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.