And wasn't it partly "strong labor" that crippled the big three?
I'd say it's plausible, though indirectly responsible for their problems. A reputation for poor reliability was certainly at play over the last 20 years or so, but that could very well be a consequence of paying more for assembly labor and not having enough left for R&D and engineering.
The other day I heard on the local NPR affiliate one of Michigan's state reps going on about how he's "never heard of a business moving out of Michigan because of taxes." I thought to myself, "Yeah, well, you never hear of a business moving INTO Michigan because of low taxes either." I started to think about that. I've been looking at buying cars since the wife's was totalled a few weeks ago and there almost everything we were looking at I'd find, via Wikipedia, was built in Ohio or Indiana.
"That's probably because they're better on taxes." I thought to myself and then I started to talk myself out of it. Obviously the taxes in Michigan weren't bad enough for GM and Ford to move their business out of state. No even the automotive suppliers that dot the countryside here bothered to move out of state. Sure, new stuff was built south of the border, but was it just because of taxes? And then it hit me:
If you built something up here in Michigan next to unionized GM and Ford plants, even if you weren't unionized yourself, you'd have to compete with their wages and benefits packages. You slide yourself 4-6 hours south of here and you've got a totally new labor pool. It's just an added bonus that Indiana and Ohio are a bit more business friendly, not the actual driving reason for those locations.
Businesses build in areas where they can get cheap labor. Dell did it in Ireland, IT companies are teaming up with Indian development shops, auto has been building in Mexico for a while, etc. Heck, I remember an article a few years ago about how companies were accepting telecommuting because they could hire up skilled workers that lived in rural areas with a lower cost of living. The same thing happens right here within our own borders.
So, yeah, I think it was high labor costs that really hurt GM, Ford, and Chrysler.