Legacy costs, severe lack of American Economic Protectionist policies, various free trade agreements, high taxes, poor product planning(such as the mass continuation of its truck and SUV lines despite rising future crude prices), offshoring and cheap foreign labor pools, and perception of very poor quality over the years......all of which have made far greater contributions overall than the unbending labor unions. Unions are only a part of the problem, not the sole cause of it.
The "former" Big 3 made HORRENDOUS vehicles from the late 60s up through about the early 90s. Remember Chrysler of the 70s? Remember, the people that make Toyotas and Hondas are not really different from those that make Ford, GM, and Chrysler. Hell, today, the quality gap between US and Japanese vehicles is quite small....a factor so little that someone reasonable wouldn't even consider that as a factor when choosing a vehicle. However, the perception remains that Japanese > American in quality by huge margins. Like we all know, perception usually trumps truth.
Japan and Europe have also instituted protectionist policies in regards to the automotive sector. These nations look out for their industries, such as putting large tariffs on incoming imports and offering rebates on overseas sales. The US does not, rather adhering to a Friedman-like non-protectionistic economic policy. In this, the US suffers greatly(the "former" Big 3 companies pay a lot in taxes...when you buy a foreign vehicle, you subsidize THEIR governments...when you buy America, your money goes towards infrastructure, defense, social programs, etc...).
US companies typically give the public what it doesn't really want...and takes away what is in demand. Evidence? Ford was on the verge of cancelling its' Mustang line in favor of renaming it the Probe. The Ford Taurus was removed from it's line, despite being a massively popular car(and is being reintroduced). SUVs and large trucks were continuously being shoved down our throats, despite rapidly rising gas prices and increased demand for more fuel-efficient cars. The introduction of large, ungainly, big-engined V8(but fun!) cars that no one was really asking for....the Ford GT, Pontiac GTO, Dodge Charger, Chevy Camaro, Dodge Challenger, SRT(v-10) Dodges, Cadillac CTS-V, Cadillac XLR. Especially in the GM line, the various products share too many similarities with each other and are built on the same chassis.....example being the GMC Sierra and Chevy Silverado.
Unions, which had once been responsible for thrusting the American worker into Middle-Class status to the boon of US companies, are now being diminished and obliterated in favor of globalization.
