The auto industry is undergoing profound changes as it always has since its inception. Imagine the 7,000 year history of having actual horse power replaced in just ten years by electric, steam and internal combustion engines in the early 20th century? How about the shakeout from innumerable auto manufacturers to a mere handful by the 1960’s? The move from craftsmanship to mass production, $5.00 a day pay, unionization, the Auto Pact, the introduction of emissions and safety mandates, electronics, vehicle leasing, oil embargoes and the move to smaller then much larger SUV’s and pick up trucks; you name it. We experienced global trade and world class competition from Europe, Japan, Korea and soon-to-be China for decades. Yes China pays its workers just $2 per hour at best and does not always honour intellectual property rights or accept environmental responsibility; but we have yet to feel the full effects of these issues. Long before the emergence of China, others were eating our lunch via fresh design innovations, superb quality, revolutionary assembly processes, high tech and faster adaptability to market shifts. Our domestic auto industry now matches some of these best-in-class standards. And we, the customers, have benefited immensely from this competition. But with the incessant erosion of North American market share and discount pricing the legacy costs of our traditional auto companies outstrips their ability to afford them today and tomorrow.
The so-called overseas competitors have now moved to North America and function in the 21st century not the domestics’ 20th. And today they have political clout and a loyal customer base. However all is not lost. As in the past, we can compete and indeed survive this onslaught if led correctly. Remember the original Fords, Dodge Brothers, Walter Chrysler, William Packard, Walter Reuther, Willy Durant, Alfred Sloan, Louis Chevrolet, Delorean, Iacocca, etc.? They answered the think-out-of-the-box call when the need arose. But where are the leadership names of the past 20 years? Alas they don’t exist or at least none come to mind. Have we indeed forgotten what it takes to win in this industry? Maybe.
There are some positives to be sure, but many negatives need correcting fast and must never be repeated if we are to succeed.
1. Our quality is worldclass and implementation of technology in our vehicles has been competitive.
2. There are strong pockets of success with many domestic vehicle lines
3. Our work standards and methods of operating within many of our assembly plants are a half century old and totally outdated.
4. Union and management act as untrusting adversaries not cohorts and do not share common objectives.
5. Investments are limited on projects and trends that do not forecast quick financial returns.
6. Management gorged on truck and SUV profits during the 90’s and early 2000’s and neglected their less profitable car models.
7. Some new models still exude a fear of failure and risk aversion by placing tradition and bland ahead of cutting edge and different.
8. Companies have gone for rental fleet and discount driven sales at the expense of their customers’ used vehicle residual values.
9. The people at the top, in many cases, are not automotive people. They lack the passion and instincts needed to catch the latest market trends or tastes and then act.
10. Organizations are still too hierarchical, disparate, disempowered and finance driven for breakthrough ideas to hit the showroom.
Too often Neville Chamberlain-like naivete at some companies prevails when the times call for Churchillean leadership of strength and wisdom with the capability to articulate, energize, plan, lead and execute a stop to our retreat and begin the real turn around that the domestic industry is more than capable of accomplishing.
I am not recommending collusion but I am calling for a quiet summit of key domestic auto manufacturers’ decision makers, suppliers, the UAW and the CAW at which the meeting would not be allowed to proceed unless everyone present stood up individually and spoke these words. “Our domestic auto industry is in deep crisis and without massive reform it will disappear as we know it. We must, at this summit, address paradigm changes using a clean slate and expect that nothing is sacred.”
I would define a domestic as one who has UAW or CAW representation since these labour contracts cut across all companies affected. Our overseas competitors would certainly do this, why not us? Are we up to the task? Will some legal expert say this action is not allowed? Hello out there. Is there someone, anyone in this industry who can rise up and overcome the naysayers and take the reins? The clock is ticking....
Mickey Moulder
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