Detroit - Motor City Blues
via: Wired
Autopia (a blog from within Wired) has an article talking on the economic downward spiral that the big three (Ford, GM and Chrysler) are facing. The article doesn’t say much as to the reason these three, former megalithic, companies are failing. It points to production cycles as a reason, saying that they are a few years behind their Japanses counterparts in terms of styling and fuel economy. I would argue that their problems are endemic to their corporate culture.
The first problem for the Big Three is that they are saddled with enormous liabilities caused by an overly greedy union, the United Auto Workers. The Big Three have agreed to numerous union demands instead of really fixing any of their employment problems. They have given away ridiculous retirement packages in leiu of wage raises. This was fine in the 60’s and 70′ s when their profits were sky-high, but as the rest of the world ate away at the Big Three’s market share, they failed to see the writing on the wall. As a result of this, just as the pension liabilities were coming due, profits were dwindling. Had they seen the writing on the wall, they would have been capable of making changes to ensure that they could remain competitive, not that they would have, but they could have.
The next major problem is more of a problem with the culture of the American auto manufacturers. These companies, for a long time, had a virtual monopoly on the market. They were able to extract enormous profits from absolute crap, the “crap” being the cars they built. They were able to make piles of cash without innovating or doing any research. Take the new Ford Mustang for instance, this is the first time in this car’s storied history that it has ever sat on a entirely new chassis. This means that all previous Mustangs were, to some extent, still rolling around on a chassis that was engineered and developed in the late 50’s. That is simply ridiculous!
The only way these companies can turn themselves around is to work as hard as possible at emulating Toyota and Honda. They need to focus on crafting quality, innovative automobiles that people will actually want to purchase. Then they can leverage their brand name recognition and the loyalty that many people (for reasons unbeknownst to me) still have for them.
