Hammer Time: Quality Work

Yesterday I sold a 1992 Lexus LS400. It was a well kept model with all the bells and whistles for it’s time. Hands-free cell phone. 250 horsepower V8. Sunroof, ABS, plenty of wood interior accents. For 195,000 miles it was a really great car. At the time it drove off I was speaking to a journalist from Reuters who was covering the Toyota recall. A mental somersault happened at that very moment. While I watched the Lexus pull away and kept on discussing the industry wide battle to contain costs, I looked at a few of my older cars. A 1993 Town & Country, still in great condition. A 1995 Cavalier that could easily go another eight to ten years. A 1997 Pontiac Sunfire Convertible that still drove like it was virtually new. Three cars. All of which were of seemingly dubious reputations for their time all had a good shot of hitting the big 20. I realized something in that very moment…

Only exports will guarantee the viability of the American auto industry. Consider this… not only is our market saturated, it has been bequeathed with unsustainable levels of financing, rental subsidies, and accounting games for over a decade. No matter what ‘clunker’ driven legislation is passed today we still will have way too many high quality used cars in today’s market that can be bought for $2,500 instead of $25,000. It’s great for the cash strapped consumer (and amen to that). But a barnacle bitch for the auto industry and their employees.

Consider the problem that Honda now has with their loyal and loving ‘repeat’ customers. The 2010 Accord may be far better than a 1999 Accord. But it doesn’t matter. That 11 year old model benefited from a time in history where long-term quality took a quantum leap. It still gets the job done extremely well and can still compete with it’s larger progeny when it comes to comfort and fuel economy.

Unfortunately for today’s car makers, a comparable and far cheaper product ends up being the product of choice in tough times. Security and ‘good enough’ are all most people really care about in a long and nasty recession. Tomorrow may be a cloud of fear and anxiety. But keeping things the same with cars and all other big ticket items helps quell this fear. Pork barrels have historically been the inducement du jour for this. Subsidize the consumer with cash and he or she will tilt their feelings toward the windmills of hope and greed. However, the only healthy way to get out of this fearful mindset is through knowledge and confidence. Simply put… you need freedom to innovate and find ‘the better way’. Consider for example all the innovations that made even the lowliest of vehicles… enduring.

The early to mid 1990’s were a paradigm shift in the auto industry. Suppliers became far fewer which greatly improved the automaker’s ability to design and manufacture the final product. Quality standards became exceptionally more strict. You had everything from Six Sigma to CAD/CAM Design to Moore’s law yielding an entirely new way to communicate and do business. The result was that nearly every competitor in the industry built better cars using better materials. Lean manufacturing, once a Japanese only assembly process, became the de-facto standard for all North American assembly plants. Everyone from the assembly line worker to the engineer had better tools and greater freedom to exercise them. The end result?

The fifteen year old car is no longer a clunker. It’s just another car. In fact portions of that car were likely designed to take on the best in the business at that time. The engine of a Chrysler LH sedan was designed to compete with the Acura Legend. Ford tried to take on the Toyota with the Taurus. Even Toyota learned a few things from the successes of a simple design like the Dodge Neon. Everybody took off the blinders and started cribbing each other’s notes and collectively spent over $100 billion+ on R&D. These industry-wide efforts resulted in windfall profits, high levels of employment in the United States, and vehicles that could endure longer than anyone cared to admit. The pursuit of knowledge was well invested and well rewarded.

Then the lazy time came. Why chase market share and spend billions on a new design when you could just buy someone else’s? The good ideas at Volvo were swallowed by Ford. BMW, Mercedes and VW all decided that foreign automakers could easily be acquired and taken over as subordinates. Even the Japanese embraced the conglomerate religion with Nissan joining Renault. Mazda joining Ford, and poor Mitsubishi finding itself between a hollowed out Chrysler and a hyper-arrogant and deceitful Mercedes management. Economies of scale and platform sharing became the standard which ended up being absolutely devastating in the long-term. The reason?

When everyone uses similar companies to engineer similar products in similar ways, it all becomes a sea of vanilla. Today’s cars all offer the same ‘cheats’ with oversized tires, plasticized interiors garnished with tin thin aluminum, and electronics that often have little to no point for most consumers (push button start, drive-by wire, manumatics that are never used.) The Camry, Sonata, Optima, Accord, and Malibu all drive like a Buick. Which is fine… except that you can buy a perfectly good 2000 Buick with about 100k on it for $3500. That car will also drive like a Buick for at least five more years if not longer.

So what does this mean? The American auto industry will only get out of this malaise of decontenting and copycatting by competing in markets and segments that now seem ‘foreign’. The ultra-cheap commuter is vital to the development of foreign markets. The idea of ‘luxury’ is still a nebulous one in most emerging markets. Competitors in the North American market will not be able to survive from profit alone here… because there’s very little profit to be had in America. We can only succeed by exploring new cultures and ideas… and putting the lazy ones that brought us here to rest. Disagree? Well consider how Hyundai became so successful in the United States. Think it over and as they say in the Green Mountains of northern Vermont, “Weigh it in.”