Between The Lines: Pete Mateja's Auto Industry "Myths"

People do the right thing, unless money and power is involved. From the highest paid executives to the lowest ranking newbie, money and power is a motivator. Those in positions of accountability are held to a higher standard, and post-bailout Detroit is not immune to criticism. But in an act of corporate cheerleading, Pete Mateja’s Internet flamebait at Automotive News [sub] titled “Detroit had lousy management — and other myths that need debunking” shows how the “experts” got it wrong.

“For the past year, I have…seen commentaries by industry analysts and consultants giving their opinions on all the causes of the problems and wrongdoings in today’s auto world and, in particular, the Detroit 3. Everyone has become an expert.”

Perhaps these experts prefer someone take responsibility for the systematic destruction of billions in stockholder’s equity? And maybe they’ve run about eleventy-billion tests on Detroit’s offerings since the dawn of the Pontiac Astre to the death of the Pontiac Aztek? But Mateja has an inside line to myths that need de-bunking.

“Myth No. 1: It is because of bad management. Senior executives such as Rick Wagoner, Jim Press and Tom Lasorda were not ‘bad management.’ All of these people have degrees and knew the industry.”

I know many MBAs and have one myself: those execs can indeed manage and inspire people. But coming clean about their fundamentally broken system? Not on the syllabus. They were lying to themselves: lies that grew more heinous with every 10K filing.

“Could they have done things differently if they had known the depths of the recession? Sure. But this could be said for almost any senior executive in the past 18 months.”

Short-term thinking works on Wall Street, building a reputable brand with a strong customer base takes decades. Destroying it takes a few years, maybe eighteen months when you’re hooked on GMAC’s highly-addictive smack. Those responsible for the decades-long slide into bankruptcy were caught red handed: tracked by every financial statement known to man, available to anyone with an Internet connection, understood by anyone who stayed awake in a freshman-level accounting lecture.

“Myth No. 2: The truth is the Detroit 3 and North American manufacturers listened and built vehicles that consumers wanted for more than 10 years…You can go back to 1990, when GM was the first automaker to introduce an electric car — the Impact. This is bad management? To build what your customers want?”

Detroit puts their eggs in one basket: proper Detroit Iron in land yacht or SUV form. Dude, where’s my Corolla-fighter? The EV1 isn’t an egg, it’s a zygote: not likely to earn a dollar for years. Volt redo, anyone?

So let’s talk money, bread and butter. If Detroit made a world-class compact in the Ford Pinto or Chevy Vega, choosing the relentless pursuit of product perfection, there’d be no Escort, Cavalier, Cobalt, Focus or Cruze. Which makes for another failed Detroit adage, a new name brings fresh karma. But the captain and his crew never sought atonement for past transgressions. Or if they did, it never showed outside of Bill Ford’s mass-media mea culpa back in January 2006. And to quote Jon Stewart, “look how sorry Domino’s was just for their shitty pizza!”

“Myth No. 3: Government subsidies are bad. The reality is that other countries, such as Japan and South Korea, subsidize their industry in some form. At a conference in Los Angeles, Sean McAlinden of the Center for Automotive Research said it best: ‘We’re the only country in the world that expects its auto industry to exist without some government support.’”

CAR’s incestuous relationship with the Detroit 2.5 aside, this Texan remembers the potential closure of the GM plant in Arlington, and what the Ann Richards’ era of Texas government did to keep it alive. More to the point, the American South knows the value of government gravy to court automakers. Question is, which organization deserves our taxpayer dollars? The ones with years of solid, trendable growth and a portfolio of strong performers, or those who continue to make the same mistakes with a Golden Parachute in one hand and the fate of an entire region in the other?

“Myth No. 4: Too many dealers are bad for an auto manufacturer. The rationale behind this is ‘big is better.’”

Mateja’s right, look at Bill Heard for proof. But Detroit’s “push” supply chain was (is?) a mess, and dealerships are but one cog in that failed machine. And it’s difficult to clean up with anything short of a proper Chapter 11 filing. Again, look to the top for answers. Or lack thereof.

“Myth No. 5: Unions are the real culprits because of high wage and benefit packages…now that GM and Chrysler have gone bankrupt, everyone has had to come to the table to make financial sacrifices.”

Union management enabled corporate management’s operational stupidity for years, if not decades. So it goes back to the Money, honey. Nobody’s hands are clean, this video is only one data point in how Management kept the rank and file in the dark. And today, everyone must pay: what purpose does a Union serve if it cannot reserve the right to strike?

Mateja ends by throwing the critics a bone:

“In the upcoming months, we will see whether the love affair between consumers and Toyota is over, the auto bailout money from taxpayers was a wise investment or just a postponement of the inevitable…”

We shall. And who is responsible for what the critics and staffers at the GAO point out? The automotive execs, obviously. These folks didn’t have to run to Congress with begging bowls in hand, provided they never relied on profits from their finance arm to cover their shockingly high overhead. They never needed to lie to the citizens of Michigan (and elsewhere) who trusted them. Now if only we addressed the problems of a broken system years ago.