, the two authors contend, capitalists will do as capitalists will do. During the Great Depression, and especially after the war, managers pursued profits by cutting labour costs, instead of embracing flex manufacturing and innovation. This strategy was a consequence of the industry’s very structure, they argue, given that auto manufacturing was based on class antagonism: “The high rates of innovation and huge surplus value associated with flexible production . . . do not flow out of some neutral process, but rather, like all surplus value, from the exploitation of workers.” As a result, starting in the 1970s and accelerating until today, the Big Three of GM, Ford, and Chrysler consciously deintensified their industry by moving jobs to low-cost jurisdictions. Since geographic density was the basis of union power, this weakened labour. It also meant the end of flex ­manufacturing, ­just-in-time production, and any real innovation — in marked contrast to Japanese rivals that embraced spatial intensity, stronger labour relations, and collaboration with fewer parts makers, even as they set up operations in North America.

Wrecked does not spell out Canada’s place in all of this, but it can be easily inferred. Before and after the Second World War, Canadian branches of the Big Three utilized their own forms of flex production, given the small batches of cars made for the domestic market, quick model changeovers, and accelerating technological demands starting in the 1950s. After the 1965 Canada-U.S. Auto Pact, which fully integrated the two countries’ industries, assemblers were continentalized, as were parts manufacturers. While this development gave birth to such giants as Magna, it locked in foreign ownership of assembly operations, and it also stifled innovation here.

Canadian policy makers and industry players willingly helped facilitate the geographic deintensification of Detroit, which sent more and more production across the border as it took advantage of cheaper health care costs and a favourable exchange rate. In this way, Canada is something of a precursor to the post-1990s automotive rush to Mexico and other low-cost jurisdictions. The result: American and, eventually, Canadian deindustrialization and inequality, and the attendant political destabilization of today.

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Murray and Schwartz offer an elegant and at times convincing explanation for the auto industry’s past evolution. But none of this has much to do with automation, robotics, electric vehicles, self-driving cars, or the transportation and societal revolution these changes portend. And though the authors nod to Trumpian efforts to reboot manufacturing through America First protectionism — a push with serious implications for Canadian workers and the Canadian economy — they don’t bring their class-based analysis into the twenty-first century. What happens when production is dominated by machine learning and advanced robotics? What happens when the very functions of automotive transport are no longer human controlled?

Readers will not find any answers to the most pressing and, indeed, destabilizing questions about the automobile in the modern age in Wrecked. But they’re questions that readers and policy makers need to keep asking and that scholars must address in future works. While the book certainly adds to our historical understanding of one of our largest industries and how it got here, there are few lessons we or the sector can apply to the challenges that lie ahead. In this sense, Wrecked, like the floundering Big Three behemoths it so cogently analyzes, seems to have missed the boat.