REPLIES TO THE CURRENT QUESTION

Our question last week was:

What does the American auto industry have to do to make a major, sustained comeback?

Here are your answers.  The name of a writer is included only if he or she actually placed a name at the end of the message.  Otherwise, we assume the writer wished anonymity and "name withheld" is inserted.

As a frequent car buyer, 12 in the last 14 years, I have given a lot of thought to this question.  Each time I have considered a different/new car, I have done my homework, test drove, compared pricing, etc.  Of those vehicles, 4 have been of US origin.  All 4 were four-wheel drive utility vehicles, two Ford pickups and two Jeep Grand Cherokees.  Each of these qualified as a special purpose vehicle in our household since we live in an area where the elements occasionally dictate what type of vehicle can be safely driven.  Quite frankly, the very first time that I found a "foreign" vehicle that provided the combination of carrying capacity, road worthiness and all weather capability that we needed, to feel safe in the winter, I jumped from gas-guzzling, unreliable, maintenance headache bandwagon to a 30mpg, diesel powered Mercedes.  Our companion passenger vehicle has been variously of Japanese or European manufacture for a long time.

So what?  In the "Detroit Iron" heydays, after WWII and into the early 70s, General Bullmoose was alive and well.  Whatever Detroit decided that people wanted, they wanted.  Or, they went without.  We all looked suspiciously at the VW beetles that a few hardy souls opted for.  The heaters didn't work, the engines required a spare, and the windshield wipers had serious issues with their role.  But, they got great gas mileage, and with a little TLC were absolutely reliable if you dressed warmly and didn't mind driving with your head out the window in a blizzard.  Early VW owners were making a statement that went totally ignored in Detroit.  They viewed their only competition to be the various British imports that shared a lot of Detroit qualities, unreliability and shoddy manufacture being the most prevalent.  Meanwhile, the Japanese were breaking out of their WWII doldrums and suddenly Datsun and Toyota started sneaking a few cars into the West coast.  They were followed a little while later by that motorcycle manufacturer, what the hell was his name?  Ah yes, Honda.  These cars all shared a common characteristic.  If you bought one, things didn't fall off of them randomly as you drove down the road.  Another lesson that Detroit ignored.

With that very abbreviated history lesson as a backdrop, the answer to today's question is pretty much self-evident.  

The American auto industry needs to lose its arrogance.  

It needs to learn from its mistakes.  

It needs to listen to its customers.

It needs to break out of its union-dominated labor agreements.

It needs to build cars that people will want to buy and that will behave as well as a Japanese car.  

It needs to quit thinking of itself as too big to be allowed to fail.

If they do all of these things there is a remote chance that they can turn things around.  Unfortunately, it may be too little too late.  Because it looks like we are about to be inundated under cars designed and manufactured by Nancy Pelosi and friends.  That will certainly fix the problem!

Don Newell

The best thing the American auto industry can do is sell itself to the Japanese and Koreans as quickly as possible.  With the stock prices depressed the acquiring companies will not have to pay a premium for decrepit companies.  With the savings they can modernize the plants, install effective production methods, and rid the companies of those obscene union contracts.  
 
With the unions out of the way, most of the productive workers will be kept, retrained in modern production methods and the American car buying public will have greater choices and better products to choose from. More workers will keep their jobs as they will now be employed by going concerns.  They will have to take a cut in pay but they are already receiving an unearned rent from bloated union contracts.  The cut will just bring them back in line with what they are truly worth.  This will be painful but not as painful as being unemployed.
 
The stockholders will have a stake in productive companies so their shares, will have a chance to increase in value.  Bond holders will breath a sigh of relief as the acquiring companies will now have the cash flow to pay off debt obligations without having to resort to picking the pocket of the American taxpayer.
 
Anything else is just keeping a brain dead patient on life support.

(name withheld)

Three giant ghosts lie within the American business world, especially for our auto industry:  Frederick W. Taylor, Max Weber, and Henri Fayol.  More than 100 years ago, these men presented ideas and beliefs that created management, that fueled management, and that drove management.
 
Unions were designed to protect the worker, non management at first, and to help the worker get a larger “piece of the pie” from the employer.  Assembly line work at the auto plants was a contest between man and “the machine” in many ways.  Who would come out on top?
 
Our governor of California (Mr. Terminator) has made millions playing the role of a super machine…looking just like a human on the outside, but a techno giant on the inside.  Pity the poor factory worker who can’t match such performance demands.
 
Foot soldiers often are referred to as “grunts” for the reason they must hump it out and carry as much as possible into battle. Years later these men pay for such determination with broken bodies, worn out joints, etc.
 
Many who worked on assembly lines suffer similar fates with their bodies.
 
However, when you view the newer factories one sees more “robots” and less humans on the assembly lines.  Now we can get both muscle and brains at controlled costs and determined production rates with superior quality.
 
Who needs people and their unions with all those demands?  Pensions?  Next target: Management!  And who says that game has not been underway for some years.  Think computer bosses.
 
Governor Arnold is smiling!  Slaves came into existence for serious reasons…and dynamic needs.  Robots are more like slaves and easier to sell as slaves than assembly line workers!
 
When the auto industry sells brains over muscle to the American people, then they will be able to survive.  How they do this is the magic trick we all are waiting to see.  
 
Blame both management and union leadership.  Problem is, each became happy with their roles, neither willing to look that far into the future.  Both groups enjoyed walking around with “big cigars” for decades!  
 
A razing of this auto landscape might be the best solution, with a replanting of new industrial systems.  
 
Enter Juran et al. for leadership here.
 
Only real problem is that these players don’t want to go quietly into the night!  Death is never that easy, especially for a narcissist. These guys love their jobs; listen to how important they feel when trying to convince us they should stay and survive!
 
Immortality has never been a part of the business world.  Life cycles seem to be a part of most things.  Drive this idea home tonight!
 
 
Robert Philips
New Mexico

1. Get rid of the focus groups and design cars with personalities.  John DeLorean, Zora Duntov, Larry Shinoda, Harley Earl, Carrol Shelby, all these men put their thumbprints on cars and they created magic.  (I will never forget my first ride in a 1968 Shelby KR500 .  From 0 to 70 was a mind warping experience that now, thirty five years later, I still recall and savor.)  
 
2.  I have mixed feelings about this, but, I think all three should go through a structured Chapter 11 bankruptcy to rid themselves of the leases, the dealer commitments and the union contracts that are bleeding the automakers dry.  My reservations comes from knowing that the Federal government will have to step in to honor the retirement commitments out there but if we don’t save the auto companies, we’re going to be doing it anyway. 
 
3.  Re-educate the American public about the quality of some of the cars out there.  It’s easy to bash the big three but Chevrolet produces some of the most technologically advanced cars out there.  The 2009 Corvette has 436 horsepower and still can get nearly 30 mpg on the highway.  The Malibu is truly a world class car and provides comfortable, safe, economical transportation for families.  These are not flash in the pans; GM, Ford & Chrysler have produced good cars for years.  I have a 1994 Corvette with 187,000 miles that still gets an average of 28.5 mpg and has never had to have any work other than routine maintenance done on the engine.  I would hate to think what it would have cost to keep a Porsche running for that long.
 
4.  Get the government out of the market.  If a fool wants to purchase a vehicle that gets 5 mpg, then let them and let them pay the price of the fuel they consume.  If you want an economy car, then buy one that has been designed for that purpose.  Unfortunately, all cars have been compromised to achieve the CAFÉ scores mandated.   
 
Robert Bush

I'm assuming that "the American auto industry" refers to GM,
Chrysler, and Ford (Big 3), and not to the foreign-based
manufacturers who seem able to build vehicles in the United States
and compete in the automobile market without difficulty. The first
thing to realize is that the Big 3 got into the position they are in
by their own actions, going back at least to the 1970's.

First: They failed to compete on the basis of quality. There were too
many cars like the Vega, the Fiero, and the Corvair that were
released to the public before they were fully engineered. The last
model years of these brands were pretty good cars, after the public
had served for several years as beta testers and the initial problems
with them had been corrected. Also, there were too many cars like
the Citation; the Ford Granada/Mercury Monarch; the Aspen/Volare that
never did get much better than half-assed; too many cars and light
trucks of all makes that failed to provide dependable, reliable
service. More and more people vowed to quit buying cars from Big 3
manufacturers, and instead bought Japanese and European brands. They
voted with their wallets.

Second: The Big 3 failed to impose any kind of discipline on the
United Auto Workers. They got into the habit of pretty much giving
the UAW whatever it asked for, adding the additional costs into their
pricing structure, since they felt they could just pass on the
increases to the customers.

Third: When their market share started slipping, GM failed to realize
that a market structure that could contain eight brands and all their
associated dealerships when GM had a 50% market share, could no
longer do so when GM had a 25% share.

As a result mainly of these failures, the Big 3 have gotten
themselves into a position in which their fixed costs are too high
for them to be competitive, even though many of the vehicles being
built now are competitive with Japanese and European brands. The
financial crisis that came to a head just before the presidential
election has only hastened their decline and their impending doom, to
the point where bankruptcy seems the only option for GM and Chrysler,
and perhaps also Ford.

To make a major, sustained comeback, the only choice: For Chrysler/
Cerberus, Chapter 7 bankruptcy. Cerberus has shown an unwillingness
to empty its deep pockets to fund Chrysler's continuing existence.
Perhaps they thought they could sell Chrysler to another manufacturer
in better times, but in these times a sale/bankruptcy/parting out
seems the only option. For GM, Chapter 11 bankruptcy and
reorganization, with debtor-in-possession financing and the ability
to shut down brands, sell excess manufacturing plants, and
renegotiate union contracts. Ford has a chance to avoid this
disruptive option; I think we'll know in a year if it can pull
through, but I do think it's made enough of the right moves that it
has a chance.

These events will send a shock wave through the entire economy of the
United States, with not just the Big 3 manufacturers but auto
component suppliers, auto dealers, wholesalers, and many other
related businesses shutting down or retrenching. But if the Congress
just gives the Big 3 money without forcing fundamental change these
problems will only at best be postponed and the money will simply be
wasted; and the taxpayers won't have anything to show for it but
maybe some Nancy Pelosi Pontiacs or Barney Frank Buicks.

Clearly I'm not sure if the Big 3 can make a major, sustained
comeback. But without the kinds of fundamental changes I've outlined,
they don't have a chance.

- Pete Madsen