Detroit is a strange place, far away from the great cultural cities of New York and San Francisco. The men who run the city’s car companies are local men. They’ve risen to the top of GM, Ford and Chrysler after years of hard, intense work; clawing their way to the top of a huge, Byzantine bureaucracy. Backed-up by minions and and subalterns, these auto execs live in splendid isolation from the rest of the nation. They are out of sight and out of touch.
Unlike most moguls, car executives must have a profound understanding of their customers’ psychological needs. While selling tires or TV sets or erectile dysfunction drugs has little to do with the responsible corporation’s “identity,” automobile buyers form a deep, fundamental attachment to “their” carmaker. If a car exec does not truly understand his customers’ emotional drivers, his customers will drive someone else’s car.
The Big Three’s bosses work is unlike that of any other boss of a major manufacturing operation. In a sense, they must function more like television or movie executives. They must link with their audiences’ daily lives– and dreams– or lose business. They must be one with their sales people– and the “real” people.
And yet, the geography of the business and its “show biz” component makes the men who run Detroit's car companies a culture unto themselves. They live in fancy houses well away from inner city squalor; their private clubs are among the finest in the world. Their social set links them with each other, and connects the major companies like Europe’s nobility linked eighteenth century nation states. They are seldom fired, downgraded or even moved laterally. They are stars in their own little universe. but this universe is distant, and finite.
You could even say these execs live cloistered lives. The Motor City’s Princes and Kings have more privilege and perks than other major executives, yet remain behind closed doors. They make millions from but rarely deal with the Union men who actually build the cars upon which their livelihoods depend. PR flacks protect them from the snooping media. And they seldom deal with the public– beyond an occasional visit to a motor show or a speech written by their media men delivered to some fawning special interest group.
In the world of powerful men, here or in Europe, few live within such a bizarre combination of privilege and insulation.
Like many bosses in industries under assault from "barbarians," Detroit’s isolated auto execs work tirelessly to maintain the status quo. Safe in their gilded cages, they continue to ignore their customers' changing needs. And they continue to build the same products over and over: the same damn automobiles that their fathers and grandfathers built.
Go back 40 years, when I scribbled a story that put me on the Motor City hit list: “The Grosse Pointe Myopians.” The sub-title pretty much outlined the premise: “Accustomed to silver-lined visions, the auto elite refused to see any gray clouds.
“Detroit can fire scattershot numbers to justify practically anything, including slumping sales. However two vivid facts remain after all the ledgers have been shuffled; the domestic automobile industry is not growing as rapidly as expected and imports are making shocking inroads into the American market.”
Remember now, those words were written close to a half-century ago. Nothing, not a damn thing, has changed. Sales continue to slump as the Europeans take more of the upscale market and the Japanese and Koreans (and soon, the Chinese) chisel away at the center and bottom of the market.
More importantly, the “Myopian” component of the domestic car business remains. Leading the near-sighted non-charge: Ford’s Alan Mulally, GM’s Rick Wagoner and Chrysler’s Bob Nardelli. Not one of them has what used to be called “the common touch.” None of them restlessly prowls the dealerships, motor shows or parking lots, away from their minions, trying to get a feel for what their customers really, really want.
During the Civil War, Abraham Lincoln spent more time away from the White House than in it. Not so Detroit’s CEOs. They and their executive staff are bunkered. And blind. In fact, Detroit’s leadership hasn’t changed in the slightest way since The Grosse Point Myopians was written at the start of what we might now call the domestic automobile’s “dark ages”.
A radical change in the Big Three’s power structure must take place, and quickly. If not, we could see Motown go away, as the imported cars and trucks seize the total market. Yeah, it’s hard to believe, but the world moves on, and very little in this rapidly shifting world can remain the same.
What’s it going to take to get the “Gross Pointe Myopians” to finally take off their glasses and face cold, hard reality? Do you really want to know?
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One specific problem this causes is that since Michigan is flat, execs never learn that the chassis tuning is off. Bob Lutz said in an interview that he only had one decent driving road in southeast Michigan – and looking at it, that road would be unexceptional in Massachusetts or Vermont.
Brock,
Hey, I must logically request: Let’s see a reprint of “The Grosse Point Myopians.”
If you drive south toward the RenCen, one shocking thing new visitors will notice about Grosse Point (and it’s adjacent Grosse Point Park burb to the south) is the utter, shocking contrast from well manicured suburbs, to the immediate presence of the crack-whore streets of Detroit. I’ve turned my car around on the first E-W street south of the Gross Points, rather then risk it on such an Iraq-like, crap-hole road.
My limited experience with GM taught me one thing: the organization is energetic about stamping down any kind of feedback from “below” that could be construed as criticism of the decisions passed down from on high.
This sentence from the editorial rang a bell:
Not one of them has what used to be called “the common touch.” None of them restlessly prowls the dealerships, motor shows or parking lots, away from their minions, trying to get a feel for what their customers really, really want.
I have also had the experience of working with the IKEA brand. Its founder has always taken a direct, hands-on approach to every facet of the company; it is completely self-financed from the first to the last store; it is now a world wide mega outlet of anything you might require in the home — and throughout that entire, quite miraculous journey, the founder has been on the floor, providing inspiration and whip, as needed.
You’ll think it’s just a pr-opportunity, but he thinks nothing of going out on the floor to help customers pick out products, or working in the cafe serving food. The man is a megabillionaire and built that fortune realizing that value is created with good products, at an attractive price, fit to customers’ needs. It’s not a magic formula, it’s common sense.
And Mr Ivar Kamprad knows exactly what the customers want, because he’s heard it from them; and he knows exactly what the supply chain needs to deliver the quality he needs, because he made it a point to know every single one of them, as he was building the business, and he helped them grow as he grew.
Contrast that with Detroit, where they spend megabillions, while not showing a profit, year after year after year — hoping for gas to go back to 50c/gallon, while squeezing suppliers dry and ignoring their customers’ wants. That’s trusting in magic.
I am quick to bitch, so when you’re right, I will be equally adept at praise. I have only been a visitor to those halls, but the sense of isolation from everything borders on lunacy, like the artificial quiet in the library. I was once invited to lunch with the CEO of little tiny AMC- in their halcyon days of the early 60’s- and the opulence shocked my semi-rural sensibilities. But, I will also admit that the business has paid me very well for many years, and hopefully, for a few more, so I can’t help but root for the home team. My family taught me loyalty, but the jackasses haven’t earned it since 1965.
I couldn’t agree more that myopia in Detroit is extraordinary; their products achieved mediocrity in the early 70’s and have shown only sparks of vitality in the intervening years. You allege however: Unlike most moguls, car executives must have a profound understanding of their customers’ psychological needs.
This “profound understanding” is nothing more than common sense. If I buy a product as mundane as a cup of coffee, a meal or a light switch, I will prize product quality, consistency, reliability and reasonable value when it is offered. It is apparent to most of us that no amount of hucksterism can replace these basic traits, even though we might be momentarily swayed by such ad nonsense as “all new” or “extra value”. The functional quality of an automobile, its purchase and its service is not masked for long, hence Lincoln’s words: “You can fool some of the people all of the time and all of the people some of the time, but you cannot fool all of the people all of the time.”
For more than 40 years, the American car manufacturers have been working to do just that. They wanted the public to pretend, along with them, that there was actually a difference between a Chevrolet and a Cadillac, or a Ford and a Lincoln. At times, some people were fooled. But here and there, friends and neighbors discovered that there was nothing special behind the curtain. The same crap switches in the Chevrolet appeared in the Cadillac costing twice as much. The “dealer experience” we hated at the Ford store was no different at the Lincoln dealership.
Detroits overpaid princes were told about this over and over again, yet shoveled out the same old same old year in and year out, convinced that they could actually fool all of the people all of the time.
Even though it is difficult in America to both satisfy myopic stockholders and a reasonably discerning public, there are scores of American companies who do so. Their executives base their performance not on quarterly fluctuations of the stock market, but on the long term strategic viability of their products. Toyota, Honda, Porsche, BMW and others have done the same thing in the automobile business. And despite occasional missteps, the vision showed in their products.
The need to connect with one’s customer is not limited to the automobile business. Success stories in business have over and over again showed that quality and value are key issues which are recognized with consumers, despite the fleeting examples of “pet rocks” which manage to flash momentary profits from nothing.
Leadership in Detroit has varied from incompetence to malfeasance for at least 50 years, and sheer momentum has caught up with them. They don’t need a “a profound understanding of their customers’ psychological needs”, but actually need something far more simple: they need to actually give a damn how the product works and how it compares in the marketplace.
Perhaps this multi-faceted isolation plays a part in why VW is packing their bags and leaving Detroit for Virginia. Wouldn’t surprise me one bit, and strangely enough I hope that other manufacturers will follow suit. As an IT student who’d LOVE to score a job in the auto industry, (especially for Audi/BMW/Merc), the last place I’d want to move is to the frozen war-torn wasteland of Detroit.
Why do we think all of this is abnormal? This is not just Detroit this is the modern “global” management system. Take three months ago, the biggest banks in the Country were losing billions. So, the top execs of a few walked the plank. But, they took golden parachutes of tens of millions with them. This was In the event they never work again, there would be no let down in their life styles. This has been a mantra of all management of large corporations. I’ll only come with a huge salary and perk package, but if I fail, I need a golden parachute. After all my repuation depends on it. Only if Detroit hired people who were not World class managers in the Wall Street mold, will they get people who still remember starting out and life in the real World. Further, it is these types who might drive themselves to a plant alone unannounced and meet the people. (managers and workers) Same goes for the car dealerships. While they were doing this, they might take out a few of their latest products and drive themselves through America and see what the experience is for the buying public. If they were really ambitious, they would stop at a competing dealer and drive his merchandise. Then when they sat at a meeting to approve product for the future, they could say “bullshit” this is not as good as the competition has out already. Only if this happens, will we see any meaningful change in Detroit. By the way, don’t count on it.
During the Civil War, Abraham Lincoln spent more time away from the White House than in it.
So did George W Bush during Iraq war. Your point being?
It’s no coincidence that Detroit have lost focus. All three were (or still are) run by accountants who don’t care if they sell rickshaws as long as they make money. There doesn’t seem to be much in the way of pride in the products. Naturally, there are some exceptions (Cadillac CTS/CTS-V, Ford Mondeo, Ford Focus Cabriolet), but accountants don’t care too much for pride. They haven’t figured out that people form a bond with a particular marque (Like I do with Toyota) and if you abuse that bond, it will break.
Another problem Detroit have is their inability to recognise the important and value of organic growth. They’d rather acquire companies to achieve growth. The net result of this is a bloated portfolio with a lot of dealers to keep happy. One only has to look at GM and Ford for evidence of this. Toyota and Honda, managed to keep there brands to a minimum, which, in the long run, gives their brands more value and a valuble brand is worth its weight in gold.
But Detroit aren’t the only ones guilty of this. Nissan are slowly turning that way. Mr Ghosn did a wonderful job of turning Nissan around, but under his continual leadership, Nissan’s reliability is in tatters and Nissan has dropped to Japan’s number three with Honda leapfrogging them.
Maybe the reason for all of Detroit’s woes is ego? A CEO will come to power and want to revolutionise the company so their legacy is a good one. Their vision only extends as far as their tenure. Without a long term vision (like the one Mr Ghosn laid out for Nissan and soon Renault) Detroit will carry on bumbling through without doing anything meaningful to secure the company’s future……
Disclaimer: Before any starts, yes I know Toyota and Honda are interested in making money, you’d be an idiot to think otherwise. But I’ll quote you some excerpts from Toyota’s production system which highlights the difference in attitudes between Tokyo and Detroit:
“Base your management decisions on a long-term philosophy, even at the expense of short-term goals”
“Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others”
“Respect your extended network of partners and suppliers by challenging them and helping them improve”
“Build a culture of stopping to fix problems, to get quality right the first time”
All these quotes follow the same principle: “long term, not short”.
From 1969 until into the 1990's I worked for Ford here in Canada from the line to several rungs up the management level.
One of the things you learn very early is that upper management does not really want to know what is going on. As a production supervisor you learn how to fudge production numbers on an hourly level, so that the General Foreman and then the superintendant do not have to explain any production down time in morning meeting. Any part which is damaged on the line through difficult installation, sabatoge or mishandling is always a supplier problem and you learn how to hide any additional manpower for rework or repair as a supplier defect related cost.
I used to wonder if upper management had any idea at all what went on in thier factories or with the product. One year our plant was competing with 2 others plants to get the new Escort program, our first front wheel drive car. The day the big shots where coming in in the middle of July for a plant tour our area was in the middel of our July hot spelll and all of the lawns around the plant were crispy brown. They painted the lawns with green dye, so that it would look nice when the helicopter landed.
I used to wonder just how such stupid people could be come so successful. There is a reason they used to say it is "Ford Country". They operated like the king with no clothes in the world of their own ignorance and making. And of course as I have stated here before, they promote like minded people not people with new ideas, (disenters to them) and the cycle continues. "Ford Has A Better Idea", but their saving it cause it's the last one.
drifter: During the Civil War, Abraham Lincoln spent more time away from the White House than in it.
So did George W Bush during Iraq war. Your point being?
Probably that Bush, as a “modern” and highly detached manager, did little to understand what the hell was actually happening, while Lincoln, who was vitally concerned with the health of the republic, listened to both his enemies and his supporters in his attempt to do the right thing. This is no doubt what Brock meant…
I,ve allways believed that the blame for GMs misfortunes rested at the unions,the dealers and the upper managements feet.
The unions have been beat up kicked around and put in thier rightfull place.{I am a long time UAW/CAW member.
The dealers, that are surviving are doing every thing possible to rectify past mistakes.Its about time!Yeah theres bad ones still alive,but not for long.Right now there is still room for improvement.From what I read on the net the import dealers have a lot of room for improvement also.Its not just a big 3 issue.
So whats upper management done to change things?
I think Mr Yates has covered that quite well.
“Detroits overpaid princes” says it all.
@edgett and drifter
drifter: During the Civil War, Abraham Lincoln spent more time away from the White House than in it.
So did George W Bush during Iraq war. Your point being?
That the Civil War is over … ? :-)
especially for Audi/BMW/Merc
As a car enthousiast, you are not allowed to like all three. Or actually, you’re not allowed to like both BMW and Mercedes at the same time.
It’s just plain wrong.
Now if you like BMW and you go work for Mercedes to do some company espionage and destroy them from the inside out that could be condoned.
Maybe in the US things are different.
If I buy a product as mundane as a cup of coffee, a meal or a light switch, I will prize product quality, consistency, reliability and reasonable value when it is offered. It is apparent to most of us that no amount of hucksterism can replace these basic traits[...]
Edgett: Ever been to a Starbucks? ;-)
While I would like to agree with this, perception still rules our world, and it’s nowhere near as true as in the car business. But the trick is that hucksterism needs to be linked with actual qualities: no matter that the suburban soccer mom will always drive under the speed limit, she knows, by buying her BMW X5, that she is indeed at the helm of a “ultimate driving machine, because BMW has relentlessly worked for that: in advertisements, but also in engineering.
Detroit-X :
February 11th, 2008 at 8:12 am
Brock,
Hey, I must logically request: Let’s see a reprint of “The Grosse Point Myopians.”
If you drive south toward the RenCen, one shocking thing new visitors will notice about Grosse Point (and it’s adjacent Grosse Point Park burb to the south) is the utter, shocking contrast from well manicured suburbs, to the immediate presence of the crack-whore streets of Detroit. I’ve turned my car around on the first E-W street south of the Gross Points, rather then risk it on such an Iraq-like, crap-hole road.
Not sure if you live there or are just a fan, but I’ve been a fan of Detroit’s history for some time (not just the automotive history, either). It seems to me you miss some of the gems of Detroit by staying away from the “bad sections,” thus why we steered our rental Cobalt into the Hamtramck area, onto Mack Avenue to catch a glimpse of the old Ford plant, and spent hours searching for a way to get closer to the old Fisher Body plant off the freeway (75, is it?). This year, we didn’t have enough time to explore thoroughly, although we did get up to Lansing and enjoyed the Oldsmobilia there. We also were afraid our ‘07 Camry SE rental was a bit more conspicuous than our ‘06 wheelcover-special Cobalt.
Anyway, my feelings on this are simple: Detroiters generally support the home team, far moreso than any other region in the US, due to many of their livelihoods or families’ livelihoods being built upon the Detroit 3. This necessarily creates a culture of insulation: the execs don’t spend enough time out of the Detroit area to get a sense of what it’s like in the real world, and even when they are out of the office, they see acres and acres of domestic vehicles. I have to laugh at the rows of unsold Mitsubishis and Hondas, and across the street, Mazdas, along Michigan Avenue in Dearborn, about a half mile from Ford world headquarters. It’s a unique culture even within America – I plan to live there sometime in the after-college years – and one that causes this myopia, in my opinion.
AKM, Is Starbucks “hucksterism” or is it something else?
You can get pretty good coffee at McDonald’s for less money. However, I find Starbucks to be better coffee, albeit at a higher price. I’m willing to pay the difference.
But a bigger difference is the environment. Starbucks expects, demands, that their people work to personalize the experience for you. When you go into the shop you are surrounded by all things coffee and the staff is actually trained in a wide variety of things related to coffee. The snacks and sandwiches are tasty and interesting.
At McDonald’s, the staff knows the basic formula, they slap it into your hand quickly enough, it’s hot enough and it’s tasty enough but it’s not the high touch experience you get at Starbucks.
Going inside McDonald’s is bad enough but worse still is to go to the drive-through. That’s no way to buy something that’s intended to relax and refresh you. Starbucks provides an alternative.
Starbucks still manages to do it with pretty good value; I rarely encounter an independent coffee shop with better prices, the atmosphere is usually not as pleasant and the staff is never as well trained. Refills are very inexpensive.
What would a Big 2.8 auto dealership be like, if they were run like Starbucks?
Mr. Yates’ words 40 years ago were quiet prescient.
That said, today’s editorial might have more power if 2 out of 3 examples of in-bred, myopic Detroit insiders hadn’t just arrived from outside the auto business.
I wouldn`t blame CEOs only. It`s alltogether that has ruined us manufacturing. How come that every single CEO of any US based precision manufacturing business is an asshole, while service oriented or primitive stamping manufacturers always succeeed even in Europe. Ralston-Purina, Mars, Cocoa-Cola, Levi`s, Gillette. All of them somehow have got great CEOs , and coincidentally none of them represent precision manufacturing of mechanisms. So I believe that it is rather a US inability to sustain high precision complex manufacturing due to lack of demanding customers within the continent and lack of engineering organization. America has shown ability to organize simple production paradigms like chop meat remains and add soy and pack it nicely as kitten meow or whatever, or sell triple -mega turbo razor with not a single rotating part. ( probably, electric actuator inside a gillette shaver would be beyond their abilities), sell pampers ?yes, sell trucks to europe? No! DHL? yes, Double-decker planes? No., etc. So I wouldn`t blame executives, I would blame the engineering and manufacturing threshold. You can`t jump higher than your ass, Shakespeare would say:)
A twofer! A great article named after one of my favorite movies!
Nardelli was famously insulated from the Home Depot sales floor and its customers. He was despised from top to bottom at HD headquarters, and the customers wer completely ignored in his relentless cost-cutting.
He did manage to make HD more profitable in the short-term, but the stock continued to languish. After destroying HD’s reputation for customer service, ruining the value of the stock, and killing a vibrant corporate culture, Bob golden-parachuted out with $212 million.
And this is the guy Cerberus turned to to revive a company that is absolutely dependent on customer satisfaction? To Bob, it’s all just widgets. At least Alan Mullaly seems to get the idea that cars are aspirational products.
but this universe is distant, and finite
You forgot ’shrinking’.
I agree with L47_V8.
As a Detroit native who has worked short stints at two of the big 2.8, I must say that Detroiters are home team fans. To people outside, they must think that we’re crazy. My Dad still suggests, “what about an Edge?” even though I haven’t driven domestic since 1995. He still brings up criticisms of Japanese cars from the 70’s. He doesn’t think Chinese cars will ever sell well here.
The homerism is charming, until you realize that it is slowly killing our market share. By blindly accepting these cars, we would actually be hurting them by allowing the mediocrity to continue.
I think it’d be wise for one of the Big 3 to move their HQ staff out of Detroit. A few years in LA, Atlanta, Miami, Dallas or wherever would drastically change their viewpoint. Force the execs to live amongst the millions of consumers who repeatedly choose Honda, Toyota etc over the domestic alternatives. I can imagine that living in Detroit creates something of an echo chamber for the big 3 execs, given the disproportionate # of domestic makes on the roads there.
I actually saw some Buick Terrazas and non-rental Grand Prixs in the wild last time I was in Michigan. Crazy
Interesting article, and as accurate as the original one from 40 years ago. But is this problem limited to the automobile industry? From what I see, insular, out-of-touch management isn’t just a problem with GM, Ford and Chrysler. It seems to be the curse of established companies, regardless of the product or service.
Every time I see the word “cloistered,” I still think about going to school in Grosse Pointe. What a freaking inbred community.
I actually saw some Buick Terrazas and non-rental Grand Prixs in the wild last time I was in Michigan. Crazy.
I’m always amazed too by the number of Buicks and Pontiacs on the roads here in Flint. I played poker with some friends a couple of weeks ago and one was talking about how happy he was with the used 2004 Grand Prix he just bought. He bought it because the engine on his Lumina siezed up.
TTAC2000: Conversely, I would challenge several on this site to actually visit Detroit and see first hand what bad management, greedy unions, and corrupt government can do to a once vibrant city. It is just friggin sad.
The overall industrial decline in this country is what is really alarming—-I don’t care what anyone says—if you stop making stuff—you just “stop” and are forced into financial schemes (see recent credit crisis) to show growth. Want to see a modern day Detroit—-visit some neighborhoods in California and Florida where the number of vacant foreclosed homes outnumbers those with occupants….absolute ghost towns. Prettier and newer ghost-towns than some parts of Detroit—-but same result.
Five years ago I visited the Detroit City Museum. They had a large “display on how a car is made.” For its dramatic high point, the body of an ’80s Impala swoops down from the ceiling to land atop a ladder frame, just like they made cars in the good ‘ol days.
My father-in-law, an ex-Chrysler exec, tells how Detroit is built atop massive salt deposits. There’s so much salt on the roads in winter that no car was ever expected to last more than five years, he said. Planned Obsolescence was a geological imperative here…
As a Detroit native, I can remember being stopped at a traffic light at a busy intersection and often not seeing one “foreign” car out of the whole pack waiting at the light. We are such homers that we even still pull for the Lions! (who are also a Ford product!)
This is how most large corporations operate at the executive level, not just the Big 3. The US auto makers are likely worse than most due to their consistently poor performance.
The guys at the top aren’t paid to care – they’re paid to tell half truths and use smoke and mirrors to describe the company’s future and present financial status for one purpose: increase the stock price TODAY. That’s it.
Shareholders ought to demand more, but it won’t be until the value of these companies has become so beaten down that a shareholder revolt will occur. Not to worry if you’re at the top, though: Your golden parachute is bullet proof.
Another facet of the myopia problem is that the rest of the country seems to care less if the United States had a domestic car industry at all. The domestic automakers get very little help from Washington, and the only candidate who recognized Michigan’s problems was Romney. (McCain prob lost in a landslide with his depresso comment at the Detroit Auto Show that “your jobs aren’t coming back”).
Michigan has been its own little society for decades now. Since the state was built on a single industry (including the supplier jobs, don’t forget), our economy rides a different wave than say Illinois, Ohio, or Wisconsin.
Japan and Germany assist their auto manufacturers in very big ways (trade policies, tariffs, universal health care). Furthermore, a foreign company is barred from owning more than a 1/3 of a Japanese company, and the EU would never let a foreign company buy a chunk of BMW or Mercedes (Nissan is fine, though, because it is a partnership and a European runs the company). China also supports its native industry.
I think, as a nation, we have to decide whether we are going to retain an auto industry, or whether like consumer electronics, we will cede it abroad. Hurry up and make up your mind, America, because a fast death is better than this.
Great column Mr. Yates, I’ve saved in Word format for future reference. As I recall from The Reckoning by David Halberstam, a sure fire career killer in Detroit was to be an engineer. All of the top management were finance or marketing types.
http://www.amazon.com/Reckoning-David-Halberstam/dp/0688048382
@ detroit1701
“Another facet of the myopia problem is that the rest of the country seems to care less if the United States had a domestic car industry at all. The domestic automakers get very little help from Washington…”
That’s a PERFECT example of the myopia I believe Mr. Yates was lamenting – blaming everyone else, now including the federal government, for the Big 3’s inability to acquire perspective and ‘begin’ building competitive automobiles. As well, it’s not up to the gummint to provide Universal Healthcare – for ANYONE; what would this actually do to assist in the production of cars people would like to drive? Nothing.
The crappy lineup of the Big 3 is their own doing – not Washington’s. Domestic automakers remaining such SHOULD be a priority – of the domestic automakers, themselves. Washington does absolutely NOTHING efficiently, or well, and should not even consider getting into the sink-hole of salvaging these automakers.
detroit1701
Furthermore, a foreign company is barred from owning more than a 1/3 of a Japanese company
That can’t be right. Renault own 44.4% of Nissan. Maybe this is offsetted by the 15% of Renault that Nissan own?
Graet article, my only disagreement is that in my opinion Alan Mulally is not in the same mold as the others. After all he actually compared and chose a Lexus over a Cadillac or a Lincoln. So he knows first hand why people choose imports over domestics.
Another facet of the myopia problem is that the rest of the country seems to care less if the United States had a domestic car industry at all. The domestic automakers get very little help from Washington, and the only candidate who recognized Michigan’s problems was Romney. (McCain prob lost in a landslide with his depresso comment at the Detroit Auto Show that “your jobs aren’t coming back”).
The domestic car industry is booming. Feel free to visit Spartanburg SC, Tuscaloosa or Mongomery Alabama if you don’t believe it. Hell BMW is shutting down the X3 line in Austria and moving production to South Carolina.
The Big 3’s problems are of their own making. Washington has helped them in the past (Chrysler bailout anyone?) and it just delayed the inevitable. Corporate welfare is not the answer
Detroit-3 executives talk the talk, but don’t walk the walk.
If they had to endure the bullshit buying a new Belchfire, sweat the payments for three or four years, fight for warranty repairs, and keep the POS running paying repairs out of pocket they would produce superior products.
Chrysler’s Tom LaSorda started a 2006 program in that briefly required Chrysler executives to drive used cars. Some are still in therapy.
This from a source who wishes to remain anonymous:
I work at a Chrysler dealership. Last weekend, we had a big Chrysler pow wow of dealership people and Chrysler executives.
Twice, during the weekend, a group of them came to our showroom. None of them spoke to the sales staff who were readily available standing a few feet away on the sales floor.
If they had bothered we could have told them why we had new cars stacked up and why we aren’t making any money and what the customers that we still get are saying about their cars….
But they did not join us in conversation. A couple of them gave us a head nod as they exited.
detroit1701 “the rest of the country seems to care less if the United States had a domestic car industry at all. The domestic automakers get very little help from Washington…….Japan and Germany assist their auto manufacturers in very big ways (trade policies, tariffs, universal health care).”
Why should those of us who have good healthcare be forced to take crappy governmental health care just so the domestic auto industry has lower health care costs. The Toyota workers in the US have insurance and lower costs but they don’t give retirees a gold plated health plan. All the big three have to to do is force their retiress to take medicare when they retire, but they don’t want medicare. Detroit doesn’t want a government health plan for themselves only for the rest of us.
Detroit is the victim of its own success. The giant automobile enterprises that survived the first half of the 20th century spun off so much wealth, for so long, for so many, fundamentally changing their habits and business model became unthinkable.
It’s a sad sight for those of us who appreciate the incredible history and effect of this industry. There is a website dedicated to the “fabulous ruins of Detroit”:
http://detroityes.com/industry/index.html
that includes a fascinating record of architecture associated with the rise and decline of Ford, GM, Packard, etc.
TTAC2000: “The domestic car industry is booming. Feel free to visit Spartanburg SC, Tuscaloosa or Mongomery Alabama if you don’t believe it. Hell BMW is shutting down the X3 line in Austria and moving production to South Carolina. The Big 3’s problems are of their own making. Washington has helped them in the past (Chrysler bailout anyone?) and it just delayed the inevitable. Corporate welfare is not the answer”
Well—-you are right corporate welfare is not the answer. The reality is though that corporate welfare is EXACTLY how Spartenburg, Tuscaloosa, and all other of the Southern cities got BMW, Mercedes, and Hyundai to locate there. Don’t let the lower Southern labor rate fool you. It was the massive government subsidies (read welfare) that got them there !
Now that I’ve had time to reflect on this article, I would like Mr. Yates to answer a few questions:
1. Is it fair to treat these companies as one entity? It seems to me that, with the events of the past decade, we are dealing with three different corporate cultures, and that each company is in a different place in regards to the market and any potential recovery.
2. What does Mr. Yates think of the effort to bring in people from outside the industry and install them in leadership positions (Mullaly and Nardelli)?
3. Is it fair to put Mr. Mullaly in this group, given that he has a proven track record of real success at another company (Boeing), when he shopped for a car on his own, he bought a Lexus (which suggests he understands the appeal of the foreign nameplates), and has openly expressed admiration for Toyota’s method of operation?
umterp85: Don’t let the lower Southern labor rate fool you. It was the massive government subsidies (read welfare) that got them there !
It was my understanding that those were state, not federal, subsidies.
Amen, Westbound and that anonymous Chrysler salesman. The executives are cosseted.
“What would a Big 2.8 auto dealership be like, if they were run like Starbucks?”
Probably a lot like an Acura-Lexus-Infiniti dealership?
I feel like I need to respond/clarify a bit here.
Some of the largest complaints coming from the domestic automakers are unbalanced trade policies and lack of response from efforts to obtain government r&d money. This is not just a “get over it and make better products” problem — that is a very naive and simplistic view. The bottom line is that the U.S. chooses not to encourage the industry.
(1) Japanese, German, Korean manufacturers do not open plants in the United States out of charity, or goodness of their heart, or whatever. Currency exchange rates, importing costs, transportation costs are the reason. Believe me, these foreign auto manufacturers would prefer in an ideal world to build their cars in the home countries. But economics dictate otherwise for the moment.
(2) Domestics have a perception problem. Granted. It is not “cool” to drive an American car for young people in many coastal parts of the country. For the upperwardly mobile folks, owning a German luxury brand is a social status statement. In other words, it is intangible. BMW and Audi sales are very strong, despite a perceived lessening of quality. German automaker margins are huge, and the Japanese have a problem pushing product above invoice.
(3) The oil lobby has controlled the White House under Bush. It gets what it wants (wars, subsidies for the price of gasoline, no mandate or real timeline for developing alternative systems, etc., etc.), while the Big Three execs were totally brushed aside by W. In November 2006, after making them wait for a year to get a meeting. Three of the largest employers in the nation representing some of the best ENGINEERING TALENT of the country — ignored by the president. The president then gives them a fraction of the R&D money requested for alternative propulsion.
(4) Free trade deals just make foreign cars cheaper and cheaper. NAFTA, Clinton’s China lobby deals, and now a free trade agreement with South Korea — is also another nail in the coffin. However, at the same time: (a) China forces U.S. carmakers to “partner” with a native industry — so that one day it can jettison foreign partners; (b) Japan has effectively out import-taxed any U.S. car; (c) people in the EU like to buy their own cars, out of national pride almost, even though rank and file Euro cars are flimsy and overpriced (even GM in Europe is “Opel” — and plays up its German character, and not American). The bottom line is that the U.S. has a hard time competing in countries that are increasingly owning our market — through government policies. The U.S. does not return the favor to its own.
You are right, though — it is about products and it will take some time for the new products to sink in. However, it is crucial to understand that there is some legitimacy to the Big Three’s complaints. The hostility of some in this country to the automakers is astounding.
Those were state subsidies but unfortunately for the Detroit three you can’t get Alabama or South Carolina to pay their state money for building a factory in Detroit.
“The hostility of some in this country to the automakers is astounding.”
No its not. Thats what happens if people repeatedly feel cheated, gyped or ripped off after spending the money on their largest monetary purchase (after a house).
Most people work hard for their money. The haughty F you attitude from detroit is now being paid back to them.
Excellent!
Yates, give us more details of lifestyles of heads of three blind mice, however I was annoyed when you compared them Abe Lincoln, there is no comparison there, Abe was thinking about the nation and its people.
The three blind mice deserve to be attacked and slaughtered [so they can lose those priviliges] by the barbarians, add a new barbarian the indian who sales a car for $2,500. I will buy 10 of them so I can annoy the meter maid.
50 Merc thanks for the link in a word its moving.
I’ve got first hand experience at the arogance that the the anonymous Chrysler salesman experienced.
I’ve had upper management come within 5ft of me and not acknowledge my precence.Degraded and insulted are too mild of terms to describe how it feels to be looked at like a lower form of life.
Management wonders why so many of us bitter and resentfull.Just viewing the link that 50 merc posted gave this old autoworker pause, and left me with a lump in my throat.
I’m taking a break for a while
Bye for now Michael