The Big Three's dramatic U-turn

Nearly given up for dead a few years ago, American carmakers are in the fast lane once more, as Lee Cowan reports in our Cover Story:

It was only two years ago that Detroit - and the Big Three U.S. automakers - were in a ditch so deep many thought they might never get back on the road. Both Chrysler and General Motors were bankrupt, and Ford was teetering on the edge.

But after hitting rock bottom back in 2009, U.S. auto sales are on the rebound - poised for a second straight year of profitability.

Which is why at this year's Detroit Auto Show, it wasn't just the headlights that were beaming. Ford CEO Alan Mulally was like a kid in a suped-up candy store.

"Look at the styling!" he beamed. "It's all integrated, very aerodynamic, you know great stance, and the inside matches the outside."

It's his new toy he's talking about: Ford's redesigned Fusion, which includes a plug-in hybrid version that may get the gasoline equivalent of 100 miles a gallon.

It's already winning awards, including Best in Show in Detroit this year.

And the view of the future through the windshield has the Big Blue Oval's boss so excited, he blurts out sales slogans in mid-conversation.

"Ford. Feel a difference. Drive one. Because you're gonna go further with Ford!" he laughed.

"Are you surprised at where you are now?" asked Cowan.

"Well, I kind of pinch myself, because you know, it's a big transformation," he replied.

It's been a big transformation for the entire U.A. auto industry.

With nearly 13 million vehicles sold last year, the Big Three ALL posted increases, not only in market share, but double-digit sales growth as well.

Ford was up 11 percent. General Motors: up 13 percent. And Chrysler was up a whopping 26 percent.

"I think it's extraordinary how quickly the industry has recovered," said Bill Vlasic, who has watched the rebound from his perch in the Motor City. He details the Big Three's recovery in his book, "Once Upon a Car."

"I think Detroit is more agile. I think they're more competitive. They're certainly leaner, but they're determined to prove that Detroit can build cars and trucks that are as good as any in the world," he said.

From the glory days of the U.S. auto industry, it seems almost hard to imagine how far the Big Three fell.

In 2008 Chrysler became the first major U.S. automaker to file for bankruptcy since Studebaker in the 1930s.

General Motors, once the bluest of the blue chip stocks, got a black eye, and was nicknamed "Government Motors" after it (along with Chrysler) was forced to take a federal bailout.

Ford managed to avoided bankruptcy, but was hanging on by a wiper blade.

"This was a reckoning that had been predicted for many, many years," said Vlasic. "But when it finally happened, this town in particular - I think the entire country - was astonished by how much trouble Detroit had gotten itself into."

They were shells of their former selves. Dozens of factories lay shuttered and abandoned. The Big Three became junkyards filled with parts and personnel from an industry plagued, critics say, by arrogance and dysfunction.

"To look back at how many cars were built in Detroit that people didn't really want, and how many were built again the second time even when they didn't want 'em the first time, it's kind of mind-boggling," said Vlasic.

Today, the Big Three are hardly recognizable.

While sales numbers are not what they were before the recession, their balance sheets are cleansed, their boards purged - and lessons learned.

All three are run by outsiders to the auto industry, the most outspoken of whom is Sergio Marchionne, the CEO of Fiat, brought in to also run Chrysler.

"Product is key; everything else is nonsense," said Marchionne. "You can sell pipe dreams until you're blue in the face. But people buy cars, and they experience them, live in them. And if you give them a less than satisfactory experience, and a non-competitive product, they'll leave you."

Under his leadership, Chrysler saw sales surge last month, fueled in part by the strength of the company's redesigned sedan.

"This car gets 31 miles per gallon, eight-speed transmission, all-wheel drive," said Marchionne. "There's no American car that gives you this performance. None. I mean, I know them. I know the competition really well. There's nobody that can give you this."

Jeep has plenty of reasons to rev, too.

Thanks largely to the new Grand Cherokee, Jeep was recently named "the most reliable domestic brand" by Consumer Reports Magazine . . . and that's not all: The inside won world's best interior.

An obsession to detail, said Jeep's CEO Mike Manley, has made the Grand Cherokee -a grand success.

"You think you could put this up against any other car around the world?" asked Cowan.

"I'd be happy to. Yeah, I'd be happy to. I think it's a phenomenal vehicle," said manley.

At the Jefferson North plant in Detroit, about a thousand Jeep Cherokees and Dodge Durangos roll off the assembly line every single day.

But suddenly - it's not enough.

The only way Chrysler can keep up with the demand is to add more workers, and that's just what the company is planning.

Eleven hundred new jobs are slated to come on line here in 2013 - and they're not the only ones.

GM has added thousands of workers, too, at a massive factory in Lake Orion, Mich., that was slated to be idled.

But then came the Chevy Sonic - an opportunity for both GM and its employees to prove that America could once again build a sub-compact car on American soil. And they did.

"We put our heads together and started thinking about, 'What would our costs need to be?' Then, 'What are things that we could do together to achieve those costs so we could do it here?'" said Diana Tremblay, the chief manufacturing officer at GM.

She helped revamp the factory and made work stations more efficient - much of it modeled after auto plants in Germany and South Korea.

But most of all, she helped negotiate a new 2-tiered pay scale.

Entry level workers were hired at about half the full United Auto Workers' wage, which slashed labor costs for the Sonic by as much as $500 per car.

"You wouldn't be able to tell who was an hourly worker and who was a salary worker, who was UAW-represented, who wasn't, who was inside, who was outside. It's all one team," said Tremblay.

"We wanna prove that manufacturing can be successful in the U.S.," said UAW's president, Bob King.

He said the wage concession was no easy sell, especially in a city built on "same job, same pay."

Just ask Chrysler employee Caron McCowin: "It was challenging at first, 'cause you're like, 'Hey, you know, you're working next to a guy that makes like more than half of what you make."

But it was a sacrifice that signaled a change in attitude between labor and management - from confrontation to cooperation - that King credits for saving the U.S. auto industry as a whole.

"I hope people look at the auto industry as a model of what should be happening across America," King said. "Here's government, and management, business, labor and community all working together. And look at the results: everybody is further ahead."

After being laid off by GM, employees like Carl Montrose say the rebound is music to his ears - a second chance he and his new wife, Stephanie, a school teacher, thought they'd never see.

Carl's Dad worked for GM, too . . . for 42 years, in fact.

But the "New GM," Carl says, has an atmosphere of ownership and accountability that his father probably wouldn't recognize.

"Instead of just pushing numbers, we're pushing quality and really doing a lot of the right things," said Montrose. " "There's still a lot of folks that are having a hard time adjusting to the new system, because they're still nervous that, you know, if you do the right thing you're going to get in trouble because it might stop production, slow production down, and it's really not that way anymore. Now it's about getting a good car out."

Eight hundred new vehicles a day are made here now - not bad for a plant that was on the verge of shutting down, perhaps for good.

"There's a lot of heritage here, a lot of pride," said Vlasic. "And still a lot of talented people who are out to prove that Detroit can compete with the best."

Maybe Denise Norman summed it all up the best. After 33 years at GM, she has a perspective few do.

When asked if she thinks Detroit is back, she replied, "Yes I do! I mean, look, even our football team did better! How good is that?"

For more info:

• Detroit Auto Show
• Ford
• GM
• Chrysler
• Jeep
• "Once Upon a Car: The Fall and Resurrection of America's Big Three Auto Makers - GM, Ford, and Chrysler" by Bill Vlasic (William Morrow)