By on March 9, 2009

Today’s automotive industry stands on the cusp of great change. The automobile will remain but its powerplant will change and evolve. Within two to three decades, today’s hybrid systems will look like museum pieces, as engineering resources around the world are devoted to alt power propulsion. For the United States to participate fully in this coming technological revolution, it needs a healthy automotive industry. It must fix the fundamentals.

The Presidential Task Force on Automobiles is supposedly addressing Detroit’s structural problems. But one thing will not change: the automotive industry requires massive capital investment. The blistering pace of technological innovation forces every automaker to invest heavily in research and development, to prevent obsolescence and provide a marketing advantage. Rapidly evolving government safety and environmental regulations place enormous pressures on resources, in both the short (three to five years) and long term (ten years and beyond). And competition for consumer loyalty has never been more fierce—or expensive.

General Motors and Chrysler have reached the point of no returns: their capital bases are essentially non-existent. Even if the US government wrote GM a check for $100B and gave Chrysler $30B, it’s highly unlikely either company could regain profitability. It’s still not enough money. In fact, to paraphrase Don Henley, there’s not enough cash in the world to resurrect their fortunes.

It’s not all about money. Chrysler and GM’s de facto bankruptcies (and Ford’s potential C11) are not merely the result of the credit crisis (as they claim). Their plight reflects decades of philosophical weakness: management’s determined and misguided pursuit of short-term gains at the expense of long-term goals and sustainability.

Don’t blame Wall Street. Chrysler’s private equity owners have proven that Motown makes its own bed. As does history. For decades, Chrysler, Ford and GM have failed to address their own weaknesses and their competition’s strength in their core market. Instead, The Big Three have looked elsewhere for profits and growth. Sometimes this quest occurred within the industry (through acquisitions or global expansion), sometimes without (non-related industries with which they had no experience).

Unfortunately, it worked (right until it didn’t). The bottom line appeared healthy, even as Chrysler, Ford and GM surrendered US market share. Worse, risk avoidance and short termism at the top trickled down throughout the entire management system. Up and down the executive food chain, the message was the same: don’t rock the boat. Why would you? There was plenty of room—and money—for yes men.

Outside reformers never stood a chance, even when the need for root and branch reform became obvious. When GM acquired Ross Perot’s EDS—a business with solid margins and rapid growth though wholly unrelated to vehicle design and assembly—it acquired a proven entrepreneur with an instinct for action not discussion. Board Member Perot was paid to go away. In 2006, investor Kirk Kerkorian installed former Chrysler and IBM finance executive Jerry York on GM’s Board. York pleaded for GM to cull brands and address domestic woes. York and Captain Kirk were shown the door.

Instead, The Big Three embarked on countless, indeed endless rounds of restructuring, reorganizations and renegotiation. Every attempt at incremental change proved fruitless. Head counts were reduced, production curtailed, suppliers squeezed and labor contracts restructured. None of this mattered to consumers. Motown’s mission critical U.S. market share continued its inexorable march downwards.

To hit reset, The Big Three must refocus on their core operations. To start, they must mimic Michelangelo’s philosophy when creating David: they must remove the bits that aren’t David. GM’S foreign operations are, to them, a lost cause. They must abandon their dreams of global domination as unaffordable and, frankly, unattainable. Then they must slice brands, kill models and cull dealers.

Second, they must recapitalize. Whether it’s by government debtor-in-possession financing or Chapter 7 re-imagining, they must make return as much, MUCH smaller companies. Third, they must redefine their corporate culture; management rewards must be tagged to long term reinvestment and sustainable profits, not short term “boosts.” And lastly, a new generation of leaders must be installed: outsiders with fresh ideas and a track record of success in other industries.

Ford Motor Company provides a template for the future. Just a few years ago, Ford was no better off than its Detroit brethren. Bill Ford, Jr. threw in the towel and tapped Boeing exec Alan Mulally to run the family firm. Mulally’s focused Ford on a few key markets, forced commonality of platforms around the world, and eliminated distractions (e.g., Jaguar, Land Rover and, soon, Volvo). Equally important, Ford has continued to strategically invest in new technology for new products.

Lead, follow or get out of the way. The feds should force GM to follow Ford’s example. Chrysler should get out of the way. And then, with American talent and determination, our auto industry can once again be the envy of the world.

Get the latest TTAC e-Newsletter!

43 Comments on “Editorial: Re-Inventing The American Auto Industry...”


  • avatar
    agenthex

    In order to survive in any business, a company needs an edge on the competition at least in some area.

    Thus far, over last couple decades, the D3 have shown that their only edge is being the home team (that and trucks, which is going away), most endemically shown in GM. While that did count for a lot, they’ve been twiddling away that good will with a reputation for mediocre or poor quality.

    Ford may survive off the carcasses of the other two, but the losers at best will reinvent themselves as niche players with a novel tech or marketing angle here and there.

    There’s no getting around the fact that capitalism is competitive and that involves doing something better so people buy your stuff.

  • avatar
    Captain Tungsten

    Ken:

    I think we need to wait for some results before we crown Mullaly. Forced induction isn’t exactly a game-changing technology and nothing has been “forced”….yet. Let’s see the cars first.

    And, Mulally doesn’t appear to have set up Boeing for long term sustainability. They are suffering labor problems with the Teamsters, massive product development delays (787 Dreamliner is years behind schedule, orders are starting to be cancelled), and they just announced headcount reduction of 10,000 (sound like some other industry we know and love?) Perhaps his departure correlated with “obvious and looming” problems? Or maybe what the auto industry is suffering actually does have something to do with the current environment?

  • avatar
    dwford

    I think any automaker needs to be a global manufacturer to truly compete. GM can make it happen if they have the will. Chrysler? No chance.

  • avatar
    98SuperC

    Buddha concluded that everything in the physical world is marked by these three characteristics:
    “impermanence” All things eventually cease to exist, or in a constant state of flux.
    “suffering” Nothing found in the physical world or the psychological realm can bring lasting deep satisfaction.
    “no-self” all phenomena are not, or are without, a permanent self, physical body or mental machination.

    Get on with the funeral so we can enjoy what comes next.

  • avatar
    mtymsi

    I think Chrysler has a better chance for long term survival than GM does if Chrysler can stay in business long enough to benefit from the alliance with Fiat. Chrysler on its’ own without question is a goner. I really don’t believe the feds will let GM go under but at the same time I don’t see any evidence of GM’s longterm survival. To this day I really don’t think GM’s management “gets it”. Without a total change of current management which I don’t forsee happening I think GM is truly a lost cause.

  • avatar
    WhatTheHel

    Àlthough a small part of me is still rooting for Ford I have to admit thinking that trying to revive the domestic auto industry at this point is like to trying the revive the domestic consumer electronics industry.

  • avatar
    Engineer

    Today’s hybrid systems will look like museum pieces within two to three decades as engineering resources around the world are devoted to battery technology, and other alternative propulsion systems which, at a minimum, will reduce automobile’s intake of carbon-based fuels for every mile traveled.
    Why spoil a good write-up with wild (and uncertain) predictions about the future?

    Resources devoted to invention does not guarantee invention. If only it was that simple.

    Even the at a minimum portion of the prediction will depend heavily on future oil prices. As the recent past showed, as oil approaches $10/bbl, interest in alternatives evaporates.

    Not that I’m predicting $10/bbl: that will depend on how badly the politicians screw up capitalism…

  • avatar
    sockmonkey

    “Hi-pots” I was a salaried employee for GM for 12 years in the 80’s and early 90’s, but I hadn’t heard that term. They were indeed there though. We used to call them “Seagull Managers” They’d come in, make a bunch of noise, crap all over everything, and then leave.

    GM CEO’s were always guys in their final position for lifelong GM careerist from GMI or one of the major mid-western universities. They knew they were going to have the job for about four to five years no matter what they did. It’s not like the board of directors was going to give any meaningful oversight. Their job was to keep the UAW off their back, make good short term financial decisions and get the hell out with as much money and sanity as possible at the end of the tenure. The next guy could deal with the union contract or angry customers. It was a culture of corporate incest. Outside input was rare (and usually unwelcome).

  • avatar

    A change in senior management is, at best, a small part of a solution. These companies have two things keeping them from long-term survival:

    1. Car buyers aren’t willing to pay as much for their products.

    2. Legacy costs

    Can’t say I’ve read much anywhere that would address the first. Bankruptcy (or some facsimile of it) might handle the latter.

  • avatar
    charleywhiskey

    Forensics seem about right, but the forecast may be a tad optimistic in this text to Ken’s PowerPoint presentation. Reasonably well maintained cars like Mustangs and Accords are almost immortal, and we have, according to reports here on TTAC, more registered road vehicles than licensed drivers in the USA.

  • avatar
    tesla deathwatcher

    I’ve got a brilliant idea on how to re-invent carmaking. Use electric cars to make the car industry more like the computer industry. We’ll see if it works.

  • avatar
    PrestonTucker

    The US market demands high quality cars for cheap prices. It’s not where you’re going to save GM or Chrysler. It’s a break-even market for most automakers. GM, Ford and Chrysler should be spending most of their time figuring out what developing market customers want. I’m talking about 1 billion Indians and 1.5 billion Chinese, most of whom don’t have a car but are getting wealthier day after day. Unlike in Japan, the Chinese have a good perception of American autos and they generally dislike the Japanese enough that they will pass on anything of Japanese origin. This means a golden opportunity for the US-based automakers, but first they need to figure out what the less affluent Asians want to buy. The Chevy Cruze would be at the top of my list for a global car sold in all markets using several variants instead of selling multiple models that cannibalize each other. Why replicate the R&D expenses and production lines? Make multiple variants of one platform. Let the customer custom-order their cars from the factory with exactly the features they want. Maybe they want a 50 to 60 mpg diesel engine. Maybe they want all wheel drive. Maybe a hatchback with fold flat seats for expanded cargo room. Maybe a turbocharged rally car. If you want a good example of the cars you need to build, look at the Suzuki SX4. The era of people buying $40,000 SUV’s is over.

  • avatar
    analyst

    @PrestonTucker: Not really, Toyota, Honda and Nissan are still among China’s Top 10 best selling brands. This, and there is China’s domestic auto industry which grows faster than anyone else in the planet. GM is having some success in China, but it will get tougher and tougher.

  • avatar
    rj

    “Their plight reflects decades of philosophical weakness: management’s determined and misguided pursuit of short-term gains at the expense of long-term goals and sustainability.”

    This is not just the auto industry, folks. This is American business, in one sentence. Somebody please name one industry in which this hasn’t happened.

  • avatar
    NulloModo

    The gas crisis and recession of the 70s drove people from large expensive vehicles to fuel efficient cheap ones, but as soon as prices came back down and the economy recovered people were buying big again. This summer’s gas spike and the current economic woes are likewise driving people towards efficient and economical automobiles, but again, it is going to be temporary. The high price of fuel is only one of the reasons for the abundance of small cars in Europe, a much large one is that in many areas the roads are just too damn small for large cars/trucks/suvs (I seem to remember a Top Gear episode where Clarkson managed to get a Ford GT500, which isn’t even all that big, stuck in the middle of a bridge).

    People will always have a need for trucks, and there will always be image buyers who jump on the bandwagon. Likewise, $40,000 SUVs aren’t going away for good. Both segments might slim down from where they currently are, or were at their height, but they will continue to be a major piece of the market in the US.

    This isn’t to say that the US auto industry hasn’t made some big mistakes. Cheaping out on parts that led to failures right after warranty, allowing the unions to raise salaries to ridiculous amounts, and letting good products get overtaken by the competition were all fatal errors. However, that also doesn’t mean that things can’t change.

    It will be a slow process, and all those who keep shouting death and doom because GM and Ford haven’t been able to do it inside of a few years are fooling themselves. It took Toyota, Honda, and Hyundai decades to earn their reputations, and it might take even longer for the US automakers to regain theirs. The trick is going to be continuing to make products that are not only good, but better than the foreign competition, and finding a way to do it cost effectively. Cutting down redundant management staff makes sense, but even more savings would come from getting rid of the UAW employees who are making $80,000 a year to work an assembly line. The current job market is a great opportunity to hire on new staff at barely above minimum wage and have them happy to have it. Put the money into skilled positions such as product R&D, and developing a cohesive and compelling branding/marketing strategy, as well as plant level positions such as quality control, but stop spending the big bucks on a job that could be done by a trained chimp.

    There are also going to be some slip-ups with the major Japanese firms, which will allow Ford and GM to regain ground more quickly. Toyota is already producing vehicles that feel cheaper than those of a few years ago, and Nissan’s ridiculous lease specials over the past few months are going to come back and bite them in the ass in two to three years.

  • avatar
    Rix

    Two things:
    1. Mulally wasn’t behind the 787. His babies were automating an automotive style production line for the 737, and as leader of the 777 program.

    2. Lots has been written on the problems facing the US auto industry. But what is the industry going to look like on the other side?

    Now is a crummy time to be a GM dealer. But mark my words: In five years, it will be a great business again. That’s because there will be half as many competing. It’s the way industries work. Overcapacity leads to rationalization, which leads to centralization and improved profitability.
    Trucks and SUV’s may be less prevalent now, but they are not going away. Millions of people still have needs for large vehicles, whether to pull a trailer, pull a stump, haul hay, or haul around the plumbing gear.

  • avatar
    John Horner

    “Their plight reflects decades of philosophical weakness: management’s determined and misguided pursuit of short-term gains at the expense of long-term goals and sustainability.”

    This is not just the auto industry, folks. This is American business, in one sentence. Somebody please name one industry in which this hasn’t happened.

    I will give you companies which are in fact counter-examples:

    Intel
    Apple
    Google
    Cisco
    Procter & Gamble
    Costco
    IBM
    Microsoft
    Oracle

    All are companies which constantly make investments in their future and take strategic decisions which the short-term focused Wall Street types find much to criticize about.

    One of the silver linings in the current situation is that all of the pontificators on Wall Street are more clearly seen as the naked Emperors they have always been.

    “Trucks and SUV’s may be less prevalent now, but they are not going away.”

    True, but they are going back to the 20-25% of the vehicle market they long enjoyed instead of the 50% share they spiked to in the roaring 90s. The days of pimping out $20k pickup trucks with $5k worth of extra seats, windows, doors and bling, then selling the result for $50k are over.

  • avatar
    jurisb

    US car industry is doomed. being so weak right at the time of collapse of economy is doing detroit a disservice. But it is logical. Being shortsighted for decades, rebadging, neglecting domestic engineering, neglecting diversity, overhaul cycles, fit anf finish, material texture and reliability for years has brought Detroit to its logical conclusion.Detroit actually is like small USA itself- too much borrowing, too little engineering.
    And can we blame management? How come that every company that makes plastic containers, shampoos or anything that doesn`t have precision movement in it, can excel in USA? Every company that manufactures precision crafted mechanisms,sooner or later dies, giving way to imports. So the core failure of US industries is LACK OF SKILLED ENGINEERS AND HIGH PRECISION MANUFACTURING EXPERTIZE. I don`t see a difference, if you can`t manufacture tv sets, wristwatches or cars- all of them are of the same domain- high precision engineering.But this is what you deserve guys, this is the payback for your greed , offshoring all the facilities and counting bonuses. In a country where people worship football and easy money, but somehow expect that skilled engineers will spawn from somewhere else like leprechauns, is doomed. You should bow, and kiss hands and build monuments for technicians and engineers, for they have made your lives better, not wallstreet, religion, politics or football.
    Those little curious fingers of young boys that start knibbling with plastic model kits, later grow up to create spaceships and Kepler telescopes. Give them a fulcrum, a soil for education, free of charge, and one day you will wake up in America I once believed in……

  • avatar
    Jeff Puthuff

    Jurisb, don’t generalize. Not all Americans are greedy, football-watching idiots. We do have many skilled engineers and precision manufacturing facilities. For example, ever hear of Skunk Works? Burt Rutan and his Scaled Composites? How about Apple? You know, just because the products are made in Asia doesn’t mean they weren’t designed and engineered in the USA.

    Considering your country’s economy is close to collapse, you shouldn’t be throwing stones.

  • avatar
    gimmeamanual

    jurisb, you should have stopped at “…logical conclusion.” I don’t disagree that some of the reasons you give are the reasons we are where we are, but then you go off the deep end.

    “Every company that makes..anything that doesn’t have precision movement in it, can excel in the USA?” Oh, you mean like Plastech, or Collins&Aikman, or clothes, kid’s toys, steel companies, casting houses, etc? Please, take a step down from your soapbox of superlatives. The US has quite a lot of skilled engineers and manufacturing expertise, and many of them are being laid off right now. To say it isn’t management’s fault at all is ridiculous; engineers don’t decide what products they work on. The amount of creativity I’ve seen shot down by management/purchasing makes one wonder why anyone would want to try and push the envelope in a big corporation, it simpy becomes a useless and fruitless fight. I’m involved with two projects right now where engineers wanted to use my company, management/purchasing went with a cheaper option, and we are now taking the business after quality problems started to crop up.

    And if you think the obsession over football is any different from other country’s obsessions with soccer or cricket or whatever is any different, you need to get out more. Your second paragraph would have been better if you’d just said “I hate the US” and left it at that.

  • avatar
    Dynamic88

    The current job market is a great opportunity to hire on new staff at barely above minimum wage and have them happy to have it.

    I don’t think so. In my checkered past, I’ve been an employer, and I can tell you that no matter what the economy is like, you don’t want the kind of people who will (have to) work at barely above minimum wage.

    That said, you can certainly get plenty of people who’ll start at $14 and be happy to work up to $18 after several years.

    I don`t see a difference, if you can`t manufacture tv sets, wristwatches or cars- all of them are of the same domain- high precision engineering

    The Japanese don’t make TVs. I guess that means Toyondissans are not good cars?

  • avatar
    Pat Holliday

    “The Japanese don’t make TVs. I guess that means Toyondissans are not good cars?”

    Uhm, Sony, Panasonic (Matsushita), Toshiba, NEC, etc…?

  • avatar
    jurisb

    to gimmeamanual– if I hated America, I wouldn`t have studied English, I wouldn`t know Ron Paul, I wouldn`t care to comment on what cars you make, and I wouldn`t suggest things that needed to be done to turn the mess around. I really don`t care about other countries, even not much about my own country, which has been screwed by uneducated and greedy people. But I do care about US,because she has wasted the greatest engineering potential in the world. But funnily enough, we the people ( oops, sounds like the beginning of the constitution) consume things that are created by those engineers.And I am not picking on US people watching football, but don`t you think that having laid off 2.6 million people( mostly workers) last year, there should be a reason to reduce amount of sports programs and grown-up males kicking around a ball? Imagine, if those roaring millions of people dying for soccer with such a zeal as if they were saving people`s lives, actually were involved in creating things…..
    to jeff– of course I know what is Skunk Works, and what is Phantom Works, but they mostly get funds through government for their projects, so their ability to compete with a mass product against competitors is partly dishonest. Skunk Works already proved their engineering capabilities- when the x-33 venture star blew up, and because of damn hydrogen tank the whole project was cancelled.Besides ,government had already invested 1.2 billion dollars in that project.
    And what refers to Scaled Composites it is rather a genius of one person, than engineering breakthrough. Frankly speaking Burt Rutan has offered interesting designs and innovations in working with carbon fibers, yet he is nowhere even near any seious rocket, spaceship or aeroplane building companies. You can`t compare YF-23a from NorthropGrumman( built with MDD) with Rutan`s planes. Or his space ship one or two with Nasa rockets. those are two completely different levels.
    And talking about Apple. Apple is a 5 product company that would have gone belly up if not extreme advertizing and mob effect hype.Besides Apple doesn`t engineer their(5) products at home . that is done in Asia by asian companies. Don`t believe me? Strip your ipod open and see for yourself what is stamped on those chips and parts.
    Dynamic88- japanese don`t make tvs? Sharp has the biggest lcd facility in the world- exactly in Japan. Sony, mitsubishi, Sharp, Toshiba, Sanyo,Fujitsu,Panasonic,Pioneer,etc.

  • avatar
    PeteMoran

    Non-essential goods manufacturers and service suppliers live or die on innovation. Innovation is not driven by accountants or an obsession with the stock ticker.

    We’ll all be getting back to basics; creating value added things people need for a sustainable price. Maybe during the capitalist re-invention that has to come, this time we won’t permit the mythical (laughable) “Masters Of The Universe” to manipulate the value of productive components/assets of our economy, which we all own.

  • avatar
    agenthex

    GM is having some success in China, but it will get tougher and tougher.

    GM’s experience in china is not unlike an accelerated version of US events. First they had success because of the rep/fashiontrend of “American” goods, but GM predictably squandered that lead with mediocre products.

  • avatar
    cardeveloper

    John Horner :I will give you companies which are in fact counter-examples:

    Intel
    Apple
    Google
    Cisco
    Procter & Gamble
    Costco
    IBM
    Microsoft
    Oracle

    Intel
    5000 layoffs, closing 5 plants

    Apple
    Announced up to 500 employees, rumored more coming

    Google
    Announced 6000 layoffs

    Cisco
    Announced 6700 layoffs

    Procter & Gamble
    Announced 9600 layoffs

    Costco
    Store by store manager layoffs, qty?

    IBM
    Number not announced, rumored to be as high at 16,000

    Microsoft
    5000 layoffs

    Oracle
    10,000 – 12,000 layoffs, more to come

    Not sure how the listed companies are counter arguments. They are having massive layoffs and seeing significant drops in sales.

  • avatar
    Ingvar

    Either you can concentrate on low volume/high margin products, as Apple or Porsche. Porsche makes in excess of 30 grand per Cayenne in profit. Or you can concentrate on high volume/low margin products.

    The problem is, you need to make really long series of products, that makes a low profit, but a profit nonetheless. What GM has done is incentive itself out of business, just like BMC/Leyland did in the 60’s and 70’s. BMC actually lost money on every Mini made, the more they made, the more they lost. And the Mini was a very successful car. They thought it a viable strategy, as they thought that customer loyalty would bring in sales to their other range of cars, thus make a profit in the long run.

    The problem was, they didn’t have any other good cars that sold in substantial numbers, and the one they had, the BMC 1100/1300 ADO 16, didn’t make any profits either. So they more or less starved themselves to death. They were a victim of their own success. And it is hard to imagine that GM didn’t learn the lesson other learned the hard way. Someone should have taken notes…

  • avatar
    garthgmc

    I think that all are valid points, but there seems to be a preponderance of posts about the value of engineering and good management.
    Especially the comment about the line workers being “overpaid trained chimps”.
    Two things, I was a firefighter for 22years and quite often heard this mentality when we received a percieved large raise. You know what, walk a mile in a mans shoes before you throw down such flaming nonsense.The other sentiment is , why would you like to cut workers wages and therefore living standards so we can be essentially like other 3rd world nations? Japan included if not for WWII. Which is the gameplan right now. When I was a kid they told me the 40 hr work week was going by the wayside because of all you techhead engineers, guess they lied about that one too.
    Utter nonsense, all I see in my daily travels are Dodge Ram pickups and Gm and I live in Ny, so why didnt management put some money aside for a rainy day,because it certainly is pouring on now.
    I would rather have a army of trained loyal chimps then overbearing elitist idiots who cant see the ends of their noses.
    Gm and Ford survive, not so sure about Chrysler,..shame
    College professor once told me, Europeans were always the idea guys and then they came to us(as in U.S.) and we (the trained chimps) actually built the thing they wanted. This is the essence of the industrial revolution.
    and you can tell by my screen name where my allegiance lyes

  • avatar
    geeber

    Ken,

    Great editorial, but there is this sentence:

    “Their foreign operations are, to them, a lost cause.”

    I can’t buy that in the case of Ford…its European operations are an important part of Ford, and are proving to be vital in the development of new models. For that matter, Ford’s investment in Mazda has also reaped enormous dividends for the company.

    Jaguar, Land Rover and Aston Martin were distractions…and Ford did the right thing by cutting its losses and selling them.

  • avatar
    Ken Elias

    geeber – You’re correct…I should have qualified that a bit more by saying foreign operations that cannot contribute profits should be abandoned, mostly referring to parts of GM’s global empire. GME has always teetered on the edge, never really making a ton of money and never integrated with the US. Ford’s share in Europe is comparable to GM’s share there (around 9% each) but has done better overall and is now an integral part of Ford’s global commonization.

  • avatar
    carguy

    cardeveloper – these companies lead the world in their field. Yes they are suffering from the downturn but they are solid businesses which don’t need government dollars unlike the car makers.

    GM, Chrysler and Ford have not led the automotive industry for decades and now seem to make a living from spooking the public into giving them government dollars.

  • avatar
    ccd1

    Listen to the D2.8 and one might conclude that getting legacy costs under control along with improvements with the economy and everything will be fine. The darker truth is that cutting costs won’t solve the problem because Detroit simply does not make enough cars that consumers want to buy. Aside from trucks, only 4 cars readily come to mind when I think of desireable GM autos: the vette (low volume car); chevy malibu, Pontiac G8 and the Caddy CTS. I’ll grant that there may be one or two more, but that would still be less than one model per brand. And Chrylsler? None come to mind. Cut costs all you will, a cheaper car no one wants is still unwanted and WILL sit on the lot gathering dust.

  • avatar

    ccd1,

    If those four cars were in one showroom, along with the Silverado/Sierra, and Lambda CUV it would be the heart of a strong lineup. Add in a competitive compact, subcompact and a large luxury car and you’d have a full line that is strong across the board. The large luxury car slot could be taken by a G8 variant.

    The problem is that GM’s good products are doled out to their various brands and no one dealer channel has a strong lineup from top to bottom.

  • avatar
    Dynamic88

    Uhm, Sony, Panasonic (Matsushita), Toshiba, NEC, etc…?

    I should have said conventional TVs. They quit making those in Japan some time ago – cheaper to make them elsewhere. The quality of their cars didn’t drop.

    Yes, the Japanese do make LCD TVs. I don’t think it translates into quality autos. (Well maybe quality NAV screens)

  • avatar
    NulloModo

    Garthgmc –

    I see no reason not to pay skill tradesmen a fair wage, so for the electricians, pipefitters, machinists, and anyone working in the plants that has a skill your average man off the street could not do, they should be paid at a market rate. What the UAW has done though is increased wages far beyond market rate for a large number of workers who do nothing more than stand in one place all day and rivet on bolts or some other repetitive task. It may be physically tough work, and it may be important to building the car, but paying out $30 – $40 + an hour to someone without any formal education or training to perform unskilled labor doesn’t make sense. The foreign competition doesn’t have these costs, and they are using it to add more features or better finish to their vehicles vs ours.

    Obviously no one wants to see all of the autoworkers in the poor house, but if the only other cost effective solution is to move more and more of our production to places like Mexico and Thailand we aren’t doing American workers any favors either.

  • avatar
    Jeff Puthuff

    of course I know what is Skunk Works, and what is Phantom Works, but they mostly get funds through government for their projects

    juris, how does this relate to your argument that the US does not have skilled engineers or precision manufacturing? It doesn’t. The fact is, our military-industrial complex is highly skilled, incredibly advanced, and very expensive.

    Mentioning, as you did, the failures of a couple of projects has no bearing on the argument. All companies make mistakes. And nowhere did I compare Burt Rutan to any other company. You seem to want to introduce a red herring into the argument. Not gonna fly.

  • avatar
    garthgmc

    Nullo,
    Therein lies the problem, the percieved “no training ” of the chimps. Who says they are unskilled and the work is repetitive. I think that is your opinion rather than fact.
    I will add, I think that the job bank, furloughs and employee resorts are over the top in benefits but,but, contract negoitiations usually go like this.. GM hires a bunch of smart lawyers and then the unions got smart and hired a bunch of lawyers and they sit down and discuss so on and so forth,etc. Gm’s lawyers are usually smarter because they are on a much bigger payroll, ivy league schools etc, but as union membership increases,so do the dues and once in a while their lawyers come out on top.
    Now thrown in the threat of strike which is really the last resort when the union is outclassed at every turn. If the threat of strike is made.. why does GM not thrown out everyone on their ass and go hire some more chimps. Its not illegal to do so although strike power has been gutted and in some cases made illegal because it was beginnig to be abused in many cases. I think its because those supposed unskilled laborers are more valuable then anybody is willing to let on.
    One more bad fireman/autoworker/trained chimp analogy. I always used to say that nobody gaves two craps on a daily basis about firefighters until they had a fire in their house and was often vindicated. It is very much so w/autoworkers, I dont think about them daily, until I ordered my new GMC pickup truck, then I want the best damn, highest paid , non disgruntled trained chimp money can buy….
    Management owns about 50 percent of this mess with 30 to the idiots in Congres and the enviro supporters/lobbyists and about 20 percent to the unions.
    Also to say “no formal education” do we mean no schooling at all or college level or higher. Because I think we are starting to see communist/socialist production camp that colleges have become with the current Commander in Chief and all his ilk he has surrounded himself with. JMHO

  • avatar
    jurisb

    Jeff, your military complex devours 500bn annually. How much do you benefit from it? You drive a Grumman car? You use a Littoral boat? Maybe your kids are happy using Harris mobile phones? Or your wife enjoys General Dynamics mp3 players? There are two technologically smart investments. 1. To manufacture better goods. 2. To make scientific discoveries and breakthroughs. Military yields both. But at what price!!!!!!!!!!
    And US lacks good engineers, otherwise 52% of all engineers wouldn`t be from abroad through H1b visas!

  • avatar
    davey49

    Speaking of consumer electronics. I don’t see why TVs couldn’t be made in the US.
    IBM makes chips for PS3,XBox and Wii at a fab near me. The same fab also makes stuff for TVs and cell phones and MP3 players.
    There’s plenty of “precision manufacturing” in the US. It just isn’t stuff that everyone buys.
    jurisb- the US military isn’t there to help our manufacturing base. It’s there to kill people who are trying to kill us.
    “And US lacks good engineers, otherwise 52% of all engineers wouldn`t be from abroad through H1b visas!”
    Not sure why this is “lacking”. It could just mean that our demand for engineers is so high that foreigners find it easy to find jobs here.
    I’d guess that our lowly 48%+52% foreigners is still 5-10 times more than anywhere else.
    So what you’re really trying to say is that the world is full of good engineers but they need to come to the US to work.
    the people who believe that autoworkers are “unskilled” are people who’ve never seen the inside of a factory and very often have a “formal education”. Unfortunately, a lot of these people are in politics and in finance. There might be clashes between labor and management in the auto industry but the execs would correct you if you called floor workers “unskilled”.

  • avatar
    agenthex

    Not sure why this is “lacking”. It could just mean that our demand for engineers is so high that foreigners find it easy to find jobs here.

    Tech companies petition the gov for additional visas specifically because they supposedly can’t find qualified candidates, therefore the “lacking” because we can’t seem to educate enough of our own (at a salary that they’re willing to pay for).

    I don’t see why TVs couldn’t be made in the US.

    Most of the components that comprise electronics (mechanical bits, pcbs, assembly), are much cheaper elsewhere. Even “high tech” fabs can be built in special tax zones or deals, and staffed mostly with local labor.

    Basically any price sensitive items, which comprise most all consumer goods are more profitably made elsewhere.

    Most Americans have no idea just how cheap labor can be in developing countries. For example, a coat for $100 would only cost maybe $.50 for labor overseas versus a few dollars domestically. That’s several percent additional profit without considering other savings like facilities, etc.

  • avatar
    jurisb

    Davey49- ` US military isn’t there to help our manufacturing base. It’s there to kill people who are trying to kill us.`

    When someone is pointing a gun at your temples , what is your first reaction? You think of how to get your own gun and kill the motherfu….. or the first question in your mind is why? and Why me? And USa should ask them a question why us? not how are we going to retaliate. The solution comes from dealing with roots and reasons, not consequences.
    And demand for engineers is continuously falling with `production of engineers` falling even more dramatically. That`s where the gap is created.

    Agenthex- Most of the components that comprise electronics (mechanical bits, pcbs, assembly), are much cheaper elsewhere.That is not always true. Is it cheaper for GM to create new internal combustion engines in Germany than here in USa? Is it cheaper for Intel to design chips in Japan than here in California? Is labour in Australia so cheap that most of the engineering for the new Camaro had to be done there? It has to deal more with engineering capacity and capabilities. Otherwise what the hell are japanese companies and Philips doing with their facilities in US if it is such a labour-expensive country?

  • avatar
    agenthex

    You’re referring to higher end R&D, which is similar in places with the capability.

    Manufacturing for autos is mostly automated so labor savings are limited, and currency and tax incentives can be overriding factors.

  • avatar
    golden2husky

    So the core failure of US industries is LACK OF SKILLED ENGINEERS AND HIGH PRECISION MANUFACTURING EXPERTIZE.…

    That couldn’t be further from the truth. America designs and builds many high tech, cost of little object products. Medical equipment, high end electronics, electrical distribution/generators, robotics, aviation, etc. Where America fails is in the price sensitive arena, i.e. consumer products. And that’s because American companies, chasing max wealth for themselves, moved consumer product production abroad 30 years ago.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • RHD: When you have solar panels, charging is basically free.
  • RHD: The oil companies are making record, multi-billion dollar quarterly profits. This situation is brought about by...
  • EBFlex: “No. Your “issue with EVs” involves a single use case which is not relevant to everyone and not the...
  • EBFlex: “Congrats, enjoy the truck and ignore the sourpuss.” Huh? If anything I am showing how much I...
  • raynla: Wait…I thought Mary led Joe?

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber