But Jackson is wrong: the main culprit is not foreign competition from low cost labor or a competitive disadvantage from companies’ pension obligations.

The Wall Street Journal [http://www.jsonline.com/story/index.aspx?id=440305] reports that Detroit automakers pension plans for the workforce is ‘flush with cash’. With a surplus of $9 bilion, this is more than enough to meet obligations ‘for years to come.’ On the other hand, executive pension plans are currently $1.4 billion in the red.

Detroit has, for years, followed a Low Road strategy of cutting labor costs rather than investing in the workforce to make it more agile and productive, investing in new processes and aggressively investing in fuel efficiency and alternative fuels. Instead, Detroit has lobbied for tax breaks to people who buy SUVs as a way to boost sales in one segment of the auto market in the short-term.

This, of course, is a failing strategy: it is simply impossible for Americans, and others around the world, to continue to consume petroleum at current rates. It’s not just a moral or a political thing–mother nature will impose this on us. So, that means that, in the medium to long-term, the market for gas guzzlers is a dead end. Why invest so much in it?

On the other hand, you have companies like Toyota. Toyota, 30-40 years ago, was at the forefront in major breakthroughs in process and product innovation. They cut costs by investing in their workforce, going to a decentralized management structure which gave more autonomy to front-line workers, aggressively developed lean and just-in-time manufacturing. The result was more innovation, less waste, more profit margin and greater market share. It has been Toyota and Honda that have driven the creation of the hybrid and super fuel efficient car markets.

Ford, on the other hand, has only recently announced that it will produce to customer demand, and not to fill warehouses. Duh!