Halberstam's Book, The Reckoning, Is Coming True

General Motors has been in the news lately. It is in serious financial trouble ... and that news sent me into some old boxes of books looking for The Reckoning by David Halberstam. It came out in 1986 and I had forgotten how big it was -more than 750
pages. The Reckoning is the story of two automobile companies - Ford and Nissan -and he tells their stories side by side. He explained how the automobile industry in America dominated the American market, and how the United Auto Workers gained this country's highest wages for manufacturing ... and then got concessions from management on healthcare and retirement benefits. It worked for a while, but as foreign cars came in the picture at lower prices, Ford management attempted to become more efficient through new technology. But that would displace workers, so the union balked. Saddled with high wage costs, management cut back on quality to keep costs down. Meantime, in Japan, Nissan did not have unions and thus had lower labor costs. Japanese quality was significantly lower in those days, so they adopted the Deming principal, an American engineer's method of improving quality. Their cars got better ... significantly better. That was in 1986 and the American-made cars were just beginning to lose market share.

Halberstam's thesis at the time was that if Ford kept giving higher wages and benefits, and continued letting quality erode ... and if Nissan continued with non-union wages and continued improving quality, a day of RECKONING would come. Tragically, it appears from the General Motors news that the day of Reckoning is here.

This is Gordon Sawyer, and may the wind always be at your back.