Why can't U.S. auto companies compete with cars from Asian and European companies?
It seems to me that it comes down to one thing: the product. Not having the right products at the right time, mediocre execution and lack of innovation. As one who writes about and lives products and technology, I find that it's rare that cars from the Big Three automotive companies can compete effectively.
The industry says it can't compete because it costs $2,000 more to build a car that's encumbered with the extra costs of union wages and health benefits that the other car companies don't need to pay. That seems like a lame excuse. I don't hear the Japanese, Korean or European automakers complaining that they have to pay more to ship some of their cars and parts much greater distances.
And I can't fault the engineers. Those I've spoken with are as bright and creative as those in Asia and Europe. The problem is due more to management who limit what the engineers can do and who discourage risk-taking. There's a huge bureaucracy with endless layers of approval that stifles creativity. That takes a toll over the years and wears down the engineers who try to innovate. The ones that get along stay and the innovators leave.
When it comes to appearance, small things add up. For example, instrumentation, interior trim, coin and cup holders and storage compartments are cruder and not as well finished. While a Japanese or German car may add rubber bumpers or dampening to silence the little doors closing, the U.S. counterpart clinks, sounding like a cheap toy. Parts that make up the dashboard have bigger gaps and adjacent parts don't match in color or texture. Radio controls seem more confusing and the electronic displays have a lower resolution and a more crude appearance. And these are just the things that you can see.
Much of this comes from the industry's focus on removing pennies rather than adding smart touches that bring delight to the owner, and delaying improvements that benefit the customer. GM continued to make cars that required two different keys, one for the doors and another for the trunk, years after imported cars went to a single key.
Instead of this penny pinching, U.S. auto companies should have figured out by now that many of us are willing to pay more for a product that is better made and that offers special features. Yet time after time, when we see both small and large design improvements, they come from Toyota or BMW, and not from GM, Ford or Chrysler. Why would anyone buy a Chrysler product when none of their cars are recommended by Consumer Reports because of design and reliability issues?
Even when they do offer new improvements, the companies seem shy about talking about them, focusing more on abstract issues. Did you know that GM and Ford both produce hybrid cars, some based on Toyota hybrid technology, and that some Ford cars are as reliable as those from Japan?
To sell more cars our auto companies should be making sure that you do know this. This is where their advertising dollars need to be spent, not on lobbying Congress to give tax breaks so people will buy the gas guzzling models such as their super-sized SUVs and Hummers. The auto industry spends $6 billion a year in advertising, but gets little value from it.
There are some bright spots. Cadillac has excelled with some of its designs and beautifully finished interiors, but not its absurd new Escalade Hybrid that has the worst mileage of any Hybrid with a payback of 218,000 miles. And Ford was the first to offer the Microsoft Sync system that linked your phone and music player to the car. GM developed the OnStar system using a cell phone built into your car. But it never was promoted as that and there's no easy way to dial directly.
The companies need new management and a total reorganization, and thanks to Obama, they will be getting it. They need to move from inefficient bureaucracies to nimble and creative organizations, much like IBM did when it set out to invent the personal computer.
Companies should be led by product people with vision, much like Honda has been. It understands the importance of the product and the need for constant innovation and reinvention.
Customers want to have a relationship with a company they can take pride in. Can you take pride in companies that fight mileage standards and who have opposed every safety innovation from the seatbelt on?
Despite all these shortcomings, we need our automobile industry to survive. We need the infrastructure that includes the skilled workers, the subcontractors that build the seats, mold the parts and forge the engine parts. If we abandon the industry, the infrastructure will never come back.
The Shenzhen area in China has become the manufacturing center to the world for consumer products. That didn't happen by accident. The Chinese government invested and encouraged companies to locate there. It built industrial parks and provided incentives. In short, China invested for its future.
There's no reason why Detroit can't once again become the center of automotive technology and manufacturing. But it will only work with new, enlightened and entrepreneurial management, a total restructuring of the companies that reward innovation, and an entirely new business plan based on building the vehicles people want to buy, not what the companies have pushed them to take.
This change will not come by bailing out the current management teams that have had their chance and failed many times over. Their most recent proposals still show they don't get it. With the exception of the Hummer, GM's "restructuring plan" wanted to retain those brands that are the ones that guzzle the most gas and shed the higher mileage brands, Saab and Saturn. These companies need some of the best innovators in the business, they need to shed the bureaucracies and begin the long rebuilding process and they need to respect the consumer and the environment. Only then will their bailout be worth our tax dollars.
Based on Baker's column in The San Diego Transcript, December 8, 2008
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It foolishly lets things go that aren't counted in that bottom line as advantageous to record profits but which impact future profitability and performance. This is occurring in government at all levels too. I want a management theory that takes into consideration many more factors than does this years report looking good.
In the 70s when gas prices went from 25 cents a gallon to nearly 2 dollars, the management at car companies should have doubled down on research into increasing gas mileage ... instead they spent money like crazy trying to DENY that there was a problem. It is here and it is biting their a$$es.
I am so pleased that President Obama is doing what he thinks is correct rather than what is ideological pleasing to any one group or person. WE own the car companies, we can end their managements self enriching, self-aggrandizing and shortsighted plans. I say GO FOR IT. He is working for all Americans.
Harvard, for one thing, isn't teaching that. At least not in their executive education classes. Instead they teach that carefully considered hard changes are sometimes necessary to turn companies around. So obviously GM was not working by the teachings of Harvard. On the other hand, it wasn't working by those alleged business school standard, either, or it would not have engaged in lot clearing at all cost action every quarter. Those are plain foolish. To buy sales volume at the cost of per item loss is a safe way to bankrupt any company.
It's much more simple than that. GM leadership had no business acumen whatsoever. They were flying by the seams of their pants... and they were flying it right into a mountain of debt.
That is what I'd do, both stop-gap to turn around, then longer turn.
Of course that will never happen b/c Obama and the democrats would never leave the UAW’s fate at the hands of a bankruptcy judge.
Also, many foreign companies don't comply with the cumbersome CAFE standards, they just pay the fines.
Foreign car manufacturers violate the CAFE standard with cars that are not classified as light trucks (a Porsche is just too light to be classified as a truck...). If you applied the same standards for GM products that are being used for the more efficient foreign cars, GM would owe billions to the government. And in 2011 it will do just that when the exceptions for SUVs run out. Bummer.
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The auto industry has done the same thing as so many other US manufacturing industries : taken the easy route of what it says in marketing and business manuals. To be a leader youve got to be able to see in the invisible and have confidence in your vision and intuition. This has to be done by people with talent, not bean counters.
The U.S. has to move out of being a paper-shuffling economy to a productive economy like Germany. We need, for this purpose, public health care and retirement, and industrial policy.
as I take my Nissan Tttan pickup in for the seventh time since I bought it new last July (on a tow truck), I'll peruse your "quality" comments. this is the first Japanese vehicle I've had in 25 years, and it will be my last.
quality? please! all the plastics inside are spray-dyed, not color-impregrated like those dreadfully "inferior" domestics. the doors look like a spotted leopard. three of the door handles have snapped off...in less than 12,000 miles the black plastic trim on the cowl in front of the windshield is now solid white...not black. and this is a 2008 model.
in the meantime, my 2006 Dodge Ram pickup has passed 200,000 trouble free miles, and hasn't been back to the dealer since I bought it.
where were those bad textures and ill-fitting panels? oh, that was the Nissan, not the Dodge.
anyone who bothers to believe naysayers like you are truly missing out on the best vehicles by far.
I sell collector car parts for a living, and spend many days every week in wrecking yards here in Arizona. it's really interesting to see seven to ten year old Japanese cars; the interior plastics are broken into many pieces, and the seat fabrics (let's not even talk about leather) are badly ripped from sun exposure.
now let's compare that late 90's Japanese car to a mid eighties "inferior" domestic, like a 1985 Olds Cutlass. not only is the plastic interior trim uncracked and unfaded, but the upholstery looks like the day it left the factory.
i've learned over time that by and large, import owners don't have much knowledge of cars at all. they base their decisions on the small timer's bible (Consumer Reports), and PERCEIVE themselves as being more intelligent than those knuckle-dragging domestic buyers like myself. perhaps you should Google either "Toyota engine sludge" or "Toyota transmission failure" to see how your perfect cars are faring in the real world.
Nor does either even acknowledge the problems caused by their own big, cumbersome bureacracies. Any idea how many people I have to try to contact at Ford to settle a problem with shipping containers? Me either, I've lost count! This is simple stuff. We work this kind of stuff out with our own suppliers in one or two emails / calls!
Goodness! It takes weeks, sometimes months, to work thru even the simplest of problems with those two companies - it's like dealing with the Federal Government!
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