In December, 1956, Chrysler Corporation's president "Tex" Colbert issued the following apology to his company's dealers: "At the moment we are embarrassed -- and seriously -- by a shortage of automobiles." And embarrassed he was. Despite expanded production capacity to meet expected demand for the 1957 product line of Chrysler, actual customer purchases far exceeded projections. That was Chrysler, then.
And now? On the verge of extinction, having initiated bankruptcy proceedings, a torrent of unsold inventory clogs dealership lots, while the dying company seeks to decapitate those same dealerships. In just over half a century, how did Chrysler, and the wider domestic automobile industry, traverse the road from riches to ruin? It is a complex story, far too long to be fully documented in this space. However, there are a couple of themes related to Chrysler's imminent demise that warrant reflection.
In 1957, engineers, real practitioners of the automotive art, still had a significant voice within the corporation, alongside the finance and marketing gurus. In fact, Chrysler at that time was renowned for the quality of its automotive engineering. In 1957, its hemi V-8 engines were considered among the finest mass produced powerplants in the industry. Its TorqueFlite automatic transmission was unsurpassed by any of its competitors. In 1957, Chrysler introduced torsion bar suspension on its vehicles, making them the most roadable American cars of their era. And not only in engineering was Chrysler dominant. In the late 1950s, Virgil Exner created the "Forward Look" for Chrysler, making the company's cars among the most cleanly and beautifully styled on the American road. At that time, what were then Toyota, Nissan, and Honda were technologically and stylistically light years behind the supremacy of Chrysler.
Sadly, in 2009, we observe this once proud and powerful automobile company in a state of lethargy, with the embalming fluid about to be poured over the scattered remnants of its once thriving industrial empire. When we reflect back on the forces that led to the downfall of Detroit, and especially Chrysler, we see the inverse of what occurred in Japan. As solid engineering became redundant in Detroit, largely replaced by so-called "badge engineering," Japanese firms built up the quality of their automotive engineering to a point where it ranked as world class.
When Toyota decided to create a luxury brand, Lexus, they did not merely slap a Lexus grill and some extra chrome on a jazzed-up Toyota; they invested in the most sophisticated engineering available to insure that a Lexus would be perceived by consumers as a first rate product. Chrysler, along with the other Detroit automakers, preferred to use common chassis designs and powertrains, and differentiate their brands with a different badge on the grill, and perhaps an opera window on their luxury models.
American consumers caught on, and began deserting the domestic car manufacturers in droves for the Japanese alternatives. Too late, Detroit began to recognize some of its mistakes. When the Global Economic Crisis exploded, demand destruction shrank the American automobile market by millions of units annually, at the same time that Detroit was losing market share.
Now the course of history is supposed to be reversed by, of all things, a bankruptcy filing. Is President Obama, as sincere as he is, really serious in believing that this is the path to a renaissance for Chrysler?
We are also informed that the Italian automaker, Fiat, will help to save Chrysler by offering its own automotive technology. The same Fiat that had a disastrous commercial experience in the United States, abandoning the American car market decades ago. Fiat may have excellent experience and engineering for the European car market, but to expect a merger with the Italian firm to prove more efficacious than Chrysler's previous calamitous merger with Daimler-Benz, is simply whistling Dixie in the dark.
Chrysler is headed for oblivion, and the history books. The late "Tex" Colbert must be turning in his grave, aghast that the successful industrial behemoth he once ran so successfully is left with the forlorn hope that technology imported from Fiat is the path to salvation for a company that once stood at the top of the world in engineering excellence.
This epic is more than tragic. It is a metaphor for the reasons why the U.S. economy, once the center of manufacturing for the world, is in free fall collapse.
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They can turn into power plants when parked. Imagine vehicles need no fuel and that pay for themselves - by wirelessly selling power to the local utility.
This will become a cost-competitive alternative to building new coal and nuclear power plants.
It reflects one application of new technologies that tap energy sources never before commercialized.
Scientists will be understandably skeptical until independent laboratory validation takes place.
That is on the horizon, as is production of self-powered generators - as well as demonstration devices for schools and universities.
See http://www.chavaenergy.com for more information concerning these and other revolutionary technologies.
They are inherently inexpensive and have surprising potential to accelerate rapid reversal of our economic and energy concerns.
It remains to be seen if Chrysler will look into these new possibilities. They can restore the auto industry.
That is part of the foundation of their culture
their demise. Obama just raised the mpgs standard to 27.3, what a joke. Our car industry would
be in good shape had they been allowed to manufacture cars with 45 mpgs.
Nuf Said
And you don't have to go all the way back until the 1950's to show the company's decline. Its minivans were the top of the industry until the second generation Honda Odyssey and the 2001. The Dodge Viper and Plymouth Prowler were head-turning concept-to-street cars and gthe PT Cruiser was so popular in its first year of production that there were regularly sold for three thousand dollars above sticker price. In 2000 when Chrysler engineers were really allowed to they could produce cars with great style and spirit. They could also produce clunkers like the Sebring.
If we keep buying the snake oil, we shouldn't expect things to change.
At the time of the Chrysler/Daimler merger, Chrysler was sitting in top of more than 18 billion in cash reserves. More than ample to have seen it through this downturn. The first thing Daimler did was siphon that 18 billion off to support its German operations.
They make extraordinary chairs on wheels. Isn't the new 500 pretty?
http://cache.jalopnik.com/assets/resources/2007/07/fiat_500_launch.jpg
Wall Street caused Chrysler's bankruptcy with illegal oil speculators and fraudulent toxic debts. Wall street caused high gas prices and frozen credit which is why cars stopped selling. Now that Rattner forced Chrysler into bankruptcy, car sales will be down 75%.
Another phrase for this might be: How to become a third world country in 20 years or less.
Gee, would that be like....Microsoft??? You think Vista is excellent??? And aren't they hiring mainly Indian and Chinese programmers today???
In the 1980s business schools were teaching America's future CEOs that product did not matter. Be it cupcakes, clothing or cars, the principles of making a profit were the same. So the finance guys supplanted the car guys at the Big 3. Remember, Wagoner at GM was just such a person.
In asian countries cars and their parts are engineered to function as designed, so a window regulator or trunk lock will last the life of the car. In America cars and their parts are engineered to meet specifications, regardless of how long they last or how well they function. Think about it: cars are manufactured to government motor vehicle safety standards. All cars sold here must meet that standard. So, why don't all cars have same quality?
I am not an engineer, but I believe that is something the Japenses learned by spending decades reverse engineering our vehicles to keep the good and improve the bad.
precisely. In fact they taught that management didn't need to understand the characteristics of the product nor the market. The insane idea was, and still is, that management is fungible.
And you wonder why US businesses are spinning down the drain.
That is a fairly glib way of putting it. There are all kinds of specification, and some qualitative measues cannot be quantified (I suggest you read Zen and the art of motorcycle maintenance). There are tests that help determine whether components are designed for a decent lifespan, but they cannot fully anticipate real-world usage. Often a specification can be more of a hinderance than a help. I cannot tell you how many times my designs have violated specification but performed well in real life. It's not that I wanted to violate the specification, but the specification had no idea what the component had to do. Also, every engineer has encountered specifications that are simply irrational. The way American cars are manufactured means some elements are made to simply the wrong specifications. In fact, they have been made to financial spec for a long time now.
The Japanese were really good at using the real-world to evolve their designs. Right from incorporating feedback from the assembly line to feedback from repair and maintenance, the Japanese have steadily made better and better cars. I suppose you could say they always measured their car against meaningful specifications.
Chrysler produced crap. In so many words, that's it. And the customer chose with his wallet.
We see the same thing happening today in a small-yet-huge segment of banking. The companies insist that they are "too big to fail" and fight against the "discovery" that they have already failed. But the customer already knows.
Companies, big or small, old or new, collapse in the same way and for the same reason: they forget their customers and their product.
Chrysler discovered that financial value trumps engineering value in a consumer economy. It became a car dealership and made the mistake of trying to manufacture the cars it was selling.
In short, the problem isn't customers and product, it is the perception that an economy can be based on money instead of industry.
:-)