Saturday, December 13, 2008

About the Bailout

I have been following the auto bailout. Without discussing the pros or cons of the bailout, frankly I can make a convincing argument for either side, I really want to know what the companies will change TOMORROW to fix the problem.

I believe that we are the sum of all the decisions we’ve made. If you find that depressing, it’s a different discussion. If I’m right, then the auto manufactures are in their current state because of the decisions they made last year, 5 years, 10 years, 20 years ago.

Ford, Chrysler, and GM all spend huge amounts of money every year on market research. The cars they developed aren’t selling well against the competition and haven’t been for years. They’ve been spending a lot of money on manufacturing that is resulting in their customer’s perception of poor quality when compared to the competition. They spend a lot of money on negotiations with their workers yet their competition, at plants in the US, have lower labor costs.

Just for the record, I drive a Chevy 1/2 ton pick up truck, but before I’d loan any of these clowns a thin dime, I’d demand a clear statement of what they plan to do differently.

Either their focus groups were talking to the wrong people or the planners weren’t listening to the answers. Either they’ve been living in a cave or they are in denial cause somebody else's cars keep getting voted “Best Car of the Year”, readers choice, and selling better! The public’s perception of Detroit’s quality has been bad since the mid-1970s, deserved or not. The Big 3 haven’t aggressively worked to correct it.

They diluted their brands by trying to have a product from each brand in the same size/price segment. Any third year marketing student could have told them that’s a recipe for disaster. Plymouth and Dodge got so close that one became redundant and Plymouth, one of the oldest brand names, is gone.

Now they want me, through my elected officials, to “loan” them my tax dollars to keep making the same kinds of mistakes that got us here!

A good friend who is in the investment business told me that the president of GM’s job has nothing to do with building cars, it’s about raising money. Well pardon me, but NONSENSE! If he did his job building cars, he wouldn’t have to rase a bloody dime. His products would make enough profit to finance any improvements he wanted to make. If he needed bridging capital, he’d have people with cash standing in line to give it to him.

If you think of the car business as an assembly line (no, I’m not trying to be funny) and look where the process failed, it’s not with the workers building the product. It’s at the planning phase. We are building the wrong product, using the wrong methods and we have got no chance to fix it until we recognize that we are doing that because the people deciding what to build and how to build it picked wrong.

I’m not sure why they picked wrong and I’m not sure it matters at this point. Cause the cure is for the leaders to either admit they were wrong and that they can’t do it that way ever again or for the senior managers to get the heck out of the way so someone who will listen to the customers can lead.

Back when I was a very young child, my mother taught me that “I’m sorry” is an incomplete sentence. The complete sentence is “I’m sorry and I won’t do it again!”

This was originally written before the Senate rejected the proposed bail out - at least the Senate understood that if they can't articulate their ideas to the senate, then they probably don't really have a new direction.

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