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Here where I live in Northern California the Toyota Prius is by far the single most frequently seen model of car on the road. They are everywhere. The place is crawling with them. In fact last month I myself bought two of them, one for me and another for a family member. No, just because I traded in my behemoth Mercedes S-Class doesn't mean I've gone green -- although I can't tell you what a cheap thrill it is to go weeks without gassing up. The real reason is that the Prius is a video game you can drive. It's fun. Everytime you go out you reset all the computer monitoring gizmos onboard and go for "new high score" in gas mileage. I'll probably be back into German steel soon enough, but for the moment I'm getting a real kick out of this thing.

Now none of that is to explain why Ford and GM are doing so badly -- though an op-ed in today's Journal makes it out that failure to go green is their main problem. The op-ed is short on statistics and long on moral judgments, such as "it is ironic that [Ford's] just-departed CEO Bill Ford, who was known for his environmental interests, never succeeded in getting his leadership team to understand the need to make the environment a core element of the company's business strategy." As my DC lawyer/lobbyist friend puts it,

Claiming that Ford and GM are in trouble because they aren't eco-friendly enough is academic proof that people tend to see what they want to see.

Ford would be in trouble even if its products topped the list of hybrid and zero emissions automobile products, a tiny fraction of the market, just barely over 1% in some estimates, lower in others. Toyota isn't strong because of the Prius; indeed, it can indulge the Prius-set because it sells so many other vehicles which appeal to the 99% of the market which rejects the Prius. Toyota's big hit for 2007 will be its revamped Tundra truck with a bigger engine, stronger frame, and -- to make sure it's accepted in the number one truck market -- it will have a sticker which reads "Made-in-Texas."

Having long ago passed Ford, Toyota will knock off GM this coming year as the world's number one in auto and truck sales by selling more trucks. The Prius is a little thing, a toe-dip in a potential market, not a significant contributor to Toyota's sales. It sure does polish up the image in New Haven and Hollywood, though.

Here's a wake up call for the Yale professor: Ford made many management mistakes, including bad product designs. One of its management mistakes was to rely exclusively on truck and SUV sales as if GM was its only competition. So you get partial credit for your answer. You missed the biggest mistake: paying too much per vehicle in employee benefits, especially for retired workers. If Ford has to pay approximately $1200 per vehicle more than Toyota, doesn't that mean Toyota can afford to put a higher percentage of its money into the vehicle itself? Could this be one of many clues that Toyotas are perceived to be higher in quality? (The largest clue is that Toyotas are higher in quality.)

Nearly all of the jobs which Ford will eliminate are union jobs. A big part of the reason to fire these workers comes from the hard reality that company management can't renegotiate the contract with the UAW management.

I'd say that's the tragedy of today's union management -- whatever the industry -- they won't try to save the jobs of current workers because they'll have to agree to cut (or eliminate) benefits to retired workers. Better to stand quietly while all the union workers bitch at management.

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