The Ups And Downs And Ups of The National Car of Texas

Remember when $4-a-gallon gasoline, war in the Middle East, and hybrids that ran on vegetable oil all spelled doom for the Suburban? Instead of driving into the graveyard, those fuel-sucking monsters have come roaring back, along with the auto industry itself. And Texans who still love their large SUVs can thank a single factory in Arlington for their resurrection.
The Ups And Downs And Ups of The National Car of Texas
Illustration by Eddie Guy

The place is a miracle of contrivance, a Rube Goldberg—esque wonder of moving platforms, roller-coaster conveyors, pirouetting robots, and banks of electronic controls that Henry Ford could never have imagined. I am standing in the whirring, clanking heart of General Motors’ Arlington assembly plant, a 3.75-million-square-foot facility whose sole job is to make full-sized sport-utility vehicles—Chevrolet Suburbans and Tahoes, GMC Yukons, and Cadillac Escalades. Enormous and immaculate, they advance down the assembly line at the pace of a wedding procession. They come in colors like Black Ice, Sheer Silver, and Red Jewel. Thirty-five years ago this plant produced the Oldsmobile Cutlass Supreme, at the time the best-selling car in America. Today’s glittering monsters—with hybrid battery power systems, fuel-switching engines, cylinder deactivation, and rearview cameras—make the Cutlass Supreme look like something from the dawn of the Industrial Age.

The plant has two 10-hour shifts and recently increased production to more than a thousand vehicles a day. It employs 2,400 people, who earn $29 an hour, and many put in 60 hours a week, logging more overtime than workers can remember. The wages reflect the plant’s profitability. GM earns as much as $10,000 on every SUV sold, seven times the profit margin for ordinary passenger vehicles. Business is very good.

For those readers who are scratching their heads: You are not in a time warp; this is not supposed to be happening. In the recession-shocked year of 2010, workers were not expected to be logging overtime to produce gigantic, expensive, gas-chugging SUVs. In June 2009 GM declared bankruptcy, having lost $88 billion in the previous five years. The company survived only because of a massive government rescue and huge infusions of capital and loans. Along the way it shut down fourteen plants, displaced 20,000 workers, and announced plans to end relationships with 1,300 dealerships across the country.

Moreover, these SUVs, which had once redefined the American car industry, had also suffered a devastating fall from grace. In 2003 sales of full-sized SUVs peaked at 773,000; last year that number nose-dived to a mere 217,098. Even more disastrous, their decline in sales was nearly twice as bad as that of cars and light trucks. But consumers didn’t abandon big SUVs simply because of their price tags, which can run more than $40,000. The vehicles had become cultural pariahs as well. Suddenly the behemoths seemed to be responsible for everything that was wrong with America: our outsized lust for material wealth, our dependence on foreign oil, our abuse of the environment, our disregard for safety, and even our involvement in the war in Iraq. If any product seemed marked for death in this imploding empire, it was the full-sized SUV. Many people thought the hulking vehicles would be left to die—along with entire brands, like Oldsmobile, Pontiac, and Saturn. And as the Suburban and Tahoe disappeared, it seemed that GM would vanish as well.

What happened instead will provide MBA students with case studies for years to come. The company emerged from bankruptcy last year and then paid off a $6.7 billion government loan in April. It has returned to the black, and it is planning a stock offering that will reduce the government’s ownership stake, which is currently 61 percent. After years of making dreary, second-rate cars, GM’s Cadillacs, Buicks, and Chevrolets are once again competitive with products from Japanese companies like Toyota, which

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