Detroit Drives to DC and Dr. Deming Invents Japan
What follows are three favorite aphorisms of Detroit's carmakers, often heard at media events like new car introductions (and while "aphorism" is not a new car name, it's not half-bad, and certainly competition for these, all of which have actually been used: Mirage, Charade, Naked and Precis):
1) "Yes, we've had some problems, but we really expect our dropping market share to stabilize at some point, and we'll soon start reclaiming those consumers who want to buy American cars and trucks!"
2) "Our own American-built gas/electric hybrids and hydrogen-fueled fuel cell EVs are just around the corner!"
And my personal all-time, long-time favorite:
3) "Wait'll next year!"
Which makes the Detroit Three the Chicago Cubs of Cars.
Now they're blackmailing Congress: If you don't give us the money, they say, over six million Americans will be unemployed; it will put the big "D" in recession, as in, "Depression."
We've had enough threats from our sworn enemies; we don't need them from Detroit executives. These CEOs and their boards of directors must go, whether by car or jet or skateboard, they must go.
(Chrysler CEO Robert Nardelli arrived in style at the US Capitol, in an EV Jeep his company first displayed just a couple of weeks ago; Chrysler's only gas/electric hybrids are the Dodge Durango and Chrysler Aspen Hemi hybrids, but the Delaware factory where they are produced is closing at the end of this month).
None of these three classic fat-cats, GM's Rick Wagoner, Chrysler's Bob Nardelli and Ford's Alan Mulally, has ever shepherded any vehicle from concept to showroom; two of them spent their most-formative working years outside the auto industry.
Blaming their decades-long corporate problems on the UAW is outrageous, sleazy class warfare.
People working on the assembly lines, union member or not, can build a product only as good as its plans, and Detroit Three plans come from white-collar employees and are approved by scores of other executives before production begins.
Everyone in America, especially Detroit's three CEOs, should google the name Dr. W. Edwards Deming. He was the American statistical quality control genius who the Japanese say "created" their auto industry and helped make its products so often near-perfect.
(Dr. Deming and his wife, Lola, pictured in Japan, circa 1980).
At UCLA in the mid-1980s, I spent several hours interviewing Deming over three days, while also attending one of his already near-fabled management seminars. Deming explains what's right with Japan's carmakers, and what was and still is wrong with Detroit - an old-school "trickle down" corporate pyramid with one feared, strong personality at the top (Detroit CEOs) and those below receiving, at best, mixed, missed or misunderstood messages.
Deming was honored by Japan's Emperor with the highest prize given to any non-Japanese; in Japan, the most-coveted and well-known award for the company with the best quality practices is the Deming Prize.
It's hard to believe that in just the past two weeks these Detroit CEOs have had the many epiphanies they've reported to Congress. Next they'll be driving to Lourdes for advice.
(Left to right on couch, Mulally, Nardelli and Wagoner, then Dick Cheney, looking just smashingly evil and other-worldly in this shot and Pres'den' W. The now well-known CEOs of GM, Ford and Chrysler met with President Bush several months ago, but the current administration steadfastly refused Detroit's plea for help from the $700 billion Troubled Assets Relief Program, the TARP fund; some view the President's inaction as intending to hurt the UAW by forcing the union to make even more concessions to management).
They still take no responsibility for their car-selling problems by holding responsible, tight credit keeping customers from buying Detroit-made cars and trucks. And always, somehow, the UAW is also to blame.
If the current tight credit market is such a singular problem, why did all three companies start lobbying Washington for -- and receive written assurance for -- $25 billion well over a year ago?
Ford wants to draw on a government-provided $9 billion "line of credit," but only if and when it's needed.
If they may not even need the money, why are they asking for $2 billion more than they asked for just two weeks ago?
If the failed structures of these companies, including their executives and boards of directors, remain in place, giving or loaning our money to them is a foolish, frightening idea.
(GM CEO Rick Wagoner addresses Congress two weeks ago. As an aside, clicking on this photo turns it into a momentarily entertaining piece of op-art, and if you know what op-art is, you're either my age or older, or younger, well-read and very hip).
I say merge the three into one. One company can fully-utilize all the money from Washington or elsewhere, but there must also be tough government oversight and a board of directors made-up of the best automotive minds in the world. And hire a futurist, too.
This new, leaned-out carmaker could also build passenger rail cars for high-speed interstate trains, for low-speed local light-rail, new subway and monorail systems and the infrastructures for them all.
In Japan, I once glanced at a small metal plate on a Bullet Train, and it said, "Built by Hitachi." If Hitachi can build Bullet Trains, so can Detroit (and yes, I know, "Shinkansen" doesn't translate into "Bullet Train," so save those particular comments; but if you do know what Shinkansen means, go ahead and comment! Could be a prize in it for the first winner ... ).
Hydrogen-fueled fuel cell EV busses and vans of all sizes and types must roll off the lines, too. Many hydrogen-fueled EV busses are in daily operation throughout Southern California.
(This is a refrigerated flower bouquet dispensing machine on a side street in Narita, Japan, another fun one to click on and enjoy. We've seen iPod vending machines at the Hilton Hotel in Las Vegas, but this one is even more impressive; often, it's the little things that say a lot about a nation and its culture).
Use of solar cells, wind- and ocean- and lake- and river-generated power can all be assessed, improved and put into use.
No longer a car company but now a transportation/energy company, partially supported by government funding, as in many other countries.
Or should one -- or more -- of the three fail? In this 100th year of General Motors' existence, is it simply Detroit's time?
(This is a very rare 1948 Pontiac Silver Streak woodie wagon, caught on the I-10 outside Palm Springs, CA, and is a classic example of some of the best in American car production; apart from the incredible amount of labor which went into selecting, cutting, staining, bending and attaching all the wood parts, these cars were also rock-solid dependable. Along the line, some of that was lost by Detroit. Can they get it back? Is it worth our time, money and trouble?).
Have the Wagoner, Mulally and Nardelli Washington Follies helped form or change your opinion one way or another? Do you believe these companies can produce the cars and trucks America - and the world - truly needs? And when?
The national unemployment rate is now 6.7%. Two million Americans have lost their jobs this year, one-half million in November alone.
Can America afford -- or not afford - to save its domestic auto industry?
How should Congress vote next week?
Some photos (c) 2008 www.SteveParker.com
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And the total time they have arrived late in ONE WHOLE YEAR was 5 minutes !!!.
Its just not the machine, its the men behind the machine who make it happen.
The one thing I disagree with is the idea of one American car company.
If the problems are bureaucracy, lack of innovation, and bloated staffs, I don't see how making 1 company with all three's staff will help, not to mention the culture war, and the inability to get anything done until a new corporate culture is established. Instead, go the opposite direction, break up the big 3 into the nimble 9. Let Saturn and Saab, Buick and Hummer, Jeep and Lincoln become their own companies, and see who can make the best car. The bureaucracy that is too large for 3 companies will be more reasonable divided between 9, and there will be fewer layers between the leaders and the decisions.
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Thanks for the thoughtful comment . By making The Three into The One (sound familiar?) you'll have a single entity able to most efficiently use any money it gets from DC. Also, the top management can be selected from the best minds (and practices) in the business worldwide. Getting rid of the current management is crucial ... without that, Detroit is capable only of repeating the same mistakes they've made the past 40 years.
Splitting the companies into even smaller entities, you dilute the industry's best people and practices even more than they are now, at just three companies. Also, all those smaller companies will not have the ability (or money) to keep factories open and keep building cars.
If the single company does well, if they produce relevant products Americans want to buy, at some point in the future they can be split into two or three or even more companies, with the approval of the American people.
A great businessman and patriot used to sadly tell me, always after a few drinks, that in the 1950's W. Edwards Deming went to the Big Three with his program of Quality: First and Always. All three companies gave him a tin ear while listening to guru Peter Drucker echo in writing and speeches what knowledge and misinformation he had learned from American managers through consulting.
Having been turned down repeatedly by arrogant administrators in these parts, Deming went to Japan and became recognized as the managerial genius behind modern Japanese manufacturing.
In respect for the facts, management is far more than quality achievement and control. However, the Japanese were already competent managers in unambiguous mission and mandates, clear delegating command structure, passing down authority with responsibility and vice versa and so on. The quality variable gave them the impetus to achieve the world's most outstanding managerial performance to the present with some exceptions.
In recent decades too many American managers have modeled their performance after the despicable Wall Street speculators and fast buck operators. Such objectives lead to dishonest accounting, rapid turnover of leadership and ownership and,understandably, unstable membership. Manufacturing acumen and quality products become secondary objectives. Such performance invites organizational stagnation, decline, even destruction.
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Thanks for the comments on Deming. Sitting in his management seminar over three days at UCLA, half of the students (they were all top managers in their respective companies) left after day one, but those who sucked it up and stayed for all three days were thinking quite differently when the seminar ended.
Deming scared the hell out of them all! His first words were, to paraphrase: "Management is responsible for every single problem in American industry." Didn't make a lot of friends, but those who listened really learned (including me).
He was actually invited to Japan. He had written, with a partner, the AT&T Quality Control Handbook, a revolutionary tome, with this simple premise: The more top-quality products leave your factories, the happier the customer will be, and your company's costs of production will plummet. Deming used the example of the old Western Electric phones we all had, which could be dropped from a six story building onto concrete, and they never broke. That was his doing.
After the War, Japan went looking for the authors of that book and found Deming and brought him to Japan (I think his writing partner had died by then).
He was a giant, and, as you state, laughed out of Detroit (except for Ford, very late in Deming's life. Strange that Ford seems to be in the best shape of the three).
Two comments -
It takes less than 30 seconds to find out the literal translation of "Shinkansen".
"Shinkansen literally means "New Trunk Line", referring to the tracks, but the name is widely used inside and outside Japan to refer to the trains as well as the system as a whole."
http://en.
That 24-hour flower vending machine you found on a street in Japan is an American invention - invented by Kenneth Watkins of Raleigh, NC.
http://www
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I'll check-out the flower vending story. Sounds interesting! The Japanese have been the world's geniuses when it comes to taking an existing product which no one quite knows what to do with and turning it into a money-maker. The fabled AT&T Labs in New Jersey created the transistor, but until the Japanese (at Sony, I think) invented the transistor radio, the product had no use as far as its inventors were concerned.
You're right on the Shinkansen ... but someone beat you to it! Thanks for trying, though.
People don't buy cars anymore because they can't afford to ! It has NOTHING to do with quality or the autoworkers. Nissan and Toyota are not selling carn here at the same rate either !... get it?
Our jobs are gone..... that is why we are not buying stuff... and every day more of us are losing the jobs we do have... our "knowlege based economy" is bull ... The American worker is the best and most productive, capable of producing the highest quality products anywhere ... but "Free Trade" killed our economy... because guess what?... it's not really FREE ... WE have to play by the rules while no one else does. The greedy corporate interests went for the easy money and cheap labor leaving the American public to beg for the dregs. That is why we are where we are now. NOT BECAUSE OF POOR QUALITY. But because of greed.
So where does that leave us now? In a world of Sh*t ! The American public needs to be bailed out ... Did anyone pay attention to the aftermath of Katrina ? get ready for massive unemployment, and get ready for families without homes or food...
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Agree with you on all points (You're very smart -- you agree with me! ha ha). Most Americans expected Detroit's failure well before this current economic disaster. They still take no responsibility, still blaming all their problems on this subprime crash of two months ago. America's remaining carmakers sell less than 50% of the cars and trucks in this country --- until the late 1970s, GM alone sold more than 50% of all the vehicles in the US. Their biggest worries in the '50s and '60s were, 1) Being split into smaller pieces by a DC which saw them as a monopoly, and, 2) making enough cars to fill the public demand (aka, "shoving them down their throats").
It's a different story now, and while many of us have seen it coming for decades, Detroit still won't cop to how they've caused their own demise. Workeers can only build products as good as the plans call for. White-collar employees make the plans, the blue-collars just build them.
Demming? I worship the man. From what I've read, Ford's quality has improved to within the MoE of most imports. The problem is the perception that they have not changed (their own fault); AND that regardless of quality and cost, the problem of credit and peoples justifiable fears about the economy are keeping them from spending money on any non-essentials.
The dilemma is that average working class people, who did not make the management/quality decisions, are unemployed - OR - they make cars that sit on lots collecting dust and the company folds and they are...unem
Let me tell you, every one who gives any of these clowns bailout money should be made to read the Halberstam book about the American Car industry..
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Halberstam's book, The Reckoning, about how Nissan and Ford approached similar problems with very different solutions, should be required for everyone who loves cars and the car business.
Ironically, he was killed in a car crash when his driver, a college kid who picked him up from the airport and was taking him to a meeting, turned left in front of oncoming traffic and Halberstam's side of the car took the full force of the wreck. Don't know what kind of car they were in, whether it had head and side airbags or not.
If you worship the man you need to start a church. That people don't trust their quality is not necessarily "their fault". But if you happened to have a Ford in the 1970s, you are not likely to buy another one in your life ever again. OTOH, if you had a Honda in the 1980s... you get the hint. There is nothing the advertising types can do about that. They simply need two new generations of buyers without memories.
Ford will be all right. They won't be the largest car company anytime soon but they can make it. GM is a very different matter, though.
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Southern California, and much of the nation's southwest, especially, now has three or four generations of car-buyers who have never bought an "American car." Ask them, say, about a Buick, and they'll say something like, "Yeah, my uncle told me he had one of those once, and he had nothing but trouble with it."
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We agree on Deming. And Ford was the only one of the three to hire him.
Donald Petersen, who ran Ford in the '70s into the '80s, brought Deming on-board, as well as F1 champion Jackie Stewart, he made all his managers attend race car driving schools to learn the potential capabilities of cars, and he brought Jack Telnack, their top European designer, to the US with his new Taurus, which was revolutionary for its time. Ford has led a bit of a charmed life, and now, with their bringing many of their Euro products here and finally producing some new hybrids, they look and sound good. Just wonder how long they can really go without bailing out.
Um, Detroit's been selling hybrids for years now. Good to see you're on top of things there, Steve!
My neighbor owns a Malibu hybrid, for example.
Good job.
Malibu hybrid? That's to a real hybrid like a "Malibu Stacy" is to a real toy, right?
A UAW member under the basic assembly agreement did not even make $4.00 per hour in 1969, so the teacher's claim that autoworkers were making $20,000 to his $7600 seem a little unbelievable. I won't call him a liar, but I know a hundred people who would. An autoworker could conceivably have made $20,000 per year in 1969, if he worked 12 hour shifts, 7 days per week. As opposed to the teacher's 7 hour day for 178 days.
Are you counting time and a half for overtime?
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I've researched this, because UAW pay comes up so often as a topic, and right now, the average UAW worker, after taxes, makes $23.50 an hour. It also takes on average 20 hours for them to build a car.
Workers in Europe who build the Smart, for example, take 3.5 hours to build one of them, and they're paid $15 an hour.
Again, a worker can build a car only as good as its plans, which, like the factory floor and assembly line set-up, comes from white collar employees.
When I was just out of liberal arts college (1969) and entering graduate school, I took a job teaching in a local high school in a Chev/Fischer Body town. Of course, I was given the most difficult students. The boys would mock my choice of a college education and drop out of high school. While I started with a $7600 teaching contract, they could go to the local Chev/Fischer Body assembly division without a high school education and make more than $20,000 a year.
Now you know why we are in the predicament we find ourselves. These young men are now the UAW leadership. They simply have no clue and these companies are going the way of newspapers. This is the future of the media and the future of the car is in silicon valley, not Detroit.
"Now you know why we are in the predicament we find ourselves.
Of course. You went to liberal arts college instead of getting a real education in science or engineering.
:-)
UAW assembly wages were less than $4.00 per hour in 1969, so the $20,000 figure seems far-fetched unless the person worked 12 hour shifts, 7 days a week. Doesn't a teacher work about 7 hours a day for 178 days?
Your story is lacking 4 words. They are "once upon a time." The UAW assembly rate in 1969 was less than $4 per hour. If they made $20,000 per year they were living in that assembly plant. This is rich coming from your 7 hour per day, 178 day per year self!
Blaming labor for the problems with American cars is like court-martialing grunts for the torture at Abu Grahib.
The UAW does not design cars.
You have to blame management for the funky and inappropriate design flaws of our legacy-mobiles.
One of the great things about Deming (a statistician) is that he used numbers to get component manufacturers to work together instead of blaming each other. This was very beneficial in Japan, which still had residues of feudalism. The various CEOs were like feudal lords in bitter competition. That was not a good thing when they were supplying parts that had to fit together. (Could Deming help Wall Street?)
Exactly, thank you! From a proud member of the nurse's union where we get 15% differentials for nights and weekends..
When they get done with the UAW.... Your moderate and for only the common good, NEA union will be next followed rapidly by ACSME. I am so glad to have the continual insight of such hardworking people ( at least for 8 months a year) as teachers..
I am even more enthused by the prosperous new America powered by Google ads and $ 400 cell phones.
GM Out of Gas: Too Late for Surprises
With a combination of deep discounts, “two-fer” sales and early bird specials, retailers did better than expected—at least that’s according to the National Retail Federation (NRF). The NRF reports that more than 172 million shoppers hit stores and websites between Thanksgiving Thursday and Sunday, which is 25 million more than shopped last year.
While it’s still way too early to draw any real conclusions, Well, that all sounds rosy, but bear in mind that the NRF is a retailer’s trade association. That means they are the Cheerleaders of Shopping. And what is a cheerleader’s job? It’s to pump you up. Naturally they want to couch things in the best of terms possible even before anybody knows what the actual numbers are. Remember the mantra of herd mentality: if everyone else is doing it, it must be OK.
In my opinion, the short-term spike in sales and the release of promising numbers is just “vanity,” and that will never replace “sanity,” which is what the retailers and the markets need because it’s the actual profits that set the true price of equities in the marketplace.
So let's hold our horses. I am cautiously optimistic and will remain so until the retailers “show me the money!” And they won’t be able to do that until they release their next quarterly earnings report.
See more details at the "Big Gamble" a new great book written by Jose Roncal and Jose Abbo
Deep discounts and "two-fer," sales? sounds like they are losing money on each sale, but will make it up with volume (grin). Of course, if you sell 2 for 1, you may find that you won't sell a second to the same person later, cause, um, you gave them one free...
It is later than you think.
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The "two-fer" sales which I've read about involve a customer paying the full sticker price for one of the vehicles. With the incredible discounts the Detroit Three have on all their cars and trucks, I just don't see how they make anything at all. Some economists are saying that many of the big companies offering huge incentives will be out of business in a few months anyway, no matter what they do.
Well said. The American auto companies are acting as though they can adopt the lean operations of their competition overnight when it has taken Toyota decades of determination and hard work to get to its current level of efficiency. The auto companies also have to reconfigure the way that they do business with their suppliers, dealers, and employees. The UAW needs to be convinced that they have to loosen up the work rules that say that any one worker can be asked to do only one job. Lean operations require flexibility from everyone.
That does not happen overnight and renegotiation of contracts is best done under the watchful eye of bankruptcy judges, not the House and Senate.
Also, I am angry that Cerebus is playing chicken with Congress about Chrysler and the lives of all of their workers when it has all the capital it needs to get Chrysler through this.
At the very least we should require that Cerebus repay any loan to Chrysler instead of weaseling out of the obligation when they reach bankruptcy court six month from now.
They evidently believe that if the company goes "bankrupt" that everyone who works in their factories and showrooms will be unemployed immediately, just like that. I'm no beancounter but doesn't chapter 11 mean that your company's assets switch hands to those who hold that company's assets as collateral, which would still be considerable, and that what a new "owner" would do is eject the management and board and replace it with their own? Does anyone believe that the "new management" would now sell the factories off as scrap metal or discount realestate to settle the bill? Hard to believe smart people would do that even if the current management of the big3 suggests that's what they themselves might do. There is some allusion to buyers no longer wanting cars from a bankrupt company...
It is as simple as building a volkswagen. Just build a Point A to Point B vechile that students, minimum wage earners and fixed income folks can afford. Make it look like a small 65 mustang, have rear wheel drive, be easy and affordable to repair, energy efficient. They would sell millions. I personally will not be buying a high dollar hybrid because I can buy a hell of a lot of gas for 15 to 25 big ones.
It's not about how much you sell. It's all about how much you earn on each. Detroit's problem for years has been that any model they put out makes less than the Japanese equivalent. The best place to manufacture the kind of car you are talking about now would be China. Detroit could not compete, again. So your choice would be between making it more expensive for Americans (by taxing imports) or let Japan or China have it.
Please ask yourself why we don't make tv sets in this country any longer. That's an example of an industry which has fought long and hard and lost. Nothing could save it. The automobile industry is on the same path. The only question is how much more money we waste before we give it up.
You make a good point. I have often asked how it is that a country that has at least 2 televisions in every home does not even manufacture any. However, it was never the choice of Americans to lose those manufacturing jobs. We bought a lot fo TVs and refrigators before globalism, The simplicity of that was the circulation of money. Yes , we fed off each other but no money was made out of the thin air . Ones worth was their time and effort as compared to fellow free citizens, not the peoples of third world rat holes so that corporations can make more money.
Americans are settling for less of everything including "the American Dream". So how is that different from Communism? I mean either way we are working for the state not the betterment of us and our children.
Killer, you're missing something. For at least the last decade and a half, Detroit has been mostly making and selling light pickups and SUV's. Because they are essentially bodies bolted to a flat frame, they are the cheapest vehicles to manufacture. Detroit got fat during the 90's on the high profits they were making on those vehicles. One of the consequences of that was a decline in research and development conducted by these manufacturers. Had it continued, Detroit would be able to produce the vehicles we are now demanding.
Even as loaded as labor costs are, they don't account for more than 10 percent of the vehicle's selling price.
Stuff is manufactured in China because the Chinese work force and the environment there can be easily exploited. The difference in the cost of production isn't passed on to customers here, it's pocketed as added profit, a bonus for evil behavior, if you will.
We are in an economic depression. Fuel cells make no economic sense for cars. Chrysler should merge with GM. We need to provide aid to Detroit, the primary string attached should be the Tiny 3 should no longer export jobs. Why bail them out if they move all their jobs overseas anyway?
You're right and you're wrong.
Fuel cells are not the be-all and end-all. In Europe they sell small to mid-size, fun-to-drive cars, gas and diesel, that get significantly higher mpg than American cars or Japanese cars available in America. I've found that I spend the same amount of money per mile to drive in Europe even though gas costs four to five times as much. By all means, work on new technologies. Fine. Meanwhile, make best use of the technologies already available. Right now.
Why not let our auto manufacturers go global? The reason that Chrysler - one of the reasons that Chrysler - is in bad shape now is because, as a condition of the previous bailout, Congress required them to forsake the international market.
So don't require fuel cells. Require efficiency. And recognize that the reason that Ford is in the best shape is that Ford is the US auto company with the highest international profile.
And by the way, I'm inclined to believe that we should make only one demand concerning the day-to-day operations of the auto companies, and that has nothing to do with engineering. Congress should require that media advertising for the automotive industry tie the size of the breasts of the models in the ads to the fuel efficiency of the vehicle in the ad. The more fuel efficient, the bigger the breasts. We'll see how that affects the buying habits of the American male.
Our automakers ARE attempting to go global...l
This is the problem in American manufactur
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Love your "limited advertising" ideas! Very funny ... and true. I am surprised at the testosterone-filled TV ads from the Detroit Three, especially Ford. In the '60s, the then-Big Three agreed, after it looked like Washington was going to come down hard on pushing high performance and their sponsoring race cars, that they'd refrain from that kind of advertising, and they'd stop giving support to race teams from the factory. What they did was calm down their advertising and made a big deal out of that, and rather than supply race teams directly from their factory, all three selected dealers to handle their racing program needs, and supplied the needed parts and technology through those dealers to the teams. Detroit is great at finding ways around the rules ...
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I don't remember Chrysler having to agree to stay out of foreign narkets. If that was so, how did DC allow their being bought by Daimler?
It means "New Trunk Line."
They are retiring the "0 Series" right now, after 44 years of service. It is the first model of Shinkansen. Now that's reliability!
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Congratulations! You are the first to come up with the right name ... and you win, uh, something ... Can you shoot me your address so we can send you something from our vast array of car company media "gifts?" Send it to dc.rr.comc.rr.com ...
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