My, how times have changed. Not so many years ago, American politicians and members of the news media panicked about the growing industrial might of Japan. The fear was that the U.S. would be "hollowed out" of its industry by the rising Japanese industrial onslaught. The success of the Japanese automotive industry was widely seen as evidence of the beginning of the end for manufacturing in the U.S.
Of course, no one would say that American automakers are now in terrific shape. A quick check of the latest developments at General Motors (NYSE:GM) and the earnings warning at Ford (NYSE:F) shows that all is clearly not well among American producers. Still, it seems that more and more people are recognizing that these firms' problems are more a function of their own missteps than the unfair practices of Japanese rivals.
These changing attitudes are reflected in a recent development in Michigan. In the home state of the American auto industry, Toyota (NYSE:TM) plans to invest $150 million to build additional manufacturing capacity. What's more, the project is being supported by Jennifer Granholm, the governor of Michigan, with a $38.9 million incentive package, according to CBS MarketWatch. Clearly Granholm doesn't really care about Toyota's status as a Japanese company; the important thing is that Toyota is going to create jobs. With the governor taking this position, it's easy to imagine that American consumers will increasingly stop looking at Toyota as a "foreign" company, and whatever "national pride" attachments buyers have to American brands will melt away.
Now more than ever, then, if American automakers hope to compete, they will have to differentiate themselves from Japanese brands. In response to past challenges, U.S. auto outfits have caught up to the Japanese in many ways on the quality front. To win against Japanese firms in the future, domestic companies will have to have an edge in style and/or technology. At the moment, they have their work cut out for them.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
