The news from Detroit, week by week, is grim as Ford and GM appear to be in some sort of a macabre dance on who bites the dust first.The December sales figures for Ford and GM promises to show more of the rosion in market shares of these two auto giants.More plant closings, layoffs are in store at both.Many of their suppliers are in dire straits with large ones like Lear already in bankruptcy.Governor Granholm had to go to Japan to implore Toyota to locate their new plant in Michigan as its unemployment rate heads skyward.
I have said elsewhere that thesickness visited on these corporations is due to the neglect of their basic function, i.e. produce a safe and reliable product, appealing to people’s aesthetic senses and delivering good gas mileage using the latest available technology.The Japanese and the Germans have mastered this to an art form and are willing to live with short term bumps on their profit margins as they invest in new technologies as in the case of hybrid vehicles. Even if that technology is not the greatest solution to fuel economy, the investment in that technology opens up many avenues for further work as in the development of fast charging, high output batteries, drive by wire concepts etc. Companies that do not invest in such technologies will be left further behind as steady advances keep coming from japan and Germany.
The woes of GM and Ford have their origins in accountants and financing people taking over the product functions that are best left to car men and engineers. I remember one of these Harvard B-School types tell me many years ago that a car is no different from a banana and the auto business is just like selling bananas.You buy something at ten cents and sell it at fifteen.This is what passes for business education at that sad institution and it has wrought more damage to our national economy than any combination that I can think of. It helps to remember that our illustrious President is a product of that school.Enough said.
The enormous demand for hybrid cars in the marketplace could not have been foreseeen by the Harvard B-school types because to them it was a waste of profits to invest in a risky technology with no guarantee of success.Gone are the days when business involved making risky but exciting technolgies, a job the people at Honda and Toyota appear to be willing and even eager to undertake.So long as our car companies are run by those people there is no prospect of us recovering the market shares we once had.The lead in perception and quality have been eviscerated by the Harvard educated finance men.
If they were truly interested in seeking a way out of the morass they have sunk our auto industry, men like Bill Ford and Rick Wagoner would be thundering at the Republicans to put in place a universal health care program for all Americans, thus relieving the auto companies of the enormous legacy costs that are hurting their profits.That is in addition to the focus that they must bring to products.Producing high quality, energy efficient products must be job 1 at both companies.That means the businesses must be run by engineers not accountants.
This is going to be a long road ahead for our auto industry.Unless people like Bill Ford see that the salvation lies in technology and product people and seek help from the Japanese and Germans on how to run the business in the new era of competition, we might as well sharpen our pencils and run an obituary for the auto giants.
The solution is simple.Keep the B-school types out of the auto industry.Learn to make a profit in small volumes, high impact cars featuring good design and high technology.Develop a reputation for delivering value first.All else should take a back seat.
Keep your commitment to deliver value to the consumer.Because if you don’t some else will.
