It's the Products, Stupid!

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, reviews, and lives products and technology, I find it to be rare that cars from the Big Three excel in any way.

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's 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 their management limits what the engineers can do and discourages 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.

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. I just rented a Pontiac from Avis this past week and it seemed like a third world product. Ugly, uncomfortable, and an interior of conflicting and garish design elements.

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.

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.

The companies need new management and a total revamp. 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. They understand 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 seat belt 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

Shenzhen, 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. They built industrial parks and provided incentives. In short, they invested for their 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 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 that has had its chance and failed many times over. Their most recent proposals still show they don't get it. With the exception of the Hummer, GM wants 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.

Phil Baker is the author of just released book,From Concept to Consumer from FT Press.

Comments

[BobLablah]

"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."

Car companies charge destination fees to pay for transport.

[JBSpeed]

GM, in my opinion, needs to consolidate their brand structure. Hummer has to go, yes.

GMC should be the next. I really don't see the purpose of such a brand. For instance...

Chevrolet Silverado = GMC Sierra
Chevrolet Tahoe= GMC Yukon
Chevrolet Trailblazer = GMC Envoy
Chevrolet Traverse = GMC Acadia
Chevrolet Colorado = GMC Canyon
Chevrolet Express = GMC Savana

GMC's entire lineup are re-badges of Chevrolet's. What, nobody notices? It'd would be different if the GMC brand we're of exceptionally higher quality and design than their Chevrolet counterparts, but they aren't. This brand needs to go. Yes, the die-hard red-blooded fans will cry bloody murder, but times are changing. It won't be long before GMC is rendered useless anyways. So time for the axe. Spend the time and money that they use re-badging these vehicles into making smaller cars much more appealing.

[Michale32086]

HuffPost's Pick

Very well said commentary..

The Auto Industry only concentrated on the vehicles with the highest profit margin (trucks and SUVs). Only 7.4% of GM models get 30+mpg

This was a very short cited approach that they are paying for right now.

Michale.....

[Aaror]

Here is an idea, help GM shed Saturn and Saab...
Make part of the bailout a spinoff of all the subsidiary brands, Jeep, Mercury, Buick, Saturn, Saab, even Hummer. Replace the big 3 with the nimble 9, and we can have some domestic competition again. Smaller companies, more nimble, less bureaucratic, more open to changes and new ideas.
Yes, some of the companies will fail, but the ones that succeed with do so by innovating and improving.
My only worry is the pension, but hey, instead of a bunch of incremental bailouts, how about the government just takes the pensions for folks who have already retired, along with the money put aside for those people, off the car maker's books. Put the cash into the social security trust fund, and pay the promised pensions from the same fund. The companies would still have to pay pensions for current workers, but a big weight would be lifted from them in terms of bureaucracy and risk.

[KillTheMessenger]

Finally. Somebody who understands the problem and focuses on the disease rather than its symptoms.

Thank you!