American car bail out….PREPOSTEROUS!!
November 25th, 2008, Features
There was a time that American automobile manufacturers built some of the finest cars in the world. Duesenberg, Lincoln Cadillac, Pierce Arrow, Packard - to name a few, engineered and manufactured some of the best cars the world had ever seen. “Made in
American car manufacturers quit building cars, good cars, quite some time ago; though the opportunity to do so has always been available to them.
For what-ever reason or rational, American car companies have been hell-bent on engineering and manufacturing second rate, disposable vehicles and relaying on the American public to keep them in business. “BUY AMERICAN” was the motto; a motto that the American public embraced for years.
There was a point in time however, that the American public had- had enough. They wanted more for their hard earned dollar, they wanted reliability; they wanted value, “Buy American” lost out to value and quality.
It is not as if the “Big Three” could not see this coming. But, rather than looking ahead, planning strategies and engineering competitive products; a conscious decision was made - not to. Let us repeat that - A CONCIOUS DECISION. Who has been making these decisions? We will look into that a bit later.
One would have to believe that after nearly 100 years, Ford, General Motors and Chrysler would know something, or perhaps, would have learned something about building cars; maybe they have. It is rather apparent however, that neither experience nor an understanding of what American’s want from their cars has been put to any real use what-so-ever. The out-come; inevitable- failure. U.S. car manufacturers simply turned a blind eye to what its customers wanted and needed and subsequently customers, who perhaps had even been loyal to a brand, have gone elsewhere. Who can blame them? Name an American car that in the last ten years has proven itself a worthy competitor. We can think of only two. The C5 and C6 Chevrolet Corvettes are surprisingly good cars for the money. The Ford GT40-though pricey, was a world class car; proving that it could be done. American car companies can build great cars; they simply choose not to. Regardless, it is far too late! The trust factor from the customer has been lost- it was lost some time ago and in our opinion, will never return. Think about it, what American car would you buy today? Just for the hell of it we took a look at the parking lot where our office is located this morning. We counted 36 cars. Of those 36 only 8 where American built and of those 8, 5 were large SUV’s or Pick-up trucks. Could our theory be wrong?
Can American car companies crawl from the cesspool of muck and mud that they themselves created? We don’t believe so. The reputation that U.S. automobile manufactures have - a reputation of inferior and unreliable products has been set in stone and no matter what they do from this point forward, nothing will sway the opinion of the consumer; nothing. Throwing tax payer dollars at this loosing proposition is about as useless as eating soup with a fork.
Meanwhile, Asian and European manufacturers have set the stage and the benchmarks; they simply build better cars. Cars from Asia and
Now, American automobile manufacturers want the
How does this now become the responsibility of our government? It doesn’t! A sea captain runs the ship. Should the captain make mistakes and the ship go down, so does the captain and unfortunately so does the crew. To think, for even a moment, that a government should now take responsibility for the failure of the captain to perform his duty is preposterous!
What’s next? Every business owner in the
Let’s take a look at the board of directors for General Motors for example; who sits on the board?
Percy Barnevik- AstraZeneca - Pharmaceuticals
John Bryan- Sara Lee
Armando Codina- Flagler Development group- capitol resources
George Fisher- Kodak
E. Neville Isdell- Coca Cola
Karen Katen-Pfizer
Kent Kresa Northrop Grumman
Ellen Kullman-DuPont
Philip Laskawy- Ernst & Young
Kathryn Marinello- Ceridian Corp
Eckhard Pfeiffer- Compaq Computer
G. Richard Wagoner- CEO General Motors
Car companies should be run by car people. What exactly do cakes, sodas, cameras, drugs, chemicals, accounting companies and universities have in common with automobiles? What exactly is it that any of these people, with the exception of Mr. Wagoner, have in common with the automotive industry?
Give us a car salesperson who has been selling cars for more than a year and we can just about assure you that they would know more about what customers want and need than anyone sitting on the board of GM. In fact, they should be the board- they could hardly do worse.
Bail them out? Hell no! Let them sink the old fashioned way- they’ve earned it.
November 25th, 2008 at 5:20 pm
Subject: A True Parable!
A Japanese company ( Toyota ) and an American company (Ford) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.
They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners, and free pens for the rower There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year’s racing team was out-sourced to India.
Sadly, The End.
Here’s something else to think about:
Ford has spent the last thirty years moving all its factories out of the US, claiming they can’t make money paying American wages.
TOYOTA has spent the last thirty years building more than a dozen plants inside theUS. The last quarter’s results:
TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.
Ford folks are still scratching their heads.
IF THIS WEREN’T TRUE, IT MIGHT BE FUNNY.
November 26th, 2008 at 8:42 am
DAMN STRAIGHT !
Bail them out? Hell no! Let them sink the old fashioned way- they’ve earned it.
Happy T-Day to all OCCE’s out there.
November 26th, 2008 at 11:28 am
I hear you loud and clear. After the ‘early retirement’ foisted on me by GM (and being perfectly OK with full and complete retirement now!), its the “as you sow, so shall you reap”. Now, the new GM Malibu IS a world class car, as are the GM light trucks. But its too little too late. Why has it taken nearly 40 years (GM hasn’t made anything interesting in all that time, and I used to be a “Chevy Guy”). Let ‘em fail.
Sent to us via email.
O.C.C.E.
November 26th, 2008 at 11:31 am
For several years now, Wall Street analysts have been telling their clients that in the not-too-distant future, Ford and General Motors will not exist as we know them.
Back in the eighties, GM had a CEO who was far-sighted enough to see this coming. Roger Smith believed GM should expand into other fields. He saw the American auto industry headed for bad times. Several reasons have been cited for this…gold-plated wage, health, and retirement plans (while foreign manufacturers operating in this country were — and are — healthy and with contracts more in tune with reality); also problematic were (and are) government strictures on auto-emission standards and increasing fuel efficiency goals.
Whatever the cause, Smith could see the domestic industry on a slippery slope of failure. Under his regime, the company invested in the then-burgeoning efforts to expand satellite communications. He invested billions in Hughes Aircraft and Electronic Data Systems. The problem was his successors did not follow through, preferring the same old same old.
Employee contracts for GM workers and retirees include health insurance with no deductibles or co-pays. Wouldn’t we all love to have that? Some contracts allow people on the payroll for doing precisely no work. They have an Orwellian term for that — a “job bank.” That goes beyond the realm of mediocrity or inertia and wanders into the swamps of insanity. It is a rip-off of the shareholders, whose returns per share have diminished into the low (almost invisible) single digits.
It’s easy to take shots at the employees and their bargaining agents for this. But all they’re doing is pushing the envelope as far as they can. They want the best deal they can get, and if management is weak-willed enough to cave in, that is management’s responsibility. It is they who are charged with protecting the best interests of the company, and acquiescing to a demand so over-the-top is a rip-off of investors, big and small. The unwillingness of the GM bosses to take a strike if necessary raises the question as to whether they belong in their jobs.
It is also a rip-off of dealers who sell fewer cars because of the increased priced tag that results from the lavish pay and benefits, and it is a rip-off of those consumers who do buy the car. Sending a blank check to Detroit would top off the outrage by ripping off the taxpayers.
The sudden push on Capitol Hill to hurry up and send a taxpayer check to Detroit has little or nothing to do with the Wall Street mess. The Detroit industry was heading south long before mid-September when the financial panic hit. The tin cup scenario is a case of piling on and striking at an opportune time when people fear the worst and derive comfort in the knowledge that Washington is “doing something.”
But notice it’s Barack Obama, Nancy Pelosi, and Harry Reid who are pushing for the bailout — yesterday, if not sooner. The sooner Congress rushes into “doing something,” however, the less likely we are to give careful consideration to unintended consequences — unintended that is, for the American people — perhaps not unintended as far as some political ideologues are concerned.
Infusing Detroit with cash without a proviso that the industry restructure itself means that the companies will be back to the Washington well in a few short months. That is because doing more of the same things that got Detroit into this mess in the first place will simply produce the same disastrous result.
The fear of losing three to four million jobs in the auto and auto-related industries (including suppliers) is not easily dismissed. It is important that we have a healthy, robust American car industry. That is why we cannot keep on doing what we’ve been doing. So what do we do?
First, any restructuring of the U.S. Detroit car manufacturers should result in accountable boards of directors on the model suggested by Icahn for industry in general. Needless to say, a policy of more responsibility in the executive suite would not accommodate those executives who basically play golf all day.
A well-thought-out plan means reorganization under something resembling the board created to oversee the airlines immediately following 9/11. That entity consisted of government officials and staff people from the private sector. It also means employee contracts would be renegotiated. As soon as the job is done and the auto industry is on a certified glide path to good health, with a corporate structure in place to prevent a slide-back into old bad habits, the government overseers would disband and get out of the way.
No more contracts without a resemblance to reality. No more cronyism in the board rooms. No more cars that consumers do not want to buy. If Obama/Pelosi/Reid and company want to shove small, ineffective, uncomfortable or unsafe cars on the market, they can go out and lecture to their constituents that they’re too ignorant to shop for their automobiles. See how far they get with that.
November 26th, 2008 at 12:29 pm
Hi Guys,
Judging by the very accurate and astute observations made, this humble one can say little to add to the discussion. We continue to be “hood winked” with the current economic situation in believing there is help on the way. We pay-they stay…and the big 3 continue to produce inferior products for the American public to purchase and maintain the “Suit O ” America way.
We have lost our identity of the American way as we remember it. We are diluted and disillusioned divided country, a feel good society thinking additional government intervention will make it better. Our founding fathers would roll over in their graves if they heard that more government intervention would be the solution to our problem. Now everyone has their hand out and expect financial aide… Preposterous !
Having been in the car business since 1976, we have come a long way, however with a few exceptions, still fall short with quality control with the big 3 products. Like it or not we are in for a rough ride for years to come. Klaus is right, the successful business model is out there to follow, change the board of directors and replace them with knowledgeable car people. Happy Turkey Day to All …..Tony a2z
November 26th, 2008 at 2:39 pm
Or better yet, let the oil industry bail them out. They are the ones who have the most to loose and have recorded record profits in the last 2 years.
November 26th, 2008 at 4:24 pm
Great Idea, I think all of Americans would agree to that… they manipulated oil prices gouging everyone , especially the north east with fuel oil heating costs. Surprisingly enough they have been very quiet these days… what goes around, comes around.
December 1st, 2008 at 10:06 am
Unfortunately it is far too easy to blame the car companies, then walk away and not look at the facts. The big 3 have provided the trucks and SUV’s that 50% of the public wanted and would continue to want if the “invented” fuel crisis and Wall Street stupidity had not put our markets into chaos. As for quality, that was in the past. GM now has many models in the top ranking of JD Powers and others for quality against foreign competitors. The big 3 also has more high mileage models available to the public if people would bother to look. Fact: If the US car companies are allowed to go under for lack of 30 billion, the result will be 150 billion in unemployments benefit costs. It will also throw the country into another spiral deeper down into our financial mess. Fact: If the US car companies go under, the suppliers will also go under. These companies also supply the US based Foreign manufactureres. The result is that the Foreign manufacturers will also be out of business or have to import parts to keep manufacturing going. This is not a simple problem. We can not adopt the attitude of “throw the bums out” and expect there to be no repercussions.