Car Guys vs. Bean Counters - Bob Lutz [19]
Reeling from a tidal wave of unintended-acceleration reports, as well as Prius brake problems, one Toyota-worshipping journalist was forced to conclude that the company’s image had “lost some luster” due to having been “beset by a series of recent misfortunes.” Let me assure you: when one of America’s Big Three has a quality problem requiring a major recall, the media do not describe it as beset by misfortune.
By no means am I suggesting that the media’s reverse chauvinism (loving “foreign” more than “domestic”) was the leading cause of GM’s decline, but together with worker wages and benefits at unaffordable levels, crippling health care costs, and government regulation that caused seismic upheaval in manufacturing and engineering, it created an environment with no margin for error, where only the most astute leadership could prevail. As we have seen, and as the following will abundantly demonstrate, GM’s leaders were not up to this admittedly monumental task.
4
A Failed “Culture of Excellence”
IN THE EARLY 1990S, A WELL-KNOWN AUTOMOTIVE ANALYST TOLD ME THE following: “I just can’t understand it: When I talk to senior American car company executives and CEOs, I have the feeling that I am in the presence of superior intelligence. I get the feeling that these people are fully in command of their operation and deeply understand their business. Yet, they are losing. When I interview Japanese car company CEOs, I get the feeling, language problems aside, that they are not deeply knowledgeable, or highly intelligent, and yet they are winning! I don’t get it.” Well, I didn’t “get it” at the time either, but I think I do now.
When the Japanese car companies began their push into the United States, they were young, vibrant, small, and extremely lean. Meanwhile, the Detroit Three were a good sixty to seventy years old.Their dealerships were third-generation owned, and often the facilities reflected that. Many manufacturing facilities had been world-class in the 1950s, with benchmark levels of efficiency, but had since been exceeded by the inevitable newer and better.The Japanese were not burdened by any legacy costs—pension, health care, or any of the other fixed obligations that burden a company that has existed for more than half a century. Effectively turbocharged by a closed domestic market and a weak yen, it was easy for the Japanese to set up nonunion facilities in the southern states, using carefully handpicked workers, all young and all healthy. No pesky work rules, no pensions to worry about for at least thirty years, and very little in the way of health care costs, given the careful chronological selection process.They also got some lovely tax breaks for building new facilities.
Needless to say, even if they had been world-class in design and manufacturing (which they manifestly were not), the legacycost-burdened Detroit Three would have had a very hard time competing. Add to that the fact that the Japanese had a clean slate when it came to selecting dealers: get the best operators in the best locations, set up magnificent, modern facilities.
Faced with this environment, General Motors embarked on a series of initiatives to overcome both the perception and reality of the growing import threat. Some of these taxed the comprehension of rational minds at the time, such as the creation of Saturn, an all-new auto company, making a new kind of car with a new and more productive relationship with the UAW. Another was a mind-bogglingly bold move into China, with, of all brands, Buick. There was a series of alliances with various Japanese brands and—after GM was jilted in its quest for Jaguar—the purchase of the decidedly weird Swedish brand Saab. As we shall see, many of these initiatives were ill-advised and ultimately failed. Some were successful, but not enough.
As stated, the 1950s and ’60s marked the decline of the “product guy” at GM and the ascendancy of “professional management,