The Big Three Car Manufacturers are obviously out of touch with their consumers. After watching a prolonged and painful slide of their stock prices coupled with poor financial results that pre-date this recession, they should know by now that Americans don’t necessarily buy American. Americans buy what they perceive to be the best at a given budget. Holding on to the old flag waving appeal of "Buy American" that has kept them from utter failure for much of their history no longer works the way that it has. It has been many years now since Wal-Mart has abandoned the old tagline of “Made in America” after discovering that manufacturing in other countries meet or exceed the quality expectations of the American consumer. The one and only way to turn the tide is to produce the very best using the same benchmarks that their competitors use – price, quality, cost of maintenance, cost of operation and aesthetic appeal.
To advance the argument of Detroit’s detractors, we’ve now learned that there is nothing wrong with the American autoworker. Some of the best manufacturing in the world is now being done in the USA, albeit under foreign brands such as Toyota, Honda, Hyundai, BMW and Mercedes-Benz. The business of going to Capitol Hill and asking for bailout money will not save their company. What management should do is get the union bosses in a room, lock the door and tell them nobody is leaving until a fair agreement is reached. The life of their respective companies are at stake and together with that are the livelihood of all the employees – management and labor. If an agreement is not reached, it wouldn’t be inappropriate at all if the Big Three were to close down and re-emerge as a new entity, this time unimpeded by all the badly negotiated agreements that have conceded the company to their competition. The word we are looking for is “compromise”. The companies need to be more profitable.
If that could not be done, an amalgamated company may be the next best option. This is nothing new. In 1932, while in the throes of the Depression, four companies in Germany joined forces to be called Auto Union, which eventually morphed into the present day Audi. It is true that national interest considerations demand that America retain a manufacturing capacity in the event of a war. Toyota, Honda, Hyundai, BMW and Mercedes Benz that all employ American workers can meet this capacity. In the event of an outbreak of hostilities against Japan, South Korea or Germany all these factories will certainly be confiscated anyway. That is why the argument that we need the Big Three so we have the capacity is devoid of reason. If the enemy is a country other than the three nations just mentioned, the services of any of these manufacturers could be employed at a fair price. Based on the quality of the finished products rolling out of those factories, we are probably assured that the military will get superior products to protect our liberties with.
It may not be obvious but being recipients of taxpayer money will have dire consequences. There are pitfalls and unforeseen landmines when you have governments participate in the day-to-day decisions of a company. Politicians have different motives and are engaged by a different set of questions that may detract from a company’s mission such as, “What do I need to do to get re-elected?” That question over-rides other relevant and complicated questions faced by company executives like ‘What markets should we be pursuing?” – the very questions that in turn create and keep jobs and make a company competitive. If the career politicians knew how to do that, they would be in the private sector.
Two legitimate solutions to this quandary are, either merge or close the company and start over. They can liquidate assets to fund retirements and pay back investors. That would probably be better than losing everything, which is certainly a possibility. These difficulties are the result of bad choices they made in the past that have come back to haunt them. In the meantime, they should consider adding cars with engines that burn both hydrogen and gasoline to their product line. It will be painful in the beginning but they will have first to market advantages that may just keep them competitive. Just as an example, ask anyone to name a hybrid car. More likely than not, the answer will be the Toyota Prius. That place in the consumer’s mind came into being because they are perceived to be the first. The lack of a competitor in that segment makes them the only player and by default the best. That is the power of the “First to Market” concept. Everyone else that follows is viewed as imitators until other differentiators come into play such as quality and price. If they execute on that, not only will they see their cars exported to and/or built in other countries but we’ll also see barrels of Hydrogen with “Made in the USA” stickers on it shipped around the globe.
It’s time for the Detroit Boys to get with the program.
To advance the argument of Detroit’s detractors, we’ve now learned that there is nothing wrong with the American autoworker. Some of the best manufacturing in the world is now being done in the USA, albeit under foreign brands such as Toyota, Honda, Hyundai, BMW and Mercedes-Benz. The business of going to Capitol Hill and asking for bailout money will not save their company. What management should do is get the union bosses in a room, lock the door and tell them nobody is leaving until a fair agreement is reached. The life of their respective companies are at stake and together with that are the livelihood of all the employees – management and labor. If an agreement is not reached, it wouldn’t be inappropriate at all if the Big Three were to close down and re-emerge as a new entity, this time unimpeded by all the badly negotiated agreements that have conceded the company to their competition. The word we are looking for is “compromise”. The companies need to be more profitable.
If that could not be done, an amalgamated company may be the next best option. This is nothing new. In 1932, while in the throes of the Depression, four companies in Germany joined forces to be called Auto Union, which eventually morphed into the present day Audi. It is true that national interest considerations demand that America retain a manufacturing capacity in the event of a war. Toyota, Honda, Hyundai, BMW and Mercedes Benz that all employ American workers can meet this capacity. In the event of an outbreak of hostilities against Japan, South Korea or Germany all these factories will certainly be confiscated anyway. That is why the argument that we need the Big Three so we have the capacity is devoid of reason. If the enemy is a country other than the three nations just mentioned, the services of any of these manufacturers could be employed at a fair price. Based on the quality of the finished products rolling out of those factories, we are probably assured that the military will get superior products to protect our liberties with.
It may not be obvious but being recipients of taxpayer money will have dire consequences. There are pitfalls and unforeseen landmines when you have governments participate in the day-to-day decisions of a company. Politicians have different motives and are engaged by a different set of questions that may detract from a company’s mission such as, “What do I need to do to get re-elected?” That question over-rides other relevant and complicated questions faced by company executives like ‘What markets should we be pursuing?” – the very questions that in turn create and keep jobs and make a company competitive. If the career politicians knew how to do that, they would be in the private sector.
Two legitimate solutions to this quandary are, either merge or close the company and start over. They can liquidate assets to fund retirements and pay back investors. That would probably be better than losing everything, which is certainly a possibility. These difficulties are the result of bad choices they made in the past that have come back to haunt them. In the meantime, they should consider adding cars with engines that burn both hydrogen and gasoline to their product line. It will be painful in the beginning but they will have first to market advantages that may just keep them competitive. Just as an example, ask anyone to name a hybrid car. More likely than not, the answer will be the Toyota Prius. That place in the consumer’s mind came into being because they are perceived to be the first. The lack of a competitor in that segment makes them the only player and by default the best. That is the power of the “First to Market” concept. Everyone else that follows is viewed as imitators until other differentiators come into play such as quality and price. If they execute on that, not only will they see their cars exported to and/or built in other countries but we’ll also see barrels of Hydrogen with “Made in the USA” stickers on it shipped around the globe.
It’s time for the Detroit Boys to get with the program.
