US car makers restore national pride


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The desire for a vibrant, home-grown car industry is an integral part of the American pysche.

The automobile has deep symbolism in US culture in a way no other nation can match. It stands for a sense of freedom and the open road, hinting at the loss of the western frontier.

That national pride in the car industry was exemplified this year when Chrysler ran a TV advertisement during the Super Bowl. It did not display an individual car. Instead, to a pumping rap soundtrack by Eminem, it glorified in the gritty reality of Detroit with the tag line: "This is Motor City and this is what we do."

It was an enormous hit, with some viewers confessing they were moved to tears by the vehicular patriotism.

But the reality of recent decades in the US has brought different tears. Detroit has long become a by-word for industrial decline as its car industry withered and fled abroad, along with other American heavy manufacturing.

The industrial ruins of Detroit's car factories and the city's staggeringly shrinking population have become a shameful badge of decline and the US car industry's troubles have become a totem of deep national unease.

But for the first time in years there is good news from Detroit's famous Big Threecar makers.

For almost seven years at least one of Chrysler, Ford or General Motors (GM) has been in the red. This year all three are in the black, making millions of dollars from a US car industry many had assumed was headed for extinction two years ago.

Ford last year made US$6.6 billion (Dh24.24bn) of profit - its best showing for 10 years.

The Big Three's good news comes at a time of bad news for its arch-rivals in Japan, which are in a crisis partly caused by the devastating March earthquake and tsunami.

It is a stunning turnaround for the US car makers. Chrysler and GM were rescued by controversial government bailouts as the recession ravaged the American economy.

Ford resisted taking government cash but suffered along with its brethren, and just five years ago was also on the brink of bankruptcy.

Now all have retuned their output, introduced popular new models, focused on new markets such as China and changed staid and incompetent corporate leadership. They are so robust they have been able to protect their profits margins by nudging up prices - a true market vindication of making a much better product.

Their recovery is also a vindication of their bailouts. Unlike the vast sums given to US banks, the relatively small amount pumped into the car makers saved real manufacturing jobs and helped to turn around gigantic companies that actually make things, rather than design ever more complex ways of pushing money around.

Chrysler is laying the groundwork to repay the government, while GM has basically already done so.

But the picture is not all rosy. There is no complete turnaround or return to the glorious past. After decades of decline the Big Three are emerging as stronger, fitter and leaner, but they are also changed.

Chrysler is no longer entirely All American. It was bought first by the German company Daimler, then sold to the private equity firm Cerberus, and is now about 30 per cent-owned by the Italian car maker Fiat.

In terms of mass employment, the Big Three are mere shadows of what they once. The days when the gigantic companies could act as the lodestone of the entire Michigan economy, to say nothing of Detroit, are long gone. They are all increasingly global companies, no longer dominating the US car landscape in favour of expanding sales abroad.

In 1999, Ford sold 4.1 million cars in America. Last year it sold only 1.9 million. In the same period Chrysler dipped from 2.6 million to 1.1 million in US sales and GM fell from 5 million to 2.2 million. That is a profound shift for a product as beloved to American culture as a car.

One of GM's greatest success stories is its sales increase in China. Its hot-selling car, the New Sail, is now built and sold entirely in China.

That is great for a new globalised GM, but not so good for struggling Detroiters in the city where the maker still has its headquarters.

Yet this is no time to indulge in fresh doom-mongering. It is time to celebrate the continued existence and unexpected new life of the American car maker.

Only a few years ago, that very idea looked like a pipe dream.