Much as the Internet bubble demonstrated the limitations of the so-called “new economy”, now it is the turn of the “older” industries in the United States, starting with the automotive industry, to experience serious difficulties. As was the case 20 years ago, we again find ourselves wondering about the disindustrialisation of the US economy, where carmakers are being pressured into poor performance by their Japanese competitors.

History does not repeat itself but the US auto industry, again at loggerheads with the Japanese, has revealed its fragility, prime examples being the red ink that General Motors and Ford have been spilling, and the state of emergency besetting their two previous component manufacturing units: Delphi (the world leader in this field!), which has requested Chapter 12 protection; and before that, Visteon’s decision to sell its US activities back to its ex-parent company.

Clearly the Japanese models’ arrival in the market for large pick-up trucks, where Ford and GM had earned significant amounts of cash in the 1990s, partially explains the problems they are currently facing in what has become a highly competitive segment. This outcome was eminently foreseeable, however, and the American companies’ inability to predict these changes in their domestic market’s competitive context is much more serious than a passing error.

Another large source of profits for Ford and GM over the past decade had been their financial activities, notably captive finance. Lower lending rates and a war waged using zero rate loans have reduced this financial windfall, all the more so that GM and Ford’s lower credit ratings have increased their own funding costs.

As financial circumstances worsened, North American workers’ pension funds began to suffer. Share prices could no longer rise as quickly once the bubble had burst. Had their uptrend continued unabated, Ford and GM would have been able to fulfill the commitments they had made to their employees. The way things have panned out, however, component manufacturers like Delphi and Visteon and carmakers like GM and Ford now face serious pension funding crisis. Their response will be to “socialise” these losses. This implies is a modicum of collective funding, but above all a cut in employee benefits. The limitations of this kind of pension funding are clear for all to see.

So much for the star pupils of shareholder value creation: firms that had divested their components manufacturing subsidiaries; pursued a global car/platform strategy followed by a modularization approach; acquired luxury brands (Jaguar, Volvo, Land Rover for Ford; Saab for GM); engaged in strategic alliances (Mazda for Ford; Fiat, Suzuki for GM) or local ones (like the Ford-PSA diesel engines arrangement); and invested in finance or e-@utomobile. And which face serious problems today.

All of which makes the contrast with the situation of carmakers that have never stopped prioritising their industrial strategy (notably Toyota, Honda, Nissan-Renault and PSA Peugeot Citroën) all the more poignant. Which is not to say that these latter groups all pursued the same profit strategy. Quite the contrary, the financial dimension appears to be a very useful way of explaining the difficulties that the US automobile industry is facing – especially because its fate is remarkably similar to the one that Fiat suffered in Europe when it tried to transform itself into a European “General Electric”.