Kash has a post up which does a fine job of outlining the decline in the size of the U.S. automakers. For example, FORD is fully 60% smaller now than just a few years ago. Yet, interestingly, this is what auto production looks like in the U.S.:


It seems to me that this puts the kabosh to the lie that American automakers can't compete with foreign automakers. This chart shows U.S. production of vehicles. Why the disparity between shrinking size of U.S. companies and increasing output? Foreign automakers making cars in the good ole' U.S. of A.

U.S. industrialists suffer from two key phenomena that hold them back. First, U.S. producers are slaves to short term thinking. This is primarily due to the expectations by shareholders that returns must improve .... often substantially ... quarter over quarter. This puts handcuffs on long terms investment that is necessary to make a company more nimble. The other factor is health care. Foreign automakers are relatively new on the scene, their health care cost "drag" is much lower because of a younger work force. U.S. automakers, on the other hand, have a much older work force and significantly higher health care costs. Thus, they have shot themselves in the foot by not becoming a primary advocate and lobbyist for government funded universal health care. Had they done so in 1992, their cost structures would be dramatically lower today and their bottom lines dramatically improved.