Business: Autos Hit 40 Miles of Bad Road

Detroit's sales slump leads the business slowdown

The warm weather and quickened heartbeats of spring have traditionally sparked a resurgence in U.S. auto sales after winter's doldrums. Not this year. Domestic new car sales for the first ten days in April were down a sharp 24% from a year ago. Detroit now expects to build only 7 million cars this year. In the past 18 years, only one year was worse: recession-struck 1975.

Last week Ford Motor Co., which is expected to lose $1 billion on domestic car operations in 1980, announced the permanent closing of its assembly plant in Mahwah, N.J., shut down smaller operations in Dearborn, Mich., and Windsor, Ont, and cut 15,000 blue-and white-collar jobs. Time may be running short for Chrysler. Sales are off 26% from 1979's already depressed levels, and the company is making a herculean cost-cutting and consolidation effort in order to qualify for $1.5 billion in federal guaranteed loans. Even mighty General Motors last week put 12,000 more workers on indefinite layoff.

Auto industry layoffs may soon exceed 250,000, which badly hurts such auto-dependent cities as Detroit, where unemployment has already reached 24%. The current downturn is reminiscent of 1927, when Henry Ford helped push the country's economy into a slump by halting all Ford output for five months, as he switched production from the Model T to the Model A. Says United Auto Workers President Douglas Fraser: "The rest of America may be having a recession. But autoworkers are having a depression."

The nation's deteriorating economy is not the only source of Motown's blues; American automakers are waging a losing battle against Japanese competition. Imports now account for more than one of every four cars bought in the U.S., and 80% of those are made in Japan. American sales of popular Toyota Corollas since the beginning of the year have been higher than those of all Chrysler's Dodge division. The Japanese cars have won a hard-to-beat reputation for economy and quality of workmanship. In a recent survey of American auto engineers by Ward's Auto World magazine, nearly half said they thought Japanese cars are better built than comparable U.S. models.

Auto company executives have stopped short of lobbying for import restrictions against Japan. Just as well. President Carter at his news conference last week pointed a wagging finger at the industry and said he had urged Detroit automakers to build smaller cars three years ago. He said they had replied that American consumers wanted big ones. The President firmly ruled out restrictions on Japanese imports, saying that controls would force consumers to buy the inefficient gas guzzlers they do not want. Both Carter and industry officials would like the Japanese to construct assembly plants here, and last week Nissan Motor, which makes the Datsun, announced plans for a new $300 million truck plant to be built in either the Great Lakes region or the Southeastern U.S. Honda will begin construction of an auto plant by the end of 1980 next door to its Marysville, Ohio, motorcycle facility.