Can America Survive Without Detroit?

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The significance of that was lost on most, but for the first time since World War I we will have people building automobiles in America who won't be able to afford the vehicles they build. Somehow we are led to believe that's real progress.

Romney goes on to discuss how Detroit's labor costs keep it from matching Japanese quality and automotive value one-on-one, comparing a Ford Taurus with a Toyota Avalon. Discussing the labor cost burden for Ford, Romney speculates that there is a $2,000 cost disadvantage for Ford. He says this lets Toyota (TM) add $2,000 worth of quality and features to its Avalon, making it the far more appealing purchase and the better value. Again, there's a fundamental flaw in his premise that five minutes' research could have corrected: In spite of the $2,000 "labor burden" he mentions on the Taurus, its list price is still $3,720 less than the Avalon's.

Using his logic, it's Ford that could add that unknown extra $2,000 worth of features and quality to the Taurus and still sell it for $1,720 less than the Avalon. Both get 28 miles to the gallon on the highway; the Avalon gets 1 mpg more in city driving.

One other important thing: So far this year, 46,167 Tauruses have been sold, down 20.2% from a year ago, while Toyota has sold 37,852 of the Avalon—down 37.9%. So, if he really understood what he was saying, Romney's position should have been: Why is the Avalon not selling better?

He also asserts: "[Detroit] management as is must go. New faces should be recruited from unrelated industries." Great idea, Mitt. Let's pick two of the best-known and most respected American corporations from which to pull the new leaders for Detroit. Say, Boeing (BA) and General Electric (GE)? While you were out campaigning, Ford and Chrysler already did that.

Imagine No Amber Waves

The media make much of the fact that Detroit's dealerships so greatly outnumber Toyota's. This extremely inefficient distribution chain, they say, weakens the average dealer, which in turn damages Detroit. To some degree that may be true, but what the media fail to take into account is how urban-centric that argument is.

One of the key reasons the Big Three have so many dealerships is that they have outlets in cities where Nissan (NSANY), Honda (HMC), or Toyota can't claim any type of business. Detroit's trucks may be taking a pounding right now in the press, but let Detroit go away and see what happens to American agribusiness.

That's right: Detroit has a strong presence across the Great American Midwest. In states like Kansas you will find GM dealers in no fewer than 54 counties, while Toyota dealerships can be found in only eight. The reality is that after a few planting seasons, given reasonable crop prices on the commodities market, one day sales of new pickup trucks will again make more money for Detroit than all of the Chevy Volts they may or may not make.

And are you really suggesting that American farmers be given the choice of Tundras or Titans in the future? What a wonderful parting gift for Japan.

One would think the media might be a bit more sympathetic to this crisis, given how many of that industry's jobs hinge on the outcome. After all, there are years when total automotive advertising can reach upwards of $15 billion annually. But not this year; and already we are seeing jobs melting away in the media—from radio stations to TV and with print publications—because of this automotive downturn. Let Detroit go away, and you're talking about a decade-long drought for the Fourth Estate.