By on July 2, 2008

dodge_mirada_1982.jpgBefore you answer, I suggest you click on over and check what Forbes' Senior car dude Jerry Flint has to say on the subject. Jerry blames "greens," the unions, California, the lawyers, the Asians, the Federal government, bad luck and then, ultimately Detroit's executives. He also raises an interesting point — do we need a domestic auto industry? Back to the blame game, I had a long talk with a friend about the Bullitt Mustang. Why, he wondered, could Ford make such a superlative, desirable muscle car but not a decent small car? And he's right — Detroit excels at making fantastic trucks and stonking sports cars. Viper, Vette, 'Stang? Hell yes. Caliber, Cobalt, Focus? Hell no! Here's my theory — the men and women that go to work for the big 2.8 like building muscle cars and boat haulers. They don't like fuel sippers, and don't want to build them. What do you think?

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66 Comments on “Question of the Day: Who’s To Blame For Detroit?...”


  • avatar
    jkross22

    Well of course the consumer is to blame. It’s us who aren’t buying GM, Ford and Cerebrus. Even more reason why I wouldn’t bail them out either. And by “I”, I do mean the Feds.

  • avatar
    mocktard

    “Some people say there’s a woman to blame…”

  • avatar
    Dynamic88

    Who’s to blame? The Execs. 100%. It’s nobody else’s fault.
    The unions do what they can to get wages and bennies for thier members, and it’s up to management to hang tough in negotiations – and they haven’t. The rest of Flint’s list is too silly to bother responding to.

    Until Detroit gets the fact that it’s 100% management’s fault, they’ll continue sinking.

    Do they want to build fuel sippers? Probably not, but that’s where the market is, so even if you’d rather build something else it might be smart to satisfy the market.

  • avatar
    canfood

    The Soviets.

    As the Soviet Union declined, so did the american auto industry.

    Coincidence? I think not.

  • avatar
    jmo

    Imagine a world in which, back in the 50′s, congress had said – the interstates will have no speed limits and gas taxes will be 200% to pay for billard table smooth roads.

    Imagine a domestic auto industry steeped in a world of high speeds and high gas prices. Just think how competative we would be.

    I sincerely think that the 55 mph speed limit and low gas prices killed the domestic auto industry.

  • avatar
    mazdafan

    The market decides what it wants. The D2.8 are not immune to making vehicles that the market doesn’t like. Simple Economics 101.

  • avatar
    SunnyvaleCA

    Jerry writes: “The proposed standards (35mpg for cars and 28 for trucks by 2015) may be impossible to reach or could add thousands ($15,000 or more) to car prices. It won’t help if automakers go broke trying to meet impossible goals.”

    Given the way the MPG values are calculated (i.e.: the previous method and not with the 10% and 17% lowerign either), Detroit should have no problem meeting them. If fuel prices increase further from here, vehicles with those figures will be the “guzzlers” of their time.

  • avatar
    Redbarchetta

    The blame goes to management and the executives and their unaccountability. The fact that the people running the company and saying ‘yes’ and ‘no’ to projects are totally disconnected from their end product and the end user. The companies aren’t product based they are profit based. Sure you need profits but the profits will come if you if you give your customer what they want and make it the best you can.

    Why, he wondered, could Ford make such a superlative, desirable muscle car but not a decent small car?

    Again this comes down to management and the structures of the company. Those small projects aren’t run with top down unsular management but by small groups of dedicated people trying to get out a kick ass project, they don’t have to answer to some asshole executive to get anything good done on the project. The other products have people making roduct decisions that shouldn’t be making them(I don’t even think they should be employeed, but that’s me). When your top management pulling th strings on a small car project and you could care less about small cars becuase you hate them and think they are for losers, exactly how good of a product do you think you are going ot get in the end. After saying that I think we should give the domestics engineers and designers big credit becuase I am sure they fight hard to keep some good things in the car, imagine what they would be selling if the bean counter executive got his was entirely, they would probably still being selling cars from the 70′s.

    It’s all the executives fault!

  • avatar
    KatiePuckrik

    Do NOT make the same mistake the UK did.

    We let our auto industry go to rack and ruin and look how it all turned out. The cornerstone of any diverse economy is manufacturing. If one of (or all of) Detroit goes under, then a lot of people would lose their jobs and that would be disastrous.

    Trouble is, (if I was American) I’d want Detroit to be a company like Honda or Toyota. A company that thinks long term, pragmatic, pays people a fair wage (that includes top executives and their outrageous pay packets being stopped) and builds a superior product.

    But I have a funny feeling that if Detroit were to pull themselves out of this hole, they won’t learn their lesson. In fact, it would make me angry to see Rick Wagoner pick up another fat pay cheque and make a speech about how his “turnaround plan” worked……

  • avatar
    psarhjinian

    Hmm..

    You can’t blame competition. Well, you can, but it’s not entirely fair. It’s like me blaming the other NHL teams for the Leafs not winning the Stanley Cup in nearly twice my lifetime.

    You can’t blame consumers. No really, GM, you can’t. Much as it sounds nice to whine about how underappreciated you are, if people aren’t buying your product, and your product is good, it’s your own marketing that sucks. If Hyundai can do it, so can you.

    For similar reasons to the above, you can’t blame the media. Again, this is marketing’s job.

    You can, though, blame the government for not creating a competitive atmosphere. For years, the US fought against universal healthcare, did little to address a brutal trade deficit, undermined the dollar and created boondoggle guidelines like the CAFE light truck exemption.

    On that note, just because the US government built the Light Truck Trough, it didn’t mean that you the manufacturers had to gorge themselves at it, nor that you couldn’t have made a few decent small cars along the way.

    We can blame the Unions, but only inasmuch as the automakers opened the barn door and let the cattle get stolen. If I were a union exec and was handed the kind of golden goose that the automakers have out, I’d be doing my members a disservice (albiet a strategically sound one) to refuse. That said, in these last few years, that strategic thought seems to to absent.

    You can, certainly, lay the blame at management’s feet. In fact, you can probably lay most of it there. There’s a big list of strategic failures there, combined with an inability to adjust to any of aforementioned.

    All that said, I think the better question, rather than who is to blame, is who is to fix it? If this industry craters, the economic shockwave will be deeply unpleasant. And as much as the American psyche is adverse to interfering with private industry, the auto industry deserves at least some encouragement and direction. Media, Energy and Defense get significantly more government assistance, yet are responsible for much less operational economic health. Realistically, the hole the automakers are in is so deep that only a government can possible pull them out. It’s a hole they largely dug themselves, but pardon me if I don’t want to fall in it as well.

  • avatar
    yournamehere

    this is the easiest QOD yet.

    Detroit is the blame. No one else but themselfs, which makes sucking it up and taking the blame even harder.

    One reason i think ford is so far ahead on the turn around stuff is because they got fresh blood running the place now. No one is trying to protect their ego. While over at GM they all think they made the best decisions and luck wasnt with them so now they want someone to fix it.

  • avatar
    umterp85

    Katie—Kudos—could not agree with your comments more. The US loss of its manufacturing base is alarming. I am a firm believer that if you don’t “make stuff” you are an empty suit–and an “empty suit” is exposed sooner or later.

  • avatar
    toxicroach

    American industrial capacity is at an all time high.

    No really.

    Suppose it might dip a bit if the big 3 go under, but the idea that we make less stuff now than we did during the halycon days of yore is just bunk.

  • avatar
    seoultrain

    psar, great points as usual.

    Like you suggest, TTAC should really take a more optimistic approach. The doom-and-gloom fatigue is starting to set in. Blame can be useful, but working towards recovery is more so.

    We always talk about how close Detroit is to bankruptcy. How about an editorial on how probable a comeback for all 3 Detroit automakers is? Can these companies make it to the light at the end of the tunnel?

  • avatar
    Gardiner Westbound

    The Detroit-3 squandered a 30-year window from the initial oil price rise and influx of imported cars to secure their survival. They wasted thousands of brilliant engineers, skilled production workers and modern manufacturing plants turning out unsuitable, poor quality cars and trucks few consumers wanted at prices even fewer would pay.

    If one or more go down it will free up valuable human assets. Talented engineers will find jobs designing things people want and will pay for. Their output will have more value, which will help everyone including themselves. Car manufacturing is not necessarily excluded. That has to be good for the economy over the long run!

  • avatar
    Bunter1

    canfood-LOVE the “Soviets” gag, good thing I wasn’t drinking anything.

    Truth on design is this (IMHO)-sports cars/niche vehicles etc. can often get away with being so-so as vehicles because they are emotional products.
    Trucks (big) are just starting to see penetration from non-USA.

    The competition simply is/was no were near as aggressive (10yrs used to cover a new truck turnaround) as it is in mid-size (how many models on the market?) and small cars.

    Detroit fooled around competeing with itself all through the 90s and is finding itself dealing with companies that are used to numerous strong, aggressive competitors.

    Bunter

  • avatar
    SherbornSean

    What I want to know is who is to blame for the fact that cars in the US cost about half what they do in the rest of the World?

  • avatar
    toxicroach

    I’m going to go out on a limb here and say off the top of my head that its cause lots of countries love to tax the crap out of everything and also a weak dollar.

  • avatar
    Antone

    Blame looks backwards, responsibility looks forward.

    The market has spoken.

  • avatar
    jmo

    “What I want to know is who is to blame for the fact that cars in the US cost about half what they do in the rest of the World?”

    Taxes? The VAT in Germany is 19%, UK 17.5 and France 19.6%, and that is added at every level of production. The VAT does not apply to exported vehicles. Hence expensive cars.

    That is one of the many reasons that a VW GTI starts at $22,800 in the US and is £20,850 in the UK £20,850 = USD 41,550

  • avatar
    Ralph SS

    Well, Johnny, I THINK, that your premise (the men and women that go to work for the big 2.8 like building muscle cars and boat haulers. They don’t like fuel sippers, and don’t want to build them) is wrong. I believe that there is a roughly calculated break-even point that is around 15k for a domestically designed and built auto. Since small, fuel-sippers genearlly cost less than that, they can’t make a profit on them. When they try, they have to take so much material cost out of them they end up turning out junk.

    Supposedly, the new labor contracts will help remedy that. But, I fear it is too late for the “2.8″. The industry is going to have to go through some very serious restructuring before it will change. I think Forbes take USED to have merit. It just doesn’t anymore.

    As for who’s to blame…I have been led to believe that the leaders take the blame, even when the troops don’t execute well. And based on how the 2.8′s leaders are behaving these days, they know it and are just letting time run out. They’re good to go.

  • avatar
    Gottleib

    “We have met the enemy and the enemy r us.” as was so aptly stated by BC many years ago. It remains true to this day.

    Management, of course they made the decisions which resulted in the over production of vehicles that are no longer in demand. Of course one could argue that until recently they were doing exactly what they were paid to do and that was to maximize the profitability of their corporations without regard for the ultimate consequences.

    Labor, of course they were taking all they could regardless of the consequences not so different from management.

    Wall Street, of course, they demanded dividends, profits and would not invest money in long term projects for which there was no current proven demand, ie electric/alternative fuel vehicles.

    Government, of course, they required CAFE fuel standards that were unrealistic by not including trucks in the formula. Years ago they put restrictions on imported cars, but not trucks. Importers just sold more imported trucks fueling demand for and providing a return of capital to the foreigners for their investment in luxury cars. Taxation policies that assumed that oil was always going to be a cheap commodity that could easily be imported.

    Consumers, of course, for demanding more than they could afford, buying on easy credit provided by the manufacturers, leading to the false notion that everyone is entitled to the biggest and best available regardless of income or the ability to repay the loans.

    there is plenty of blame to go around if you need blame someone.

  • avatar
    Luther

    The something-for-nothing voting parasites are to blame…Their governments kill everything it touches with its taxes and laws. There is no money in small cars…Ford can’t survive selling focus and fusion.

  • avatar
    yankinwaoz

    Why is it that Jerry Flint seems to think that standards only apply to Detroit made cars? I remember all the pissing and moaning from Detroit back in the 70′s when the first MPG and safety standards started rolling out. “It’s impossible!”, “It will quadruple the cost of the car!”, blah blah blah.

    Yet, Honda and Toyota and Datsun did it.

    I ain’t buying it Jerry.

  • avatar
    geeber

    Detroit – management, labor and their committed customers – really don’t like small vehicles.

    They don’t like the profit margins, they don’t like designing them (it was GM designer Bill Mitchell who likened styling a small car to tailoring a dwarf), they don’t like engineering them and they don’t like driving them.

    Which is okay when gas is $1 a gallon, but is an invitation for disaster if gas prices either rise, or become very volatile.

    What’s Detroit needs, both in the executive suites and at Solidarity House – is a culture change, or any federal assistance will be worthless.

  • avatar
    pman

    The executives must take the biggest chunk of the blame. Their arrogance, hubris, and elitism has resulted in them blaming – among other things – the customer for their woes. They actually want us to believe that it’s the car-buying public’s fault that their second rate efforts don’t sell. It’s also their fault that these second rate efforts actually get cranked out of their factories. And, it’s their fault that the unions got their way for so many years.

    The unions, and the union members who make the cars, must take a big slice of the blame. The union leadership has strategically planned strikes (some smelling of illegality) designed to hit the car companies squarely in the kiwis. This “cough up what we want or cough up blood” approach hurts the business in so many ways. And the union workers individually must take some blame. They always detach themselves from any quality problems but are very willing to take credit when there are quality successes. When a part isn’t designed to last, then it is engineering’s fault. OK, but when a hood is crooked, or when there’s a rattle in a door panel caused by a bolt rolling around, or a dashboard is assembled with a part that has a crack, that IS the fault of the union people assembling the car. They’ve simply never owned up to their role in the quality equation.

  • avatar
    netrun

    I know that for years at Chrysler no executive would approve an engine improvement project if the primary focus was on fuel economy. They were convinced that consumers would not pay an incremental price for an incremental improvement.

    Since they didn’t do the incremental improvements all along they now have to do GIANT improvements to match what everyone else is offering. That’s a lot tougher nut to swallow.

    And quality? Puh-lease. It exists as a concept, not as a must-do from top to bottom.

    And the whole “we can’t build small cars profitably” nonsense is bogus. They saw the opportunity to build big ticket items that had higher margins and simply focused their resources on that. Too bad no one looked up from the profit statement to see the storm brewing on the horizon.

  • avatar
    Richard Chen

    @Gottleib: the quote is from Walt Kelly’s Pogo

  • avatar
    John Horner

    The management, pure and simple. Supporting cast: The Harvard, Yale and other big name business school professors who “trained” these guys.

    Funny how when business is good the executives take all the credit and all the cash … but when things aren’t good it is everyone else’s fault.

  • avatar
    eggsalad

    One more spot for blame: Boards of Directors and shareholders. Their focus has always been, “what are the numbers THIS QUARTER?”

    Japan (and others), meanwhile has focused on the long term. This allows for far more expenditures on R&D, and other forward-thinking operations.

  • avatar
    jaje

    There is one and only one true place of blame and that’s the D2.8 themselves. It was not one factor nor another as they so claim and make excuses. It’s their management and business is so terribly corrupted and bureaucratic that they cannot move efficiently nor make effective and timely decisions. In this world the politicians, accountants and used car salesmen make the top spots with little true understanding / ethics / morals – we get lots of claims of grandeur yet products that always fall well short of those claims. We hear it’s Japan’s fault, currency issues, oil prices, unpatriotic Americans, etc. – no…it’s simply short termed thinking killing them slowly.

  • avatar
    mikey

    John Horner has it right.From the beginning the 3 problems in order are:#1 Lousy, greedy, and corupt car dealers and service departments.#2 bloated, overpaid,empire building, enept layers of do nothing white collars.#3 This one hurts,but its gott’a be said:Unions that refuse to recognize reality.

    But as John points out,with good senior management all 3 groups would have, should have been controled,BEFORE! they went out of control.

  • avatar
    Qwerty

    It is a systemic problem that is caused by the way corporations in the U.S. are managed. A company does not have to be that big before the rewards to the executives for short term success are so lavish that long term success does not matter. The Big 2.8′s problems are way worse than other companies because they have a corporate culture that will nearly always attempt to take the easy way out of any problem. This culture seems to be so longstanding and so ingrained into the fabric of Detroit that changing the people at the top is like rearranging deck chairs on the Titanic.

    A line should be drawn through the middle of management at each Detroit company and the entire upper half should be fired. Then the companies should be moved to Texas or one of the growing, dynamic states.

  • avatar
    rm

    Regarding Detroit’s inability to produce a superlative small car… They’re predominantly of the mindset that if it’s got a four banger it’s an entry level vehicle. Think about it.

    I was talking to one of our application engineers and it became very obvious that a certain oem’s nvh issue with their four cylinder mid-size sedan wasn’t worth fixing because it’s just an entry level car. The more people I talk to, the more it seems that this is a very pervasive mentality in Detroit though it’s not necessarily limited to the ‘Big’ 2.8.

    Why on earth would you make a DVD nav system or automatic climate control available on an entry level car? Or any other ‘high end’ option? Why do a competent job when it’s “just an entry level car?”

  • avatar
    Jon Paul

    In the stock market, if you don’t diversify your portfolio, what is likely to happen? Disaster

    Oddly enough, the same seems to apply to the auto industry’s product portfolio. Those with a diverse portfolio of quality products (Honda, Toyota) make profit, even in hard times (yes, I know Toyota’s sales were off, but they’re still making money).

    If, on the other hand, your portfolio is full of gas guzzling SUVs, trucks, and offers only a token few uninspired models with minimal fuel efficiency – well, you’d be feeling a lot like GM and Ford.

    Who is to blame? Who decided which mix to put in the 2.8′s portfolio?

  • avatar
    Stephan Wilkinson

    Good lord, I hardly think the Viper and Mustang are “superb sports cars.” If anything, they are excellent symbols of Detroit’s lack of true talent. I’ve driven enough Vipers and Mustangs to feel they are jokes, the “sports car” equivalent of jacked-up pickups. (“Remind me again what the point of that is?”)

    And please don’t tell me about the Viper’s Le Mans wins. I know. I also know you can make a good racecar out of just about anything.

  • avatar
    Gottleib

    Richard Chen, thanks for correcting me. Of course it was Pogo, it’s been a while since I read the comics.

  • avatar
    Verbal

    Stephan Wilkinson: “…Detroit’s lack of true talent.”

    Here we go.

  • avatar
    Agitated

    It’s greed, pure and simple. It’s the worst of human behavior magnified by the immense size of the industry. Most of us can’t comprehend how much money flows through this industry. Why would anyone in the upper echelons of the exec offices, BOD, union bosses, etc understand what drives their business? They have no connection to the people that buy their products. They live in gated, exclusive communities, socialize with people like themselves, are chauffered everywhere, fly on private jets, etc. And we’ve seen, time and again for 100 years, that the public will purchase the worst POS cars imaginable. The Chevette sold by the thousands, so did the 1st gen Escort, the Pinto, the Omni, etc etc. I realize they had no foreign competition then but they did have themselves to compete with (not to mention AMC). So why would they want to make anything better than “acceptable”?

  • avatar
    Jonny Lieberman

    Stephan Wilkinson:

    Ah… the old ‘Vette vs. Porsche debate.

    Personally, I like them both.

    Mad power + mad skillz.

  • avatar

    What was that about “creative destruction” and “free markets” again?
    The leadership in Detroit has managed to lose the game despite their home team advantage.
    Game over.

  • avatar
    keepaustinweird

    First and foremost, management. I also believe that state and federal government also shares a percentage of the blame for effectively enabling the kind of sub-competitive, non-innovative approach the senior management at domestic auto manufacturers have repeatedly proven they refuse to break away from.

  • avatar
    factotum

    The money men, in answer to the question. Whether it was the accountants dictating design and engineering specs or “Wall Street” pushing for short-term ROI vs long-term growth, the manufacturers who’ve had non-engineers leading them have tended to fare poorly.

  • avatar
    Stephan Wilkinson

    Jonny, I’m not talking about the Corvette, which is a true world-class, Porsche-beater sports car. Read again what I wrote and you’ll see that I was talking about the truly klunky Viper and the unforgiveably live-axle Mustang.

    I am not a Porsche elitist. The 25-year-old 911 track car that I own is an amusing piece of crap,and our Boxster is an overpriced but also amusing daily ride. I hold no brief for the Germans, other than the fact that my uncle was the youngest member of Hitler’s German staff. But that’s a long story.

  • avatar

    I wrote a Ph.D. thesis on this topic.

    My conclusion: the problem is that even profits aren’t the top priority. They’re second. Cars are, maybe, third.

    The top priority: the executive career game. These companies are essentially extremely expensive variations of Survivor. Far more effort goes into developing senior executives (i.e. players) then into developing experts in design, engineering, and marketing–or into developing true teams of such experts.

    The executive summary of the report I gave to GM back in 2001:

    http://www.truedelta.com/execsum.php

    Some people acted on pieces of this report. But I didn’t expect the company to switch from a culture of careers to a culture of experts. After all, you’d be creating a place where the current execs wouldn’t fit. And they haven’t.

  • avatar
    Paul Niedermeyer

    Michael Karesh: The top priority: the executive career game.

    I whole-heartedly agree. It’s not the whole answer, but it is a major part of it. I found myself in the corporate world, in and near the upper echelons, and it…reminded me of a high school locker room. Which is a place I avoided (in high school). And which is why I dropped out of the corporate game.

  • avatar
    carguy622

    Most of the blame has to lie with the executives. As has been said before many times, they reaped in profits from the trucks and SUVs and let the sedans stagnate. Did Ford really have to wait so long to have “The Year of the Car”? Every year should have been the year of the continually improving product line-up.

    When the profits were rolling in they (mostly Ford) used the excess cash to purchase other failing companies (i.e. Jaguar), blinded by their desires and the hubris that they could do no wrong. Like most Americans today they did not have a proper “emergency fund”. They blew all their extra income.

    One last item: Why does a focus group have to approve every little detail of new vehicles, and be taken as gospel? We end up with front end “A”, side profile “C”, and rear end “B”. The focus groups are fickle, the engineers and designer are skilled in their trades, all that does is undermine their efforts.

  • avatar
    LenS

    The states deserve some blame for letting the dealers write the laws that force the auto industry to sell it’s products through third parties who so often have no incentive to provide a positive customer experience.

    They and the Feds also deserve some blame for making hostile takeovers of companies difficult so that boards and senior management of very large corporations can be hard to remove. Imagine if all directors faced annual elections by shareholders? And their and senior exec compensation required annual stockholder approval? They’d jump a lot quicker when problems occurred. The sheer size of the US Big 2.8 has rendered them nearly immobile when it comes to making real changes.

    It’s a pity, the US Steel industry makes more steel than it ever did. It just does it with a vastly reduced workforce through modern mini-mills. I don’t see something similar happening to the domestic auto companies.

  • avatar
    carlos.negros

    Obesity. The U.S. has the highest rate of obesity in the entire developed world. As of 2005, 65 percent of Americans were fatties.

    Fat people need bigger cars. They are more comfortable, easier to get into and out of, and frustrated people, peeking out under rolls of lard, tried to soothe their frustrations stemming from their lack of physical prowess and mobility by burning gas in a big engined pig car.

    Detroit gave the fat asses what they wanted and needed. If people would have had to fit into a miata, they would have realized they needed to diet.

    Big fat people in big fat cars using lots of gas. That is what killed Detroit, and America as well.

  • avatar
    Waffle

    I think one major villian often missed is consistently bad engineering. Detroit has had one engineering disaster after another: vega alum engine, pinto, cadillac V4-6-8, olds 350 diesel, cadillac ht 4100, x-body, olds quad 4, gm10, chrysler ultradrive transmissions, ford 3800 v6, ford ax4s transmission, ford TFI ignition failures, gen 1 chrysler LH, OBDII “Service Engine Soon”… and on and on and on

    Now, maybe unrealistic executive decisions were part of the problem but Detroit has a long history of putting poorly engineered, not properly tested, not properly debugged cars into production.

    I think several decades of not properly debugged car launches has hurt them far more than design and marketing issues.

  • avatar
    skor

    This question can’t be answered in a few paragraphs, and it can’t be answered until Detroit has its rendezvous with the iceberg — which is going to happen sooner than later. Only after the twisted wreck is lying on the bottom will it be possible to write the history of the US auto industry. It’ll be a work of encyclopedic length, that will cover decades, and spread blame from the corporate board rooms, to the union halls, government, academia and ultimately, the American tube zombie.

  • avatar
    DearS

    No blame. Live and let live or die. whatever.

  • avatar
    IllinoisAutobahn

    I would argue that, long-term, Detroit’s quality problems are more significant than its failure to build better small cars.

    GM went from a market share around 50% in 1980 to around 25% in 2000 despite the ultra-cheap gas of the 80s and 90s. Even as small cars became a less and less important part of the market during those years, nearly half of GM’s customers deserted it.

  • avatar
    Phil Ressler

    Thirty-five years ago, during a discussion about a friend’s BMW Bavaria, he observed, “It’s not coincidence that the best cars in the world are made within two-hundred miles of the Alps.” I’m certain that if US automobile companies were headquartered in Vermont or coastal California, our engineering heritage for automobiles and the traits that define an American car would be somewhat different than today. The Midwest existential experience favors comfort and convenience for long-distance, lineal, unobstructed transit, over dynamic balance. The Germans continue to demonstrate that even today, there’s a trade-off.

    But even a mountain-proximate US industry would have had to accommodate the peculiar preferences of a market spanning a continental country. Europeans come to the US and still barely grasp how much our continental dimension affects our life and worldview, today’s EU pseudo-country notwithstanding. And Japanese barely relate to it, but they obviously chose to adapt to us more than we adapted to them, given the expanding waistline, porky mass and marshmallow dynamics of modern Toyota vehicles.

    The very same companies that brought you Escort, Chevette, Omni and their successors also made some great cars coincident to their shameful models. While many folks here testify to serial disappointment with failed D3 products, in the same span of time I owned and drove so far a quarter century’s worth of American vehicles with anvil-like dependability and low ownership costs. But I didn’t own any of the models people commonly complain about. Why the delta?

    Executives like Don Petersen showed how much difference leadership makes, and we even have to give credit to Bob Lutz for the same. Soichiro Honda was another example of a defining leader who massively influenced his company’s output, making Honda as close to being American as a foreign manufacturer can be. So the lapses in quality, and failures to act on market changes that were clearly warned traces to two liabilities intrinsic to the Detroit 3: First, by circa 1960, the best new executive talent began to be progressively less available to an industry headquartered in Michigan. Some of our automotive CEOs (you know who) would be laughably unemployable in more innovative competitive sectors. Second, the quarterly imperatives of the US public markets favoring real-time financial performance encouraged boards to “professionalize” the executive layer of the D3 by placing process and financial experts in control, who were frequently unschooled in and unenthusiastic about, cars. And then there’s been Ford and the family’s disproportionate control of the company’s governance, resulting in failure to isolate and insulate the CEO from the politics of a legendarily dysfunctional family.

    So, not who, but what. What’s to blame for Detroit is the betting parlor called the New York Stock Exchange, the continent, and the holdover 19th century convenience of locating a steel-intensive heavy-goods manufacturing business at a confluence of Great Lake, rail, a major city, and proximate natural resources where it happens to be flat for miles and miles and miles….

    Phil

  • avatar

    Building small cars is not macho, and in Detroit it was a career dead-ender to be sponsoring such efforts.

  • avatar
    rpol35

    Detroit has always felt, I believe, that small, fuel-efficient cars are a passing fad and Americans really don’t want them. You know, it’s more of a flavor of the month thing. There is a belief that fuel prices will stabilize and then recede and the small car attraction will go away. And why not, that is pretty much what has happened since 1973; it has been a real ebb & flow.

    Looks like the tide has gone out for good this time and very rapidly, too rapidly for Detroit to even act like they are temporarily interested.

  • avatar
    JJ

    Who is to blame?

    The US government, for restricting imports in the 70s/80s and therefore making sure the Big 3 was given the market instead of having to compete for it and therefore taking away all incentive to make the best car they could but instead paving the way to produce ‘just good enough’ cars to ‘just not make the consumer so angry to not buy a car anymore’.

    The consumers, for keeping buying the rubbish cars that they were offered and not collectively demanding better products (eventhough they had little choice).

    But mainly–>The big three themselves, for taking advantage of their ‘monopoly’ in the wrong way, not by giving the people something back in return for what they gave them (via the government) but instead angering them by giving them really bad products, and not forseeing (or not caring) that in the longer term, someday that would inevitably come back to hurt them.

    Obviously, Detroit makes cars, people still buy cars in great numbers, greater numbers than ever, so if Detroit can’t sell cars in that environment, in the end it’s their own fault.

  • avatar

    For years now I’ve been preaching that unless GM changes it’s marketing, the downward spiral will never be reversed. Still today they refuse to listen, embarking on the 72 Hour sale where we spent tens of millions advertising giving our products away at a loss while further damaging the brands. GM is like an alcoholic who won’t recover until they hit bottom. There should be no government bailout as this management team under Red Ink Rick would only burn through any infusion just like a down and out drunk who’s handed a $20 spot.

    Here’s the bottom line…

    It’s the marketing destroying GM

    It’s Red Ink Rick’s fault for allowing it to happen and continue (ie 72 Hour)

    It’s the Board of Bystanders to blame for their ongoing support of Red Ink Rick.

    It’s the shareholders who are ultimately responsible for the composition of GM’s Board and therefore derserving of the massive loss in valuation of their investment.

    The capitalist system works and water seeks it’s own level. In this case the water has flowed out of the stock as it has become quite clear GM’s management is clueless and the Board and shareholders are passive and non performing.

    Return to Greatness still stands as the answer. It would immediately save over $1 Billion in marketing costs and regain 5 points of share within 6 months. Yet GM couldn’t care less. Wonder why?

  • avatar
    geeber

    The Mustang is not a sports car…and it was never meant to be. It was originally a stylish compact that offered Americans a touch of import flair (long hood/short deck styling, bucket seats, floor shifter, etc.) with American-style reliability, ease of service and comfort options. Blazing performance was not part of the bargain. It certainly wasn’t a muscle car, either, as that role was filled by the GTO, Malibu SS, 442, GTX and Coronet R/T in the 1960s.

    As the old muscle cars died out in the early 1970s, the pony cars hung in there, selling on style and the look of sportiness. When interest in performance revived in the early 1980s, the Mustang and Camaro/Firebird were the only domestic cars that had a “sporty” image, were affordable and not available as a family sedan or wagon, so it was natural that they would receive the hot engines and tighter suspensions.

    Over the years, the Mustang has developed a schizophrenic personality. The Mustang GT has come to fill the slot once held by the original GTO and its competitors, while the base Mustang is the direct descendant of the original Mustang.

    The Mustang is well-suited to its purpose and target audience…yes, it would be nice if Ford had installed an independent rear suspension on the car, but the bottom line is that the car is very good at what it does. Ford’s problem is NOT the Mustang.

  • avatar
    Dynamic88

    So, not who, but what. What’s to blame for Detroit is the betting parlor called the New York Stock Exchange, the continent, and the holdover 19th century convenience of locating a steel-intensive heavy-goods manufacturing business at a confluence of Great Lake, rail, a major city, and proximate natural resources where it happens to be flat for miles and miles and miles….

    Respectfully, this idea doesn’t get off the ground.

    First, Detroit isn’t a particularly convenient place to locate the auto industry. It’s not near the natural resources, and it was far from the markets in the early period of the industry. In fact, in the first several years of the 1900s, NYC produced more cars than Detroit.

    The auto industry sprang up in Detroit, NYC, Chicago, Toledo, Buffalo, Kenosha, etc. because these were already industrial cities where metal working activities were taking place. Industrial activity begets industrial activity. Nice as it might be to have an auto industry located at the foot of the Rockies, there just wasn’t enough industry there to supply the sundry needs of the auto producers.

    The second reason your thesis doesn’t fly is because Ohio is at least as flat and boring and dull as Michigan, if not more so, yet Honda is doing wonderfully in this “dull” location. Somehow they are able to attract executives to live there – not just execs, but execs who can actually make good decissions. Execs who are presiding over increased market share and high profits. If there were something wrong with the location, we’d expect to see Honda failing.

  • avatar
    zenith

    Interview for ANY JOB at ANY corporation run by those who look only to the next fiscal quarter and who keep their resumes current and constantly in play and the question of “Where do you see yourself in our organization 10 years from now?”always comes up.

    Nobody in those companies sees the irony of it all.

  • avatar
    Phil Ressler

    First, Detroit isn’t a particularly convenient place to locate the auto industry. It’s not near the natural resources, and it was far from the markets in the early period of the industry. In fact, in the first several years of the 1900s, NYC produced more cars than Detroit.

    In relative terms, southeast Michigan was close to both coal and steel producing regions, and centrally-located for shipping product. Sure, in the infant days of automaking, entrepreneurs were dispersed and activity was atomized throughout the northeast where population density was greatest. But inevitably, the industry consolidated around a location with the best mix of advantages.

    The auto industry sprang up in Detroit, NYC, Chicago, Toledo, Buffalo, Kenosha, etc. because these were already industrial cities where metal working activities were taking place. Industrial activity begets industrial activity. Nice as it might be to have an auto industry located at the foot of the Rockies, there just wasn’t enough industry there to supply the sundry needs of the auto producers.

    Yes, and for similar reasons that automaking consolidated there.

    The second reason your thesis doesn’t fly is because Ohio is at least as flat and boring and dull as Michigan, if not more so, yet Honda is doing wonderfully in this “dull” location. Somehow they are able to attract executives to live there – not just execs, but execs who can actually make good decisions. Execs who are presiding over increased market share and high profits. If there were something wrong with the location, we’d expect to see Honda failing.

    Honda had already established its paradigm for what constituted a good car well before they ever arrived in Ohio. Their operating practices and products simply enabled them to attract the better executive talent interested in and willing to work in the auto industry. Plus, Soichiro Honda’s stamp so thoroughly imbued the company with his business, engineering and product ethic that any incoming management was / is powerfully oriented by the company’s prevailing conceptual framework.

    The location may not attract the very best managerial and executive talent in the US, but Honda’s culture is strong enough to channel success from the available executive talent and is magnetic to the best available in automaking. Still, Honda is headquartered in Japan.

    Phil

  • avatar
    Potemkin

    The blame for the mess lies, ultimately, with the shareholders. Like Truman said “the buck stops here”. It is the shareholders lack of action that has let Wagoner and company run GM off the cliff. I don’t know whether they are stupid or just don’t care but it is their money that is now worth 70% less than a year ago. The execs don’t care because they have golden parachutes and are sure to be hired by some other dumbass group of shareholders when their current job is over.
    Yes, the people at the top don’t know the business. A reason for that in GM may be their hiring practices. Starting in the 70′s GM told their recruiters to try to hire only MBA’s for salary positions. Internally at GM you needed an MBA to get a superintendent or better position. Consequently GM ended up with a bunch of management people who did not grow up with the business and so do not understand the nuances of the car biz.

  • avatar
    Landcrusher

    There is plenty of blame to go around. If I had to pick a an ultimate culprit, I would blame the government, and therefore, the voters. Surprised? No? Saw it coming you say?

    Laws that allow one group of people to hold a company at ransom for as long as they are able to will inevitably end this way. All the actors are so many lemmings walking along a destined path after that.

    PS. I am not subscribing to QOTD anymore, so I won’t be responding on this thread.

  • avatar
    Dynamic88

    In relative terms, southeast Michigan was close to both coal and steel producing regions, and centrally-located for shipping product. Sure, in the infant days of automaking, entrepreneurs were dispersed and activity was atomized throughout the northeast where population density was greatest. But inevitably, the industry consolidated around a location with the best mix of advantages.

    Well, relative to the moon, yes. Anywhere Pennsylvania would have put them closer to both steel and coal, and shipping would have been better, since the bulk of the market in the early years was in the NE. But aside from Philly – possibly, there just weren’t enough machine shops to support a fledgling auto industry. Detroit didn’t become the motor city due to location – the location isn’t very good. NYC had a better mix of advantages, as did Chicago. Buffalo was probably at least as good.

    Honda had already established its paradigm for what constituted a good car well before they ever arrived in Ohio. Their operating practices and products simply enabled them to attract the better executive talent interested in and willing to work in the auto industry. Plus, Soichiro Honda’s stamp so thoroughly imbued the company with his business, engineering and product ethic that any incoming management was / is powerfully oriented by the company’s prevailing conceptual framework.

    The location may not attract the very best managerial and executive talent in the US, but Honda’s culture is strong enough to channel success from the available executive talent and is magnetic to the best available in automaking. Still, Honda is headquartered in Japan.

    Thanks for proving my point – location has little to do with being able to attract top talent, or designing and building good cars.

  • avatar
    Phil Ressler

    Thanks for proving my point – location has little to do with being able to attract top talent, or designing and building good cars.

    Location is less important when said location is *secondary or tertiary* to the location, resources and characteristics that inform and infuse a company’s actionable worldview. Honda or any other company with strong leadership can transfer that to reasonably equipped locations and find adequate talent to train, indoctrinate and prosper.

    The situation is quite different for location as influencer of the primary executing team. When the auto industry was consolidating in southeast Michigan, it could easily draw upon the best new business talent coming up in America because it was the exciting place to be and much of that talent was already conditioned to life in the upper midwest and northeast. By mid-century, aeronautics and electronics became more interesting to new talent, and those industries were dispersed, but the pull of California intensified. After 1960, California and Texas began to drain managerial talent from the industrial heartland. Aerospace and the moonshot programs accelerated this. By 1970, the best new talent coming out of B-schools was not looking to live in Detroit, nor seeing auto manufacturing as their ticket. By 1980, the defense and computer economies of Massachusetts, California, Texas and Seattle further diverted the attention of the best new business talent away from the old school calcified cultures of Detroit business, and away from the weather, the parochialism, the lack of currency. After 1982, the financial boom drew many of the better business minds to New York, San Francisco or overseas assignments in London, Hong Kong and Singapore.

    Honda plunked an established mindset down in Marysville, OH and started fresh. I don’t think anyone believes they succeeded by attracting the very best and brightest of American executive talent. They got good people and transplanted a system for relevant engineering, production quality and limited their catalog to what they did well. The real leadership was / is in Japan.

    Today, some pistonhead B-school graduates are thankfully interested in the auto business. But the best executive talent emerging from the younger generations aren’t hankering to live in southeast Michigan nor Ohio for that matter, and bending metal for 4-wheeled transportation isn’t a top-of-mind career option for them either. Perhaps this can change as the auto business becomes once again more innovation and technology driven to remove the car from the environmental equation.

    Honda America only proves that you can transplant a system that’s been well-thought-out elsewhere. Honda Japan personnel were assigned to transfer the culture. But originating executive talent isn’t hankering for a career in Detroit. The Steve Jobs and Eric Schmidt types of my generation, and the Larry Pages and Marc Zuckerbergs of the emerging generation are in California and perhaps Boston. Detroit never entered their minds. Imagine what GM or Ford could have been had they been able to attract and retain Larry Ellison, Bill Gates and Steve Jobs, for example, circa 1975. Hell, Scott McNealy and Steve Ballmer both had Dads in the auto business and it didn’t even occur to them to stay. If the central idea of the car is informed primarily by the experience of the upper midwest, a company holding that mindset will fail. If these companies are going to try to maintain their relevance from that spot, they will have to build the executive collaboration infrastructure to attract talent where it lives, give such leaders a free hand, and remove the headquarters advantage to decision-making. No company is going to attract to Detroit the best executive talent America has to offer. The area has many engaging characteristics, but not enough business diversity makes it professionally parochial. And no, flying Mark Fields in from Florida isn’t the answer.

    Phil


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