Why the Most Profitable Cars Made in the U.S.A. Are Japanese and German

(4 of 4)

As for Chrysler, some analysts say it has little chance of becoming a low-cost producer any time soon. A handful of its new vehicles — the Pacifica wagon and Crossfire sports car — incorporate the prized engineering of its corporate sibling, Mercedes-Benz. By 2005, Chrysler will start using a Mitsubishi small-car platform. (DaimlerChrysler owns a controlling stake in Mitsubishi.) But Chrysler's annual run of 2.5 million vehicles comes from 15 plants and incorporates 11 platforms — an inefficient scheme.

Though the UAW has resisted manufacturers' attempts to outsource much production to lower-paying suppliers, GM may have set a precedent with its new Cadillac plant in Lansing, Mich., which opened last year. Be more flexible about work rules, and let us outsource more, GM said, or we'll set up shop in Mexico or Canada (where the Canadian Auto Workers split from its American parent in 1985). The plant is now a model of Detroit lean and mean. Its vehicles rate second, to Lexus, in initial quality. Suppliers deliver components every four hours (vs. every two weeks at some GM plants), and management lets workers freeze the lines if they notice a component or assembly flaw.

One of Detroit's toughest problems is that as its vehicles and plants improve, so do those of its foreign-based competitors. Today's global auto industry is a race in which it's difficult not only to win but also to survive — a contest that Chrysler, in a sense, lost when it gave up its independence. That prospect stalks other U.S. automakers — and keeps them running hard.