Question of the Day: Who's To Blame For Detroit?

by Jonny Lieberman

July 2nd, 2008 3:16 PM

question of the day who s to blame for detroit

Before 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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4 of 66 comments

Potemkin on Jul 03, 2008

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.

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Landcrusher on Jul 03, 2008

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.

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Dynamic88 on Jul 03, 2008
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.

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Phil Ressler on Jul 03, 2008
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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