Toyota's progress and fear of American backlash

New York Times had an article about Asian car manufacturers and how they are remaking the Southern US as the new Detroit. The article contrasted the waning influence of the Big Detroit three with that of Honda, Toyota and Hyundai who are progressively becoming nimble, astute and more importantly, profitable players in the global automotive market.

Toyota's upper management fears a backlash due to the steady decline in GM's and Ford's performance . I am not surprised that Toyota feels this way.

The US government resorts to protectionism when it suits itself. The rescue of many airlines in 2001 and 2002, the tariff on Chinese textiles (after the quota regime was scrapped in Dec 2004) are all cases in point. In the case of the Airlines, the govt. used the 9/11 tragedy as an excuse. There is no doubt that the unfortunate events of 9/11 pushed many airlines over the brink. But what led them ther was their poor execution, lack of operational and fiscal discipline. In the case of Chinese textiles, the argument was that the American producers did not have enough warning about the coming deluge of cheaper Chinese textiles. Nothing can be farther than the truth. For the past few years, the entire world was waiting for this day.

I do not fully believe in the efficient market theory nor do I think that laissez faire is the panacea for world poverty. But since these two principles are thrust by every American government on every country in the world, it is entirely justified to expect the American government to practise what it preaches. If companies like GM cannot compete fairly in the market, then they should be reduced to obscurity. Propping these poor performers by penalizing successful Asian car companies is not the answer. Protectionism will not make them better, it will only worsen their already dire condition.