As GM groans under the loss of its markets and houses like Goldman Sachs predict its demise,it would be well to remember that GM’s nemesis, Toyota, is predicting the demise of the oil age and has prepared a detailed plan to Move Beyond Oil.
As someone who knows a thing or two about our auto industry, there are a couple of immutable facts that serve to distinguish our auto industry from its formidable Japanese competitors.
One,our industry is totally risk averse.The army of Harvard B-Scool graduates and their many accountants and lawyers who run GM,Ford and Chrysler will tell you, technology is risky and they are not about to commit the corporation to a risk over the long term.
Many GM engineers have gotten this message and avoid all possible talk of technical improvements in the presence of their bosses or colleagues.
The second point to note about our auto industry is that when a problem can be solved by money manipulations rather than technology, they will always adopt the former.
In some ways one can say that the Harvard B-school has caused the death of our auto industry.Its most illustrious product,Rick Wagoner,who is the current Chairman of GM, ascended to the throne after the board toppled an engineeer Robert Stempel during a financial crisis brought on by their risk aversion.Stempel, to his credit, wanted to take GM in a direction where Toyota is at the present time by building innovative cars that guzzle less fuel.Stempel was also interested in developing battery or gasoline/battery hybrids that were vetoed by the board as too risky.
In many ways, the death of GM by accountants and business school ignoramuses is a metaphor for the decline of the US economy as the economy moved from a technology based producer of tangible goods to one that now manipulates paper or electrons for the benefit of money managers.In some sense one can say that the money managers have been given the key to the equity that has been built up by the sweat of millions of people over many generations.That has resulted in looting on a vast scale, and as the store declines, the rats of Big Finance blame the engineers as is their wont.
I expect to see Rick Wagoner blame his engineers when finally GM bites the dust.
We’ve kept it on life support for far too long. I like Tom Hartmann’s line “The Last Rays of Ancient Sunlight.” Had greed not entered in, we’d have diversified decades ago.
Hmmm… money managers = money changers?
we’re reminded our high gas prices are nothing compared to Europe. What’s overlooked is that the cars there get much higher miles to the gallon over 65 MPG on some:
Why is this Ford focus in the UK not offered here?
from the way-back machine, an issue recalled from my post-grad research on the urban/suburban growth patterns and causes.
GM has never been very forward thinking, it’s always been about profit. they were demonstrably responsible, along with all the usual suspects, for much of the widespread decline of public transportation, specifically street car lines, in the period between 1936 and 1950.
via wiki:
granted, there were other forces at work as well, but as you can see from just the minimal information referenced above, government wasn’t too concerned about it. much as they aren’t today. lot’s of lip service, but very little action.
instead we get the garbage like chrysler’s Let’s Refuel America Gas Card incentives, and entrepreneurial endeavors like MyGallons.com rolling out in lieu of any real initiatives, private or public, that could begin the long hard slog toward alternative strategies and solutions.
“there’s a sucker born every minute, ad you happened along at the right time”…tom waits
you’re certainly correct about this though; they’re going to milk their cash cow until it dies, and then blame it on someone else.
Although I’m not quite old enough to remember the Indiana Interurban rail network, I’ve found some of the old roadbed and bridge piers nearby. I’ve thought many times how nice it would be to just take the train the 45 miles to Indianapolis and be able to relax going to and from. No $22 to park, either, which is what I had to pay the last time I went there for an all day meeting. All this and no expensive fuel fillup as well.
As a student at one time I lived in Toronto, the most civilized of all North American cities.What I remember most is the subway system that I could take anywhere from my small apartment in the middle of the town.Every spot in the city was accessible by the subway and the subways stayed open late into the night.The stations were spotlessly clean and the frequency of trains was very good.
Because Toronto also had a large immigrant population,many old world small shops were everywhere.From my apartment I could go to local grocery shops,meat markets or wine &cheese shops to pick up anything I needed.
When you had such convenience within walking distance, who needed a car? Not many did.
l’m not familiar with toronto, but l’ve spent a good deal of time in montreal, and it has an excellent trans systme, metro [subway] and surface [buses]. there is little need for a car, for the same reeasons you note about toronto.
it really makes life a lot easier and enjoyable, and contributes greatly to the livability of the city.
were the climate not so extreme, and my french a little better, l could, quite happily, live there.
Yes, Toronto is a great city. I’d live there.
Nearly twenty years ago, on a business visit to Japan, I happened to go to a small town called Hamamatsu,in the Shizuoka Prefecture.This was the home of Honda Motor Co.I had to take the Bullet Train (Shinkanshen) from Tokyo to Hamamatsu.The ride on the train was very plesant, no shake,rattle and roll as you experience on the LIRR.The train,of course, was very fast,at nearly 150 MPH.The service on the train included hot steam towels,a great lunch box and Asahi beer.
What suprised me even more was that the train station at Hamamatsu had a hotel for passengers who want to stay overnight.This hotel was spotlessly clean, the rooms were small by American standards but still very comfortable.In 1988, I paid only $22.00 for a single room.
My hostess, a beautiful young lady by the name Mika tol me that in Japan most people use the rail/bus/ hotel combinations quite frequently.Makes sense.
I wish we could change over to a train/bus transportation system with small self contained communities soon.
don’t get me started on rail service in this country. we’re over a quarter century, or more, behind europe, where, in many cases, it’s not only cheaper, but faster than dealing w/ airports, etc. additionally, the stations are literally in the heart of the cities; nearly all of which have vibrant cores.
we had that once had the beginnings of that here, but it’s pretty much gone. even today, there’s still is a great deal of animosity and lobbying against re-constituting it. even in california, some of it from some very strange sources, and dog knows, they’ve got some serious transportation problems.
Suburbs need not become the ghost towns of the future. Honda has actually begun limited production of its fuel cell vehicle, the Clarity. Initial production will be expensive. With greater volume, the cost should go down considerably.
But you’re right, the domestic manufacturers are risk averse. (Ford’s hybrids are actually built under license from Toyota.) After Americans brought so much to the industry early in the 20th century, our lead was relinquished.
As an engineering professor and a consultant to the auto industry for a long time, I have always felt that the domestic car industry died the day when the power was ceded to the financial types from the Harvard B-School. These men and women ( I am an equal opportinty critic) were never comfortable dealing with the intricacies of new technologies or designs.Their attitude was:on’t bore me with details just let me know how much it is going to cost.We will decide if the returns will be worth it.
Contrast that the CEO of Honda or Toyota.These men were engineers first and would not recognize a Harvard B-School graduate if he hit them in the face.Because their only focus was making the best cars with the best available technology, they managed to keep supplying the marketplace with ever more desirable and reliable products, something our car comapnies could also have done if they were not straitjacketed by the Harvard B-School crapamole purveyors.
Also consider how it was possible for Toyota to create a new market for Hybrid autos at a time when gas prices were relatively low and exploit that when gas prices reached the heights we see today.That would be like seeing beyon one’s nose which the Harvard Professors and students seem unable to do.
I think the best thing that can happen to the US auto industry would be to kick out all the B-School types and replace them with engineering graduates.They can easily outsource all the financial and legal functions to India and save themselves a bundle.
I am sorry but I have been sickened more years than I can count by the myopia in the auto executive suites.
If we empty the executive suites of all executive empty suits from B-Schools we should see things turn around.
The other problem here is getting the shareholders/Wall street to go along with it.
Most of the people on the board of GM are also Harvard B-School types who have no interest in technical advancements or quality.They are bored with everything except money and lots of it.Even sex does not excite these mofos.
Again I have to contrast that with a story about Soichiro Honda, the founder of that auto company who.on a visit to Detroit, was asked what he would like to do when he was in town.His reply is one for the ages,keeping in mind Honda was 70 years old at the time.He said: I want to find a young American girl with big chests and big rear ends and spend the night with her.You see our Japanese girls lack proper equipment in these departments and I feel I am so deprived.
Deprived or depraved,take your pick.But there is no denying that Honda, even among the Japanese automakers is a true maverick and has revolutionized the industry much as Henry Ford did in his day.
that might not be a hard sell in todays market environment regardless of what the board wants. they may all be unemployed soon at this rate…l looked it up: GM closed at $10.12 friday… the lowest their stock’s been since sept. 1954…it’s lost 1/2 it’s value since the first of the year.
it may already be too late for them to save it, regardless of who’s running the show. the june sales reports were abysmal. l think Honda was the only major auto co. that had an increase.
and l agree about the quality and engineering that Honda builds. l’ve driven them for past 26 years, and l’m still on my second one. l’m thinking it might be a good time to get a good deal on a new one.
Well, to be honest, they probably would. After, you know, they beat the stuffing out of the B-school graduate, rifled through their wallet, and went “Oh, look! This fool went to Harvard Business School! No wonder he’s so stupid!”
I am sure you are right.I know a guy at GM who is high up on the totem pole there and has said that the Toyota Prius is crap.This is a car for which the market did not exist.And Toyota took a huge risk and spent over a billion dollars to develop the entire automobile.Nearly ten years later, the Prius is flying off the shelves while GM’s cars spend a na average of 120 days in the dealer lots.They get sold only when huge incentives are added.
You would think that the dire straits of GM would breed some humility into these empty suits.That is not the case at all.
If you haven’t already, I encourage you to read Going Postal by Terry Pratchett. It’s an excellent parody of B-school types and how they Just Don’t Get It – how their pursuit of efficiency and profits inevitably winds up destroying both.
Thank you.I have not read the work you recommend and will certainly take a look at it.My ideas, such as they are, were formed by direct encounters with the B-School types over four decades of experience.
As the world formed by these extraordinarily arrogant creatures comes apart just as the one engineered by the likes of Bush-Cheney and Rumsfeld,we now have an opportunity to look at how our economy and politics can be set right and serve the needs not just of Americans but also those of the people of the world preyed upon by our homegrown predators.
It is in this spirit that I have started looking at the way communities in Japan are organized around a railroad and bus network.I have also started looking at the education system of India that continues to amaze the rest of the world by producing extraordinarily talented and innovative young people in advanced technology and mathematics.These two countries have much to teach us.What stands out in my assessment is that their educational system emphasize science and mathematics.And people with that kind of training are respected and rewarded.
It’s not more than 3-4 years ago GM destroyed some 2,000 electric cars rather than sell them to those who had protested the move. I recall GM said servicing was the issue!
2010 is the year to watch:
Daimler Mercedes-Benz line up will be off petroleum by 2015 – they’ll launch a few models before –
It seems that if our communities are laid out so none of us has to commute more than 40 miles a day, even current battery technology should be able to give us petroleum free operation.
Gasoline or gasoline/hybrid vehicles can be used for long trips including vacations until battery technology makes it possible to design cars for total battery operation.
and you’ll soon go a long way on one gallon.
It’s reported VW has approved a 235 MPG one-liter car to be offered in 2010
On one imperial gallon, it becomes 282 MPG.
GM has tied its dwindling fortunes to the development of a series hybrid ( as opposed to Toyota’s parallel hybrid).GM’s hybrid would have all wheels driven directly by motors powered by a Lithium-Ion battery and a gasoline engine will be used only to recharge the battery.Such a system has its advantages and I hope GM pulls it off.That is its last chance for survival.
I don’t see fuel cell cars as going anywhere. Just a distant carrot that is dangling in front of people to tempt them into believing that the car culture can be maintained somehow.
I think what you say applies to a lot of American businesses, not just GM, though it’s certainly the biggest example.
The B-School mindset scoffs at long range returns through investment in new technologies and emphasizes quarterly profits.Thus the manager who is more or less an accountant gets big bonuses on the strength of quarterly profits from existing operations.
If innovation is adopted, such managers tend to finance them through debt rather than from internal resources.Debt allows the accountants to take their bonuses and pretend that they are still supporting innovation.But debt and equity are dissimilar animals.Debt extracts a price from the corporation in the form of an interest while equity financing does not affect the corporation’s bottom line except as it affects the manager’s bonuses.
Delaying or kiboshing new technologies on the pretext that money is not available is a unique Harvard B-School disease.Once again it is practised because the B-School mentality measures everything in terms of current dollars and cents and ignores the many benefits that can be generated by a well planned R&D effort.
This is why Toyota is ahead because even Mr.Toyoda was directly involved in the development of the Hybrid Synergy Drive that produced the Prius,the runaway success.
This morning’s news says that GM’s board is going to meet in early August to ratify a proposal by management to fire thousands of white collar workers, eliminate several brands and raise several billion dollars in cash to keep the company going.
I think this is the end game.In fact, I will go further and say that the end game for GM is that there is no end game.The death watch has begun.
Even at this late stage, GM’s board shuts its eye toward the most important thing they need to do.And that is to focus on products.So long as this charade continues, GM might as well be dead.
I fear you are correct. I have no love at all for GM management, but the workers are going to bear the brunt of this. For bad decisions that management has made for years, I think…
Do they say what brands they are thinking of eliminating, or are they holding onto that until the proposal is ratified?
I have heard this morning on CNBC that Buick,Pontiac,Hummer,Saab are all going to be axed.