Business
4:16 pm
Sat January 28, 2012

Made In The USA: Saving The American Brand

A majestic building still dominates the skyline of Rochester, N.Y., the word "Kodak" shining brightly from the top. It's the legacy of George Eastman — the founder of the Eastman Kodak Co. — a company that helped Rochester thrive and gave it the nickname "Kodak Town."

In 1976, Kodak sold 90 percent of the film around the world. The company basically invented digital photography, but it couldn't figure out how to make the transition from film quickly enough to out-compete its Asian rivals. Of the 20 best-selling digital cameras in the U.S., not a single one is from Kodak.

Today, Kodak is barely a shadow of its former self. Earlier this month, the company that in 1982 once employed more than 60,000 people in Rochester — but now has fewer than 7,000 workers there — filed for bankruptcy protection.

Just three years ago, two other iconic American brands, General Motors and Chrysler, were on the ropes. They recovered thanks to government intervention. President Obama even made it the centerpiece of his State of the Union address, when he declared: "We bet on American ingenuity. And tonight, the American auto industry is back."

So what does it take to keep making goods in America and to save the American brand?

Saving American Autos

Before the auto industry bailout, many people in the U.S. and around the world assumed that the age of the American car manufacturer was over. And yet, one need only visit an auto show, like the Washington Auto Show that opened this weekend in Washington, D.C., to see how confident American automakers have become.

There are hundreds of new models all across the showroom floor, and they're innovative cars in terms of their design and their prices. Probably one of the best slogans is Chrysler's "Imported from Detroit," splashed across a huge sign above the company's newest sedan.

GM and Chrysler are now expected to show their best performance since the auto crisis. On Friday, Ford posted its biggest profit in years.

No one at the auto show sounded more confident about American manufacturing than Transportation Secretary Ray LaHood. From the floor of the auto show, he told weekends on All Things Considered host Guy Raz that the return of GM and Chrysler is a "great American story."

"[The auto industry] is back because President Obama decided he was going to make an investment," LaHood says.

A few years ago, General Motors, once the largest employer in the country, was on the path to insolvency. No bank would lend them money; and so the Obama administration insisted that the company declare bankruptcy, and with a massive federal bailout, begin a massive overhaul.

Bill Vlasic, Detroit bureau chief for the New York Times, tells NPR's Raz that it was shocking to realize how much trouble GM was in at the time.

"The leadership of General Motors had resisted Chapter 11, saying that people wouldn't buy a car from a bankrupt car company," Vlasic says. "Well, that was proven wrong."

Vlasic is also the author of Once Upon a Car, a book about the auto bailout and the revival of GM, Ford and Chrysler.

Vlasic says that although they were initially resistant, once GM restructured, the company became more streamlined and focused. Part of that restructuring was discontinuing the Pontiac and Saturn brands, a tough decision for GM because of the long history of Pontiac.

"Guess what — when they closed the division, nobody cared," he says.

Considering the cost to the American tax payer: Was the bailout worth it? With job loss estimates in the hundreds of thousands if GM had been allowed to go into uncontrolled bankruptcy, Vlasic says that's still up to the American people to decide.

Humility, restructuring, tough decisions and billions of dollars to fall back on; it was enough to save American automakers, but what about smaller companies, like Kodak, in Rochester?

Vlasic says only one thing is certain: Kodak will come out of its bankruptcy a different kind of company.

"They can't expect sentiment to save them," he says. "It has to be based on their ability to compete with not just companies around the world, but companies here in the United States."

Kodak's survival will also depend on whether they can tap into their historical ingenuity and success, and come up with the kind of products that can get them back on track, Vlasic says.

Why Save American Brands?

When countries like China can make them faster and cheaper, or in many cases, as good, why does it matter whether our cameras or our cars are made in the U.S.?

Jennifer Granholm, the former governor of Michigan, tells Raz that if the nation decides that the logical choice is to stop making things in the U.S., there would be more consequences than just massive job losses.

"You'd have to deal with the consequence of a country that doesn't make anything," Granholm says. "If we rely on other countries to build the stuff that we use, then we are completely at the mercy of others. If you want to have a strong country, you have to make things."

In the new global economy, Granholm says the blind fealty to "laissez-faire, hands-off economics" no longer applies when our economic competitors are not playing by the same rules. Hanging on to that philosophy simply makes the U.S. accomplices to continued job losses to more aggressive competitors, she says.

"We have to decide: Are we going to fight for jobs or are we going to let others take our jobs?" she says. "We cannot bring a knife to a gun fight, and that's what we have done."

Hope is not lost, however, and Granholm says though the U.S. might have lost the fight for lower-skilled manufacturing, the opportunity is still there to be competitive in higher-skilled, advanced manufacturing — like the auto industry, for instance.

"We have to get in the game," she says. "The auto industry [was] saved because there was a smart, strategic, active partnership with the federal government."

To those that were willing to let the auto industry die, Granholm says that it would have made the country weaker, and we would have lost a manufacturing backbone. That philosophy, she says, would ultimately harm our nation.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

GUY RAZ, HOST:

From NPR News, it's WEEKENDS on ALL THINGS CONSIDERED. I'm Guy Raz.

Last week, a public radio producer named Rachel Ward and her colleagues at WXXI in Rochester started to record testimonials from people all around the city.

MICHAEL SPETOMACK: My name is Michael Spetomack(ph). I've lived in Rochester since 1959. Before that, I was raised in Hornell, New York.

RACHEL WARD, BYLINE: And what brought you up to Rochester?

SPETOMACK: Kodak.

(SOUNDBITE OF MUSIC)

RAZ: Right at the center of Rochester skyline, a majestic building still dominates. The word Kodak still shines brightly from the top. It's George Eastman's legacy right there in brick and mortar. And yet today, Kodak is barely a shadow of its former self. Last week, it filed for bankruptcy protection. A company that in 1982 employed more than 60,000 people in Rochester has fewer than 7,000 workers today.

The company basically invented digital photography, but it couldn't figure out how to make the transition from film quickly enough to out-compete its Asian rivals. And today, of the 10 best-selling digital cameras in the U.S., not a single Kodak.

Just three years ago, two other iconic American brands, GM and Chrysler, were also on the ropes. Not anymore. And that's our cover story today: making things in America and saving the American brand. But first, more memories from Rochester.

(SOUNDBITE OF MUSIC)

SPETOMACK: When we're young and not so well off, Kodak was our place for recreation. And we went there for bowling, for dining. They have subsidized my education.

BILL JAMES: Yeah, I met my wife there, and I was way in the back and I had to walk through the production areas to get to the cafeteria. And every day, I walk by and...

KATIE JAMES: He was this cute guy. He'd walk by with the coffee. And one day, he came by and says hi and asked me to go get a cup of tea. And that's how we started talking.

JAMES: Been together for, 32 - 32?

JAMES: Mm-hmm.

JAMES: Thirty-two years.

(SOUNDBITE OF MUSIC)

SPETOMACK: We're here to talk our memories, and Kodak was, you know, it was just the thing - my dad love softball.

WARD: Did he play softball with Kodak?

SPETOMACK: Oh, yeah.

WARD: What position did he play?

LARRY ARNON: Center. He used to teach me a special way of catching the ball and I stuck into it today. And the old Willie Mays, (unintelligible) catch in front. And he like - he thought that was the best way to catch the ball.

(SOUNDBITE OF MUSIC)

ARNON: The Kodak meant so much to everybody here. I mean, we did everything around Kodak. I look at - General Motors two years ago was in bankruptcy, (unintelligible) out. And now, I understand that they're one of the strongest companies in the world now. Back to being number one in auto. We can turn this around. We just got to come up with some better way for doing things.

SPETOMACK: There are still good people at Kodak. (Unintelligible) these men associated with quality and quality products. And who knows? Maybe it'll never be the company that it was, but still may become a viable company.

RAZ: That's Rochester resident Michael Spetomack. We also heard from Larry Arnon(ph) and from Bill James and his wife, Katie. And that point that Larry made about GM, that was the centerpiece of President Obama's State of the Union speech on Tuesday.

PRESIDENT BARACK OBAMA: We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.

(SOUNDBITE OF APPLAUSE)

RAZ: Now, just two years ago, many people in this country and around the world assumed that the age of the American car manufacturer was over. And yet, when you come here to the Washington Auto Show, which opened this weekend, what's clear is how confident American automakers have become.

There are hundreds of new models all across the showroom floor, and there are innovative cars in terms of their design and their prices. And probably, one of the best slogans is Chrysler's. There's a huge sign above its newest sedan. And it reads: Imported from Detroit.

This month, GM and Chrysler are expected to post their best results since the start of the crisis. On Friday, Ford posted its biggest profit since 2009. And no one at the auto show sounded more confident about American manufacturing than Transportation Secretary Ray LaHood.

SECRETARY RAY LAHOOD: When I was here three years ago and when I was in Detroit three years ago, it was like being at a funeral. Detroit this year was like being at a wedding. One of the best celebrations I've ever been at. The automobile industry is back. And it's back because President Obama decided he was going to make an investment. He was going to invest taxpayer dollars and very skilled workers. And GM and Chrysler are back. Chrysler has paid all the money back. And GM's paid almost all of it back.

RAZ: Do you think those companies, particularly GM, had to kind of hit rock bottom, you know, in order to get to the point...

LAHOOD: Look, I'm a forward-looking person. What I'm saying is GM is back. It's a great American story. It really is.

(SOUNDBITE OF MUSIC)

RAZ: But how did American auto companies bounced back? And what can other American companies learn from that story?

BILL VLASIC: It was an extraordinary story. Summer of 2008, it was shocking to realize how much trouble GM really was in.

RAZ: That's Bill Vlasic. He is the Detroit bureau chief for The New York Times. Think back to 2008, he says. GM, once the largest private sector employer in the country, was on the path to insolvency by the end of the year. No bank would lend GM money. So the Obama administration insisted the company declare bankruptcy. And with a giant federal bailout, they began a massive overhaul.

VLASIC: It was interesting that the leadership of General Motors had resisted Chapter 11, saying that people wouldn't buy a car from a bankrupt car company. Well, that was proven wrong. But more importantly, for the longest time, it was considered, well, we can't lose Pontiac, the storied brand with all this history that people care about. Guess what, when they closed the division, nobody cared.

RAZ: Same with Saturn, right?

VLASIC: Same with Saturn. They resisted giving this up. But once they did, the company became more streamlined, more focused. Like they say, nothing focuses the mind like the noose. There's a humility there now that perhaps wasn't there before.

That being said, did the American taxpayer get a good deal? Was it worth it? The estimates of the number of jobs that would have been lost in this country if GM had been allowed uncontrolled bankruptcy, earned hundreds of thousands, you know, are these - saving these jobs in the communities and the manufacturing base worth 10 or 15 or $20 billion it'll ultimately end up costing? I think that's for your listeners to judge.

(SOUNDBITE OF MUSIC)

RAZ: Humility, restructuring, tough decisions and billions of government dollars to fall back on - it was enough to save American automakers. But what about smaller companies like Kodak in Rochester? Bill Vlasic says only one thing is certain: Kodak will come out of its bankruptcy a different kind of company.

VLASIC: They can't expect sentiment to save them. It has to be based on their ability to compete with not just companies around the world, but companies here in the United States. And whether or not they can tap into their sort of historical ingenuity and success and come up with the kind of products that can get them back on track.

RAZ: Then there's the question of why it matters whether these iconic American brands survive or whether there's a good economic reason to make things in this country. Why does it matter whether our cameras or cars are made here? I put that question to Jennifer Granholm, the former governor of Michigan.

JENNIFER GRANHOLM: I mean, if we want, as a nation - if we decide that we don't want to make things, you'd have to deal with the huge fallout, the massive job loss that would have ensued. But you would also have to deal with the consequence of a country that doesn't make anything. If we rely on other countries to build the stuff that we use, then we are completely at the mercy of others. If you want to have a strong country, you have to make things.

RAZ: Jennifer Granholm, you may have seen some stories in The New York Times recently about why the iPod and the iPad were not being built in the United States. They're designed here, they're not built here. And one of the arguments raised was not because American workers are necessarily less efficient than Chinese workers, but simply because if you've got a factory in Zhejiang, China, and you need a part, you just go down to the factory next door and they can manufacture the part for you within hours.

GRANHOLM: Exactly right, because China has decided to get aggressive on attracting job providers. What we have done in the United States is we've decided that economics, strategizing or planning or offering assistance to businesses to locate here is not what we do. This blind fealty to laissez-faire, hands-off economics might be nice in theory, but it no longer applies in a global economy when our economic competitors are not playing by the same rules. We cannot bring a knife to a gunfight, and that's exactly what we've done.

RAZ: Have we missed the train, though? I mean, is there a way to revive manufacturing in America, or is that story pretty much over?

GRANHOLM: Absolutely not. We will not get back the investments that have been made by companies overseas because it's too expensive to bring those investments back. But we do have an incredibly innovative country. Products are being made all the time, and decisions are being made even as we speak right now by CEOs of manufacturing firms about where to locate. I think advanced manufacturing, we can be competitive in. The lower-skilled manufacturing with repetitive motion, we probably won't get that. But advanced manufacturing, you better believe, we can do it.

RAZ: I guess you would argue the best evidence for that is the auto industry. I mean, they are making a product that Americans are buying.

GRANHOLM: Amen, brother.

(SOUNDBITE OF LAUGHTER)

GRANHOLM: The auto industry has been saved because there was a smart, strategic, active partnership with the federal government. Those who are running against President Obama would have let the industry die. That would have made us a weak nation. It would have been terrible strategy. We would have lost the manufacturing backbone. And that philosophy will harm our nation.

(SOUNDBITE OF MUSIC)

RAZ: That's Jennifer Granholm. She is the former governor of Michigan. We also heard from Bill Vlasic of The New York Times. His book about the 2008 auto bailout is called "Once Upon A Car."

Thanks to the production staff of member station WXXI in Rochester, New York, for helping us tell the story of Kodak. By the way, we should point out, Rochester, in a lot of ways, the city is doing great despite Kodak's bankruptcy. The University of Rochester is now the largest employer in town, and its medical research center is growing very quickly. There's even a budding music scene, including the music we've been hearing. It's by Rochester-based band, Giant Panda Guerilla Dub Squad. This track is called "Sunshine."

(SOUNDBITE OF SONG, "SUNSHINE") Transcript provided by NPR, Copyright National Public Radio.