Selling the Rescue of GM

Our American automotive industry is in deep distress, a quagmire mostly of their own creation. How could GM stay asleep at the wheel, remaining ignorant and indifferent for so long? How could Michigan politicians look the other way for so many years, all the while permitting the big three to sink further into the pit? I watched with disbelief at what I heard from Senator Carl Levin (D-MI) while watching Sunday morning's edition of NBC's Meet The Press. It was a familiar scene of political whine, wanting relief but not wanting to accept responsibility. The American consumer is not a bottomless source of revenue. They are however, smart enough to desire solutions under the right conditions.   
 
In the 1970’s, the lead-sleds produced by our domestic auto industry began competing with a new breed of cars coming from Japan. The industry ignored the challenge, seeing it as nothing more than a nuisance; after all, they were the Detroit Collective and who could possibly compete with that! Such arrogance possibly predicted their current state.

This situation did not occur overnight, rather over the course of several decades. The current effort to save the American auto industry will be a long and arduous one, an effort that will demand many concessions from all sides. There must be significant restructuring, new laws, new management and most important… a new vision. How can GM compete successfully and profitably in this new age? While there are many reasons for their failure and plenty of blame to be thrown around, there are several simple strategies that might be readily employed to get our US Auto Industry back on track, hopefully enabling their very survival. There is a great deal at stake and little time for fence straddling. Massive action must be taken before Congress agrees to loan any more money.

I submit that GM should restructure its entire manufacturing, sales and marketing strategies, investing considerable time and study of its rivals Toyota, Honda and BMW. After all, they appear to be doing things right and have been growing fiercely at a time when GM, Ford and Chrysler have been losing market share and profits. Heck, anyone can visit BMW’s state-of-the-art manufacturing facility in Greer, SC and schedule an in-depth factory tour. That is a hint for all of you GM corporate and production managers and board members: Go tour the plant, see how Brand X does it and do likewise!

Toyota, Honda and BMW build their high quality cars right here in America with American workers, proving that it certainly can be done here. They build cars that their customers want. They build cars that are appropriate for the times, employing the right combinations of efficiency, ergonomics, green awareness, technical prowess, performance features, aesthetics and ride quality. They do it however, with a completely different management approach. All of BMW’s cars found rolling down the assembly line in Greer are sold before they even leave the manufacturing plant. Now that's sales efficiency.

How many varieties of the same basic model do we really need? A Pontiac G6, Saturn Aura, Buick Lacrosse, Chevrolet Malibu and Cadillac CTS are all quite similar save details and appointments. Each has its own costly manufacturing and production requirements, supply chains, vendors, brand identification, sales channels and marketing strategies. The crazy part is that this grouping is but one of a larger number of product offerings. How many products and iterations do we really need?

Get rid of most of them! Offer a streamlined product offering like Honda, BMW and Toyota. Load them up with features that almost everyone wants as standard as Honda has done with their Accord. Eliminate all of the sub-brands and offer GM cars alone. Perhaps entry-level vehicle, a family sedan, a performance vehicle, a luxury performance vehicle and a utility/truck vehicle could round out the models offered. Make fuel efficiency, new battery and fuel technologies paramount in importance and focus.

Toyota, Honda and BMW offer high wages and great benefits to each of their non-union employees. They foster a culture of long-term employment and community involvement. People like working there. They have low turnover and absenteeism. They also have few if any costly quality issues. Their people are involved and respected. Their contribution is recognized and invaluable. While unions certainly are not solely to blame for the failures of the American auto industry, there in no doubt that they have contributed to it. There is no longer any room for weighty and oppressive union activity in the new automotive world order. If a revised, re-tooled and re-evaluated Detroit effectively models and commissions what they learn from Toyota, Honda and BMW, their employees will not need or want union representation. The new and efficient General Motors could operate without such a stranglehold placed upon them.

So…Here is a short memo to the GM board: Forget the bankruptcy option. Study these foreign competitors, quickly duplicate their manner of operations and restructure immediately. Time is of the essence. There is no time to waste. Fire all current lackluster and shortsighted managers. Assign the best team of industrial minds and decision-makers to the task, going outside of GM to find them. Obviously, if they were already part of the existing GM management team, these tough decisions would have been made long ago. Find new, aggressive talent and employ them now. Implement these sweeping changes and act immediately. Leave no stone unturned.

Then and only then proceed to ask Uncle Sam for a loan. Democrats and Republicans alike will be far more likely to approve such a measure when they are convinced that it’s not the same old Detroit asking for a handout. Sans total and immediate reform, the same volatile situation remains. Let’s fix this right and ensure this industry continues to thrive in the future. It certainly is in the best interests of all US citizens to make it so.

Soon, a new, smaller, leaner, more savvy and more efficient GM will emerge and their car sales will be flourishing again.

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Daniel Sitter
Author

Stumble It!

Comments

[Dr. Jim Anderson]

Daniel: so it's a good post, but you skipped over a couple of points. GM has done joint manufacturing with Toyota before and clearly didn't learn enough to save itself. I'm reminded of that story that a frog put on a hot plate will jump to save itself while a frog put on a cold plate won't notice the change and so won't hop to save itself. I'd actually propose that GM split into two parts: a design and marketing part and a separate company to do the manufacturing. This way you could optimize the two parts and get the best of both worlds.

- Dr. Jim Anderson
www.TheAccidentalNegotiator.com
"Learn The Secrets of Side-By-Side Negotiating To Get The Most Value Out Of Every Negotiation"

[Robyn McMaster]

Hi Dan, I laughed when I read your description of "lead sleds." Seems like I started seeing some of these when SUV's came to the fore. The ad people worked well to convince a huge number of folks that they needed these vehicles. In my mind they not only guzzle too much gas but they also lead to accidents. When they're in parking lots, you can't see around them when you back up. They block your view of stop lights. At last the three motor car companies are forced to make changes fit for 21st century needs.

[Britton Manasco]

The auto industry's present crisis is a great topic for applying the "idea sellers" concept -- what I would call "thought leadership." Unfortunately, I don't see how the Detroit automakers can get the leverage necessary to make the far-reaching changes you suggest without filing for bankruptcy. Only in Chapter 11 will they have the ability to truly reorganize and address their inherent structural problems. They can't go on competing with Asian manufacturers with the weight of excessive labor contracts and state-enforced dealer arrangements on their backs. It may not be enough, but it's probably the only chance they have. Hopefully, the taxpayer doesn't get the bill for their incompetence. The bailout package circulating through Washington these days would be like giving another bottle to an alcoholic so he can temporary settle his shakes. Not a good move -- not an idea that anyone should be selling.

Britton Manasco
Illuminating the Future

[Jeff]

GM made the cars that Americans have largely wanted, and Toyota did the same for the Japenese market. The major difference was they were paying $4 per gallon of gas while we paid $1, largly due to the government there taxing gas at $3 per gallon. Would US taxpayers stand for this then or now?
This is the only reason Toyota and Europeans made more fuel-efficient vehicles years ago. This is seen with Toyota's newest plant building the Tundra, a huge gas-guzzling SUV it designed for the US market as it seemed to exist a few years ago.
Toyota and Europe also have national health care taking care of their longer time employess back home, while here in the US the transplants do not have any retirees or health care of same to be concerned with. Once again the US government model was to let employers provide the bulk of US healthcare and government only be a back-stop.
Matching these two policies today -- $3 a gallon tax on gas to pay for national health care, would immediately and into the future automatically make the US automakers competetive and driven toward fuel efficient vehicles as Europe and Japan have been. The health care cost for all automakers, foreign and domestic, would be the same all of a sudden.
It is actually the Ameican model of employer paid health care and retirement that is collapsing. Even so GM had a plan underway that would have paid off next year had the economy not tanked due to banking schemes and manipulations of wall street and the real estate bubble. This too was largely the result of unregulated US policies toward banking.
Regardless of how you feel about US carmakers, if we all a bankruptcy here, it is likely to lead to a great depression that the trillions spent on banks was designed to avoid, and the cost to the US governement will be many times higher by ignoring this problem than the loans would be. The estimated first-tier losses for the next four years could be $600 billion from failing to act, rather than giving a $34 loan that would likely be repaid with great interest.