As someone who’s quick to call out the hypocrisy of others, a critical reader recently noted my seeming hypocrisy claiming to “Buy American,” yet I’m fiercely loyal to the Japanese automakers. In fact, I cheered when Toyota was recently crowned the top selling brand in the U.S. for the second successive quarter. In my mind, GM and Ford represent all that’s wrong with America.
My dim view of both companies was reinforced with the recent disclosures that GM CEO Mary Barra in 2021 received $29.1 million in compensation, while Ford CEO Jim Farley received $22.8 million. What especially stuck in my craw was that GM pays for Barra’s financial counseling, personal travel, and an executive physical. Admittedly, U.S. healthcare costs are steep, but if Barra can’t afford to pay for her annual physical, who can?
Barra’s and Farley’s compensation is beyond obscene given the performances of the companies they helm. Electric vehicles are all the rage, supposedly representing the future. If that’s the case, how is it that Elon Musk, who was barely old enough to shave when Barra and Farley began their careers in the automotive business, is trouncing them so mercilessly?
Tesla in this year’s first quarter reported a net income of $3.31 billion, a 658 percent increase over the same period a year ago. By comparison, GM posted a net profit of $2.93 billion in the first quarter, a decline of 3.04% from a year ago. Ford posted a net loss of $3.1 billion in the first quarter.
Tesla’s earnings are especially impressive given that the company doesn’t advertise or even employ public relations people in the U.S. Tesla makes cars that people want; GM and Ford make vehicles that mostly must be sold.
Ford’s earnings were dragged down by its investment in electric truck maker Rivian, which so far has been unable to live up to its hype. A year ago, when Rivian boosted Ford’s earnings, Farley was quick to celebrate, despite the investment predating his appointment as CEO. I’m a fan of Rivian’s CEO and hope he succeeds.
Ford Bronco Engine Issues
Most sycophantic automotive reporters are too busy sucking up to Farley and hailing his supposed EV vision to notice this report in the newsletter “The Drive” disclosing that Ford Bronco owners are experiencing critical problems with their trucks’ 2.7-liter EcoBoost engines. The engines are failing with 10,000 miles or less on the odometer, and repairs can sometimes take months. At the time of publication, The Drive noted there was already a thread of 46 Bronco owners reporting engine issues. The thread provides insight as to how Ford treats its customers experiencing serious issues, so if you’re thinking of buying a Farley Ford, it would behoove you to read it.
There was also this report that Ford has recalled 252,936 Explorers for the 2020-2022 model years to replace a bolt used to mount the rear axle of its subframe. As explained by Auto Blog, the bolt can fracture, allowing the driveshaft to disconnect from the axle assembly, making it possible for the vehicle to roll away while in park if the brake isn’t applied.
I’m not an automotive engineering expert, but I know that manufacturing electric cars is considerably more complex than ones with internal combustion engines. Even Elon Musk hasn’t fully mastered EV manufacturing, so it’s a giant leap of faith to believe that GM or Ford will get it right out of the gate. They’ve both been making ICE vehicles for more than a century and they still can’t roll out consistently reliable vehicles using legacy technology.
I swore off U.S.-made cars after owning a Chevy Citation, a death trap of a car regulators wanted recalled, but GM’s lawyers managed to avoid. Since switching almost exclusively to Japanese cars, I’ve enjoyed a life of nearly automotive bliss. The few issues I’ve ever had were always promptly and fairly resolved.
Pause for Concern
GM’s and Ford’s record with electric vehicles so far should give any thinking person pause for alarm. GM was forced to recall all its Chevy Bolt vehicles because they were prone to catching fire. Ford’s hot selling electric Mustang has already been subject to four recalls because of manufacturing defects that can’t be fixed remotely. The car has been out for just over a year.
What’s galling about Barra’s compensation is that GM is hardly at risk of someone poaching her. Over the years I’ve seen Barra’s name making the list of “most overpaid CEOs.” If Elon Musk were to announce that he’s stepping down and that he tapped Barra to replace him, Tesla’s stock would tank. Barra is a management legacy of the GM Michael Moore featured in his 1989 documentary Roger & Me that captured the automaker’s disregard for its employees and the communities it served. Barra began her GM career in 1980; her total 2021 compensation to the median of all GM employees’ total compensation is 420 to 1.
Walking my dog through my west L.A. neighborhood last night I realized just how faded a brand GM has become. To amuse myself, I began counting the number of GM cars I saw. There was one – an aged Cadillac parked in a driveway. If Ronnie And The Daytonas re-recorded “Little G.T.O,” they’d change the lyrics to “Little Tesla Y.”
Ford’s Farley, who previously was a top U.S. executive at Toyota, is more marketable because he’s a salesman extraordinaire who could sell igloo air conditioning units to Eskimos. Farley is the quintessential globalist CEO with no loyalties to Ford’s native Michigan or America for the matter.
Farley has made a “bet the farm” wager on Ford’s future. He’s split the company into three operating divisions – electric vehicles, internal combustion engine vehicles, and a commercial division. Ford’s electric Mustang is manufactured in Mexico, and the company has indicated it will expand manufacturing in that country. It also has announced plans to significantly expand its white-collar workforce in India, where it already has more than 11,000 employees. There also have been reports that Ford is considering manufacturing electric vehicles in India for export.
Farley last fall announced plans to invest more than $11 billion in EV manufacturing in Tennessee and Kentucky without giving Michigan Governor Gretchen Whitmer even the courtesy of making a competing bid. In due course, I expect Farley will announce plans to relocate Ford’s EV operations to California, Texas, or Tennessee. I expect Ford will ultimately become like IBM and have more employees outside the U.S. than in America.
Toyota Is No. 1
The media has glossed over Toyota becoming the No. 1 brand in the U.S. for the past two quarters, but it’s a very big deal. When I bought my first Toyota in 1986, I felt considerable guilt buying a foreign car, as did many other Americans. Buying a Japanese car once carried a stigma, particularly in the Midwest.
Many Americans have little choice but to buy Japanese or other foreign brands these days. GM and Ford have pretty much abandoned making sedans that Americans lacking affluence can afford. Their focus is manufacturing fat profit trucks and taxpayer subsidized luxury electric vehicles, ceding the sedan market to Toyota, Honda, and Subaru who make cars of a quality and value that Ford and GM in their wildest dreams could never manufacture.
In another significant development that went unnoticed, the head of BMW last week joined the CEOs of Toyota, Alfa Romeo, Citroen, and Peugeot warning that the phasing out of gas engines is happening too quickly. It’s hardly reassuring that the person overseeing America’s energy policy is former Michigan governor Jennifer Granholm, who has a proven and extensive record of failed energy policies and initiatives. When asked about rising gas prices in a Bloomberg interview last November, Granholm laughed hysterically.
The future of America’s automotive industry is heavily dependent on the leadership of Barra, Farley, and Granholm. God help America.