Learning from Abroad

I recently re-established contact with an old friend from my time in Brazil, whose passion for cars actually exceeds my own. He was the previous owner of a red 1968 Karmann Ghia which I purchased, mentioned in a previous post. Exchanging e-mails with him reminded me of how our own industrial myopia and arrogance is a sign of the automotive times. Allow me to elaborate.

Throughout the entire current automotive crisis, I have not heard a single voice of humility. That includes the humility to admit that there are solutions in other countries which we could apply here if we could ever admit that we are wrong and they have a better way. The whole Detroit/Washington mindset seems to be that we got ourselves into this mess without your help and by goodness, we will get out of it too, using the same tools we have used with such brilliant success up until now. Am I the only one who sees this?

Ford's most modern plant in the entire world is in the Northeast of Brazil, and is a modern marvel. Different suppliers actually make the parts on the Ford factory floor and place them in the vehicle as it goes by on a conveyor. Parts transportation and warehousing costs for Ford = Zero. Admittedly this is not a Brazilian solution but Ford did implement it in Brazil. Union rules prohibit such modernity in the US, but instead of showcasing to Congress, this plant as an international solution for current cost woes, as well as what Ford can do with a relatively uneducated workforce, it is carefully hidden away in a corner of the developing world. Why? Is it because there is a hidden agenda that wants to show Congress how hard it is for the poor automakers to make cars here in the current environment, so please....give us money? GM makes some very popular vehicles in Europe. They have brought some them here, put them in their most bland brand, Saturn, marketed them as humdrum family transportation and then used this as proof that European cars don't sell so......give us some money. They brought two cheaply assembled vehicles from Australia and marketed them as sports cars (Australia - that land of thoroughbred automotive excellence, the new Germany) which flopped, and wondered why we did not sell our BMW's and jump into an Australian Pontiac.
Do you see a pattern here? Foreign solutions squashed and hidden so that we....give them the money. This is not a conspiracy theory, but a recital of facts. At best, it shows a gross ineptitude on the part of management to leverage global capabilities on anything approaching a comprehensive scale. At worse, it is an effort to get their hands on our money. Either way, shame on Detroit. I just wish that we had an alternative. If GM and Chrysler go under (I still have faith in Ford), who will pick up the juicy leftovers abroad? Where are the capital investment funds today? Oh, yes, they are in dire straits and currently "unavailable" because we were so adept at leveraging our "expertise" in mortgages on a global scale.

Chrysler and GM: The Folly Continues

The papers are still rife with stories about a possible merger between Chrysler and GM. As I have said in the past, this merger makes almost no sense from a model line up point of view, and this was confirmed by a source who recently reported that the new company would consider selling some lines off, like the Dodge Ram pick up line. Naturally. They have completely overlapping and competing line ups in this fast shrinking market.

This kind of shallow thinking is what got Detroit - and especially GM - in trouble in the first place. Firstly, Dodge has just launched a brand new (and vastly improved) lineup of Dodge Ram pick ups. The Chevy/GMC pick ups were redesigned about two years ago. But sure, sell the newly designed models.Who will buy the Dodge Ram product lineup? Not the Japanese. Toyota is still nursing a gunshot wound to the foot that it took by launching the new full size Tundra pick up amid rising gas prices and a declining economy. Nissan launched the Titan in the same segment some time ago. The Koreans have their hands full. Kia launched a full sized SUV last month (need I say more?) and Hyundai, try as it might, has trouble being seen as an upscale car maker.

The Europeans are unlikely ever to want to get into the full size pick up segment in meaningful quantities. So, I ask again: who will buy the Ram line? Indians? Maybe. Mahindra and Tata are itching for an "in" into the North American market, but Tata has already bought Land Rover and Jaguar, and will have its dance card full trying to fix these brands in the US for the near future at least.

So while selling a vehicle line sounds wonderful on paper and makes a great sound bite, it is little more than that.

GM is really in a desperation samba, looking for cash at any price and Chrysler's stash looks tempting. But the cost of integrating the two companies would eats most - if not all - of that cash in the medium term. Cerberus of course, is still the big winner if this comes off, having washed its hands of Chrysler and gained GMAC to boot.

GM needs clearer thinking and some calm. Current management seems lost and desperate, and has lost sight of the real problems, which include years of product and quality neglect and attention only to profitable lines, while failing to turn unprofitable products into winners.

Only a herculean effort by a competent management team can save GM at this point, along with a healthy bailout. As of today, it has neither.