Why don't we get to the root of the problem? Usually, it's because we would rather swing at meaningless limbs than to get to the core problem and solve it.
Is anyone out there a little suspicious that the 3 largest American car makers ALL decided at the same time that they were upon the brink of total destruction? Is it not a little odd that they all came upon this enlightened state right after our liberal-infested congress handed out millions of our money to banks that had squandered funds previously? A happy coincidence? I think not.
Ford, GM, and Chrysler have known for over a decade that they were running on borrowed time. They all have tried to adjust, make deals, make wanted cars, and deal with ever-strict CAFE standard as they come down from the government. These companies are top heavy, sluggish, and crippled with a terribly greedy, insane union that refuses to make any concessions. Read: $$$ Meanwhile, Asian companies and German companies continue to be more innovative, less top heavy (in terms of numbers and salaries), more flexible, and make do without unionization. As stated in previous blogs here, the American companies will never see any true, lasting change as long as the UAW is a part of who they are. And the UAW will never give up its grip until the companies are dead and gone. A grim picture.
The big three bosses are lobbying for money to pay off UAW debts. A few hundred million here and there will not be enough to make a huge difference. Too much has to happen. It's a pipe dream. And besides, the timing can't be ignored. They didn't go to Washington because they all mystically happened upon the same circumstances at the same time. They descended upon Washington because the vultures were circling and they wanted some free money. End of story.
Whether or not they actually get any money is a truly moot point. $$$ won't solve this problem. Cutting $$$ will. Their top heavy managers will be forced to take a cut, even as their jobs are cut. The UAW will HAVE to make real concessions in benefits and pay scales, which as stated, is as likely as Barny Frank going straight. They will have to become pared down, lithe, financially adjusted businesses that desire more to be viable and competitive, than to be rich and autonomous.
Either way you cut it, harsh events and big time adjustments are coming. Even if GM goes south, some investment group will cash in, buy up tooling, plants, and some of the workers, and make a go at it. Same with Ford, and already happening at Chrysler. 100 year old businesses can, and do, go under, but another upstart waiting for their chance is always waiting in the wings. We can only hope such entrepreneurs will learn from their sluggish, over fed forebears and avoid the same mistakes.
Can we ever hope the same for Congress? Hope seems shallow up against such a thing. Prayer is a far better answer. And vocalization.
By the way, write your representatives often, and pointedly. It's their J O B to listen.
Friday, December 12, 2008
Tuesday, December 2, 2008
The Big Need for the Big Three
The automobile, as a reliable and ubiquitous form of transportation, has only been around for about 90 years. Perhaps some people have forgotten that fact. What this means is....very few car companies have been in business for most of those 90 years. Cadillac, Chevrolet, Ford, and a few small European companies make up that short list. The "Big Three" we hear about in the news these days are "established icons" in American industry because they have been in continuous business for only 90 years, or less. In the whole business world, such a run would be considered sophomore level at best.
In those 90 years, some car companies have come and gone, some have merged, and some have swapped places with world leader and world follower more than once. It is a volatile business, making cars. Fraught with myriad issues and complexities not experienced in many other manufacturing entities, building a modern automobile that can meet or exceed hundreds of expectations and legal parameters, AND sell well, is a daunting task. Preston Tucker found this out back in the 40's when he ventured to build highly modern and safe automobiles far advanced for their day. His company's failure was not innovation -- rather, it was not having the ability to keep such a progressive dream moving long enough to become stable.
Today, General Motors, Ford, and what is left of Chrysler are begging for funds (supposedly loans) to help keep them afloat. To the point, what they are really asking for is money to keep the unions at bay until they can figure out how to reconfigure themselves in the ever-changing world. We'll get to the dastardly union situation later, but now let's look at why the big three are where they are.
To be honest, life is good for everyone working at any level in the big three. Common line workers have a very good pay scale, promise of a salary if they work or are laid off, and very good working conditions. It's not rocket science either, as they say. Middle management jobs are plentiful, as these companies are very top heavy, a "mile wide and an inch deep," in corporate speak. Managers get hired and fired quickly, but again, once in the union, they get something just for one days work, the rest of their lives. And at the top, where truly huge decisions and risks are made and taken, high 6 figure, and low 7 figure salaries are not at all uncommon. So pay is not an issue. Volatility is, but that's true elsewhere.
The big three have a long history (if you consider 40+ years long) of making large cars with middlin' styling and so-so build quality, and could get away with a sluggish response to innovation and advancement for decades due mainly to the fact that they had little competition. Complacency breeds complacency, so while Tucker saw the need for disc brakes in the late 40's, Detroit didn't see that same need until the early 70's. Even then, having 4 wheel disc brakes did not become common until the 90's. European cars beat the Detroit 3 by almost 2 decades on that one. The point being made is that advances like fuel injection, overdrive transmissions, and certain safety measures were installed very late in the game, and then, at a slow dribble. Sluggish. But the big bosses at the big three are not being sluggish about asking for money!
We taught Japan and China how to make cars. They still imitate our innovation, styling, and recently, our portly size, but they do so with a much leaner and more progressive approach to the whole industry. Think in terms of a 350 lb. NFL lineman and a lean, mean 170 sprinter both approaching the task of moving a 40 lb bucket forward 1 mile. The big lineman handles the weight fine, but the distance causes him to be lethargic. The sprinter struggles with the weight, but over that one mile, he has quicker reflexes, better stamina, and ultimately, gets it there faster. Such is Japan vs. America. We are slow to move, even though we have the technology and innovation, and apparently, we are willing to let things slide until we have to act. Chevrolet still used throttle body fuel injection in their high selling trucks until 1995. That was a full 15 years after throttle body injection was forsaken for the dinosaur method of fuel delivery that it was by other car manufacturers. Why? Because Chevy was selling trucks like hot cakes, and saw "no need" to advance the technology. Besides, refitting their engines with modern (efficient and far more powerful) fuel injection would cost money. Ford does the same thing, as has much of the greater Chrysler corporation.
Lethargic, top heavy, and dubious union influences have crippled the big three. They have all been in trouble for years, even decades. Ford has been changing leadership like diapers on a baby, all to no avail. Their designers are obviously gay tree huggers and their truck-biased inventory has created a huge void in income. Without the Mustang, Ford would already be dead. Chrysler is now privately owned by a community of investors (most don't know this), having been dumped by their Mercedes-Benz partners years ago. Bad choices and few saving grace models are keeping it limping along, for awhile. GM is so large, so diversified, and so much closer to reinventing itself that it may actually make it long term, even in today's market. But GM is the epitome of the aforementioned lethargic giant, and too many people have long since dismissed them as the maker of second rate, bland vehicles that could be so much better, if only someone at GM gave a d$#@.
What the Big Three need is not a buy out, or a bail out, or even a government loan. What they need is the following:
1. Deal with the Unions: American automobile unions cost the big three an average of $2000+ per car in benefits and wages. The average for the Japanese brands? Less than $20. Just that fact alone sets the stage for a no-win situation. Maybe some real pressure will result in the union bosses finally giving some ground, but don't count on it. Small concessions may be the only hope. The union influence, and their irrational price gouging and demands, have made the big three obsolete in the world market. Keep in mind that if any of the big three go under, without a "bail out," the unions will not likely budge an inch. They will instead take every dime they can, call it a day, and move on.
There are several car plants in the south, owned by Mercedes, BMW, and Toyota, among others, that offer good jobs to Americans, but they are not unionized. Those "foreign" brands are doing rather well, and they are not forced to pay elaborate fees to unions. It is a huge deal. Either the big three subdue the unions, or the unions will bury the big three.
2. Reorganize: This is an "in-house" affair, as these huge conglomerates have swelled over the years and have gotten used to having millions of expendable income to invest as they wish. Don't be fooled -- Ford, GM and Chrysler have all spend tens of millions on "halo" cars (either super performance/impractical cars, or ultra luxury/unreachable cars) at various times, just to prove they could. Today, these companies are trotting out so-called "green cars" (ahem) that are impractical, unusable, and terrifically underdeveloped.
CEO's and upper management are accustomed to million dollar bonuses, huge offices, and pleasure trips. The car industry is a viable, tremendous help to America's economy, but they have been bloated, lethargic, and apathetic for decades. They think their name and status will carry the day, but presently, they are in Washington begging for dollars they have every intention of wasting on union obligations.
The Big Three must be forced to become the svelte three, with conservative attitudes in all they do, accountability in their finances, and a willingness to essentially start over as if they are the underdog, and willing to work hard for low pay just to compete. Aside from adopting that attitude from the top down, they are already doomed.
3. Re-Focus: Electric cars appease the worthless tree huggers among us. No one else. Just like wind power, electric cars, hydrogen powered cars, and solar cars will always be a dream of some that is infinitely impractical. The American three must bite the bullet and invest in technologies they know will work: smaller, more efficient engines, lighter vehicles, and a commitment to diesel.
Direct fuel injection is a new technology that allows the fuel spray to be introduced directly into the combustion chamber. Don't fall asleep! This technology is finally being put into production decades after it should have been, but what it means is more power with less fuel. Win-win, which is a rare thing in automobiles. GM has direct injection in just a few models. Shame. Japanese makers are putting it into effect across the board. GM knows it will cost money to retro-fit this DI technology, but it will reap great benefits for all. So why do they drag their heels? Cause they are lethargic, money grubbing idiots. Hence, the begging before a corrupt congress.
Turbo-charging and turbo diesels are incredibly effective and efficient power plant ideas, but have almost no showing in the big three because, again, they are stuck in their financial muck, and have the ability to change directions like a huge ship with a tiny rudder.
The reality that is coming is not solar, wind, or batteries -- the reality is smaller cars with small, efficient power plants that make big power, all running on OIL!
The Big Three are in trouble, have been in trouble, and will be in trouble until they get serious about survival, serious about implementing technology that increases power and efficiency, and get serious about being highly proactive in an ever changing world. Today, they are far too lazy and hazy to do anything resembling that. From the top down to the guy who sweeps the floor, wages must be cut, innovation must be lauded and implemented, and less time needs to be spent listening to people who don't know a water pump from a breast pump, and more time listening to people who want to build quality, highly evolved vehicles, and know how to do it. That is what started the big three, and that is what will save them.
NOT some Elmer Fudd-sounding congressman that sent the housing market into the dumpster, which is exactly where he lives his life.
In those 90 years, some car companies have come and gone, some have merged, and some have swapped places with world leader and world follower more than once. It is a volatile business, making cars. Fraught with myriad issues and complexities not experienced in many other manufacturing entities, building a modern automobile that can meet or exceed hundreds of expectations and legal parameters, AND sell well, is a daunting task. Preston Tucker found this out back in the 40's when he ventured to build highly modern and safe automobiles far advanced for their day. His company's failure was not innovation -- rather, it was not having the ability to keep such a progressive dream moving long enough to become stable.
Today, General Motors, Ford, and what is left of Chrysler are begging for funds (supposedly loans) to help keep them afloat. To the point, what they are really asking for is money to keep the unions at bay until they can figure out how to reconfigure themselves in the ever-changing world. We'll get to the dastardly union situation later, but now let's look at why the big three are where they are.
To be honest, life is good for everyone working at any level in the big three. Common line workers have a very good pay scale, promise of a salary if they work or are laid off, and very good working conditions. It's not rocket science either, as they say. Middle management jobs are plentiful, as these companies are very top heavy, a "mile wide and an inch deep," in corporate speak. Managers get hired and fired quickly, but again, once in the union, they get something just for one days work, the rest of their lives. And at the top, where truly huge decisions and risks are made and taken, high 6 figure, and low 7 figure salaries are not at all uncommon. So pay is not an issue. Volatility is, but that's true elsewhere.
The big three have a long history (if you consider 40+ years long) of making large cars with middlin' styling and so-so build quality, and could get away with a sluggish response to innovation and advancement for decades due mainly to the fact that they had little competition. Complacency breeds complacency, so while Tucker saw the need for disc brakes in the late 40's, Detroit didn't see that same need until the early 70's. Even then, having 4 wheel disc brakes did not become common until the 90's. European cars beat the Detroit 3 by almost 2 decades on that one. The point being made is that advances like fuel injection, overdrive transmissions, and certain safety measures were installed very late in the game, and then, at a slow dribble. Sluggish. But the big bosses at the big three are not being sluggish about asking for money!
We taught Japan and China how to make cars. They still imitate our innovation, styling, and recently, our portly size, but they do so with a much leaner and more progressive approach to the whole industry. Think in terms of a 350 lb. NFL lineman and a lean, mean 170 sprinter both approaching the task of moving a 40 lb bucket forward 1 mile. The big lineman handles the weight fine, but the distance causes him to be lethargic. The sprinter struggles with the weight, but over that one mile, he has quicker reflexes, better stamina, and ultimately, gets it there faster. Such is Japan vs. America. We are slow to move, even though we have the technology and innovation, and apparently, we are willing to let things slide until we have to act. Chevrolet still used throttle body fuel injection in their high selling trucks until 1995. That was a full 15 years after throttle body injection was forsaken for the dinosaur method of fuel delivery that it was by other car manufacturers. Why? Because Chevy was selling trucks like hot cakes, and saw "no need" to advance the technology. Besides, refitting their engines with modern (efficient and far more powerful) fuel injection would cost money. Ford does the same thing, as has much of the greater Chrysler corporation.
Lethargic, top heavy, and dubious union influences have crippled the big three. They have all been in trouble for years, even decades. Ford has been changing leadership like diapers on a baby, all to no avail. Their designers are obviously gay tree huggers and their truck-biased inventory has created a huge void in income. Without the Mustang, Ford would already be dead. Chrysler is now privately owned by a community of investors (most don't know this), having been dumped by their Mercedes-Benz partners years ago. Bad choices and few saving grace models are keeping it limping along, for awhile. GM is so large, so diversified, and so much closer to reinventing itself that it may actually make it long term, even in today's market. But GM is the epitome of the aforementioned lethargic giant, and too many people have long since dismissed them as the maker of second rate, bland vehicles that could be so much better, if only someone at GM gave a d$#@.
What the Big Three need is not a buy out, or a bail out, or even a government loan. What they need is the following:
1. Deal with the Unions: American automobile unions cost the big three an average of $2000+ per car in benefits and wages. The average for the Japanese brands? Less than $20. Just that fact alone sets the stage for a no-win situation. Maybe some real pressure will result in the union bosses finally giving some ground, but don't count on it. Small concessions may be the only hope. The union influence, and their irrational price gouging and demands, have made the big three obsolete in the world market. Keep in mind that if any of the big three go under, without a "bail out," the unions will not likely budge an inch. They will instead take every dime they can, call it a day, and move on.
There are several car plants in the south, owned by Mercedes, BMW, and Toyota, among others, that offer good jobs to Americans, but they are not unionized. Those "foreign" brands are doing rather well, and they are not forced to pay elaborate fees to unions. It is a huge deal. Either the big three subdue the unions, or the unions will bury the big three.
2. Reorganize: This is an "in-house" affair, as these huge conglomerates have swelled over the years and have gotten used to having millions of expendable income to invest as they wish. Don't be fooled -- Ford, GM and Chrysler have all spend tens of millions on "halo" cars (either super performance/impractical cars, or ultra luxury/unreachable cars) at various times, just to prove they could. Today, these companies are trotting out so-called "green cars" (ahem) that are impractical, unusable, and terrifically underdeveloped.
CEO's and upper management are accustomed to million dollar bonuses, huge offices, and pleasure trips. The car industry is a viable, tremendous help to America's economy, but they have been bloated, lethargic, and apathetic for decades. They think their name and status will carry the day, but presently, they are in Washington begging for dollars they have every intention of wasting on union obligations.
The Big Three must be forced to become the svelte three, with conservative attitudes in all they do, accountability in their finances, and a willingness to essentially start over as if they are the underdog, and willing to work hard for low pay just to compete. Aside from adopting that attitude from the top down, they are already doomed.
3. Re-Focus: Electric cars appease the worthless tree huggers among us. No one else. Just like wind power, electric cars, hydrogen powered cars, and solar cars will always be a dream of some that is infinitely impractical. The American three must bite the bullet and invest in technologies they know will work: smaller, more efficient engines, lighter vehicles, and a commitment to diesel.
Direct fuel injection is a new technology that allows the fuel spray to be introduced directly into the combustion chamber. Don't fall asleep! This technology is finally being put into production decades after it should have been, but what it means is more power with less fuel. Win-win, which is a rare thing in automobiles. GM has direct injection in just a few models. Shame. Japanese makers are putting it into effect across the board. GM knows it will cost money to retro-fit this DI technology, but it will reap great benefits for all. So why do they drag their heels? Cause they are lethargic, money grubbing idiots. Hence, the begging before a corrupt congress.
Turbo-charging and turbo diesels are incredibly effective and efficient power plant ideas, but have almost no showing in the big three because, again, they are stuck in their financial muck, and have the ability to change directions like a huge ship with a tiny rudder.
The reality that is coming is not solar, wind, or batteries -- the reality is smaller cars with small, efficient power plants that make big power, all running on OIL!
The Big Three are in trouble, have been in trouble, and will be in trouble until they get serious about survival, serious about implementing technology that increases power and efficiency, and get serious about being highly proactive in an ever changing world. Today, they are far too lazy and hazy to do anything resembling that. From the top down to the guy who sweeps the floor, wages must be cut, innovation must be lauded and implemented, and less time needs to be spent listening to people who don't know a water pump from a breast pump, and more time listening to people who want to build quality, highly evolved vehicles, and know how to do it. That is what started the big three, and that is what will save them.
NOT some Elmer Fudd-sounding congressman that sent the housing market into the dumpster, which is exactly where he lives his life.
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