Comments

"We really do have a "new economy"—and, to some extent, the faster we can get over the "old economy" the better off we'll be."

At the risk of showing my ignorance, I have to say I have a hard time getting my mind around this.

Is this to say GM/Ford will not be part of the new economy, or just not in their current structure? Can they re-tool, re-org, re-imagine to BECOME a part of the new economy?

Posted by DUST!N at March 6, 2006 12:03 PM

The "new economy" is an AND not an OR to the "old economy." As a society we are blending the two together. Even with the faster pace of change on the Internet, we humans at the bottom of it all don't make fundamental changes very often. We still need cars. We still buy them for emotional and practical reasons. We still want reliability and attractive styling. And we still vote with our checkbooks. GM has not been coming to market with the right product, as evidenced by their declining market share. So it's not about GM being "old economy." It's about GM being out of touch with their market. Be it buggy whips or broadband, ignore the market and you're doomed.

Posted by DJHowatt at March 6, 2006 12:33 PM

We don't make cars at all now in the UK. My late beloved Dad worked on the factory line for more than 25 years until 1988 in a Diesel Engine factory along with 8000 other human beings. Now there are less than 1000 working at that factory and that is probably 900 too many if truth be told. The world is changing. The Japanese cars are popular 'cos its what the customer wants.

Posted by Trevor Gay at March 6, 2006 12:38 PM

Let's be clear about these "Japanese" cars. They are made in the U.S. They are built through international supply chains that include many U.S. suppliers. Many of these vehicles are now designed in the U.S. Bill Ford was right when he said that Toyota, Honda, and Nissan could no longer be referred to as "transplants," but should be referred to as "new domestics."

Posted by Mike at March 6, 2006 1:08 PM

Mike I agree, but "they" are still kicking our behinds based on Detroit's stunning inability to figure out what the AMERICAN consumer wants. And, thank God for the jobs and facilities the Japanese have put in the USA.

Posted by tom peters at March 6, 2006 1:16 PM

The transition will be painful in human terms but this train is on the track. In 15 years, we will not be manufacturing cars in the US.

from the NY Times:
"In this obscure corner of southern China, General Motors seems to have hit on a hot new formula: $5,000 minivans that get 43 miles to the gallon in city driving. That combination of advantages has captivated Chinese buyers, propelling G.M. into the leading spot in this nascent car market."

These cars are cheaper than cheap as far as quality goes, but think cost-of-manufacture.

China purchased a very sophisticated Daimler-Chrysler plant in Brazil. They will break down the entire plant, ship it to China, and re-construct it. Thus providing a sophisticated engine manufacturing capability in China.

If we play our cards right, we will still lead in in-car telematics and services around those information systems and the wealth of data they will provide. Services such as these:

Norwich Union in the UK offers individualized auto insurance based on a GPS-enabled device that provides data based on your personal driving habits.

CNET article today about Stockholm reducing city automobile congestion 25% in one month with a road charging scheme with RFID-enabled system tracking use of congested city streets at peak hours.

Posted by Jeff at March 6, 2006 1:32 PM

The new economy is growing inside of an old, thinning wallet. If we don't replace the wallet soon, we'll lose the value of its contents.

- Antiquated environmental strategy and over-reliance on petroleum - hard battle against the strong oil lobby, especially during this presidency.

- Impractical living/working conditions for the current population (looking to almost double to 11+ Billion by 2050). Too much low density living, requiring people to scatter like ants, in every way, at every hour, in petrol/CO2/carbon monoxide death traps with popping rubber wheels on surfaces that can't handle the volume of movement and require too much maintenance. More tele-work incentives. Better, more efficient mass transport using alternative eco-energy sources. More efficient and affordable housing solutions with wood pellet/geo-thermal/solar/wind/water power instead of oil, cheaper, more efficient methods of construction. New community models needed. University-style campuses with necessary amenities on campus - campuses connected by reliable, efficient and alternative mass moving systems. Difficult to sway the oil lobby, construction industry, property developers.

- Think out of the box. Look up - exploit the riches of the sky - space. Stop running cables over and under the earth surface. Stop covering it with concrete. No more boxes/Desktop Systems approaches to life. Less is more.

The success of the new economy requires serious shifts in infrastructure, energy, transportation, spacial planning, education, and lifestyle - break the old school 9-5 rules of engagment.

Posted by Tom O'Leary at March 6, 2006 1:41 PM

Dear Tom,

GM and Ford remind me of my favorite story which goes: I was walking late one day along the hilly dirt road that runs by our property. Up ahead in a shallow ditch I see a buzzard standing erect facing the road but not moving.

As I get closer I see that it's eyes are closed and its left wing is pointing awarkardly straight up in the air. As I walk past the buzzard neither blinks or moves. Its obviously hurt, in fact its hurt real bad.

I walk up the hill about a half mile troubled by what I've just witnessed and as I turn and head back toward home I realize I can't walk past this injured creature again without doing "something."

I decide to call the local Sheriff's department for advice. Later, as darkness starts to settle in John calls and I explain what I've found.

John listens carefully and says, "Mr. Ballard, its really great you called. Most people wouldn't have called. Most people who found an injured buzzard would have either killed it or let it die.

I say, "John, I appreciate you saying that, but I called because I need your help. What should I do?"

Then Johns says, "Well, Mr. Ballard. Here's the deal. Buzzard's will throw up on you and it smells something awful. What you need to do Mr. Ballard, you either need to kill it or let it die."

Robert

P.S. The buzzard which must have been shot died soon after I called.

Posted by Robert Ballard at March 6, 2006 2:02 PM

Well boss...this one is personal. Of course the Toyota's and Honda's are made here (and in Ontario). Proximitry to the market and suppliers show this to be smart. GM is not just old economy, it is "old business"; that is, a model built on entitlement and keeping your nose clean as you climb the ranks. And regardless what the ad blitz says, quality didn't matter. That is not only on the factory floor, but in the office. Coming from UPS to GM, I was appalled by the work ethic (lack of it) and a sense that people were owed a job/career. I was raised a child of a union official, and sat on Walter Reuther's lap as a kid...but UAW...you blew it by not maintaining the craft. You represented, and saved the jobs, of many who did not deserve a job, or to carry your membership card. I don't know if you can reverse that now. Emptying the halls where jobs bank people play cards all day for full wages might be a start. And management, geez, get a clue. Your cars are freaking ugly. You obsess about cost and end up with cheap design and cheap parts. If you could once change your focus to what the market wants, and maybe even define the future market, maybe you wouldn't have to worry about costs. You are just out of touch. And that means you need to clean house. Get some youth in there from another industry. Hang garlic around your neck so you arent tempted to promote another finance guy to run the company. Go get Stempel again and let him run the show. I respect Bob Lutz, but dont fall in love with the press releases...except for the sports car, his designs have been duds. Quick, run and throw money at that kid who designed the Chrsyler 300C and the Magnum...

You had to get me started....Look, maybe Michigan thinks they need the big three, but let us hope not. Nothing short of a total abandonment of historical business models and changeover of leadership can save GM and the UAW. And that breaks my heart...

Posted by mike neiss at March 6, 2006 4:25 PM

Oh, there goes the cost-cutting and short term strategy.

Posted by mr. cheap guy at March 6, 2006 6:20 PM

Sorry there is of course an 06 model GTO- the Australian car it is based on (the Monaro) does not have a 2006 model - GM (Holden in Australia) can not afford to keep the production line running for this car and their core sedan (the Comodore).
Another rumour to investigate is that the production of the GTO is moving to Canada - things to ponder on the global nature of the car industry...

Posted by Hank Johnston at March 6, 2006 7:48 PM

My father was a 27 year blue collar GM employee. I worked in a GM parts warehouse for 3 summers during college. What I have witnessed in over 30 years of watching GM and the other 2 is that they continue to bury their heads in the sand and then wonder what has happened around them. While they have brought quality up from the basement, they have rarely kept site of what people want and can afford. They are building cars for the minority of old-school Americans. They have rarely kept up with the modern tastes. Who wants a car clad with all that disco-era plastic trim. If the big 3 were clothing designers they would still be making leisure suits.

The other big problem is the UAW. The power of the worker went from getting a fair deal to biting the hand that feeds them. The UAW has turned them a spoiled bunch of brats that have forgotten how to work an honest day!

Posted by togo east at March 6, 2006 9:32 PM

To carry the argument a little further about "Japanese" brands and "American brands" - That's all that's left that separates them, is the brand name. Yes they are both manufactured here (actually the new Fords in Mexico). But the nationality of all of the manufacturers is considerably greyer than where cars are made.

The firms with Japanese names are managed by Americans here in America. Design is done globally - the "Japanese" companies have American design centers (with Americans doing the design). Ford and GM take many of their designs from European subsidiaries. The "Japanese" car companies' stocks are listed on public exchanges with shares purchased by American Institutional Investors on behalf of American workers. So actually, "we" are "they".

Enough of the "them" vs "us", I think that whole part of it discredits the whole issue here - that there are old dinosaurs and there are modern companies. And the latter are killing the former. Thats the story. Not "them" vs. "us"

Posted by Marc Shiman at March 7, 2006 12:52 AM

It looks like your 'Circle of Innovation' comment about "No more Generals" might be coming one step closer, Tom! The approach taken by GM Management in the face of so much evidence that they clearly were not providing American customers with what they want must rank with the blindness of Samson!

Posted by David Lee at March 7, 2006 4:35 AM

Let's not count out Americans yet on the auto business. A Philadelphia High School group of 5 students developed a hybrid car that gets 50 mpg, goes from 0 to 60 in 4 seconds and runs on soybeans.

http://www.cbsnews.com/stories/2006/02/17/eveningnews/main1329941.shtml

It took them a year, they scavenged parts, learned as they went, and did it in an after-school-hours program.

Get some venture capital behind these guys after they graduate and give the Detroit establishment a good run.

Posted by Russ N. at March 7, 2006 6:43 AM

Mike Neiss ... very nice post. (As are many of the others.) Frankly I am surprised that, and sure it's our Blog, I was not hammered for suggesting we could get along (just fine) with GM in Chapter 11, or worse.

Posted by tom peters at March 7, 2006 7:50 AM

To Trevor Gay....

You say we don't make cars in the UK anymore....

....how old economy can you be?

Sure, Rover has gone the way of the dodo, though may soon be reanimated under Chinese ownership, but BMW (Rolls Royce) Nissan, Honda, Ford (Jaguar AND Aston Martin) and VW (Bentley) all produce vehicles here. Last heard, British workers at Nissan were the most productive in the group!

But it isn't just about nailing tin together.

Our country is being used for design centres by Renault, Mercedes, VW, Ford. Our country continues to have a proud heritage of small scale, niche manufacturers such as Caterham, Westfield, Ariel, Morgan. Our country continues to be the virtual hub of motor sport excellence.

To write off our motoring industry just because we don't have a national big ticket manufacturer with their badge on the hood does a serious diservice to the innovation and excellence underway at design studios, engineering workshops and manufacturing plants spread across the country.

Ross

Posted by Ross Hall at March 7, 2006 8:26 AM

Well Tom, we NEED to learn to get along fine with GM and other fossil-vision business models in Chapter 11. To be competitive in the new global economy; we must eventually take the next step - in concept, design and implementation.

It would be far more dangerous if we waste any more time throwing coal into our out-dated business engines.

This is where governments like Ireland and Sweeden have it right. In times of change/shift, people are protected when made redundant, provided unemployment assitance and State sponsored re/cross training opportunities. I was made redundant and out of work for 12 months last year. Ireland's social support structure allowed me to not panic so much, concentrate on what needed to be done, and move on into a new field of work. In the States, unfortunately, shifts like this can literally put people/families on the streets in the middle of winter.

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There don't have to be casualties from such dynamic change if the government gets involved when they should, and stays away when they shouldn't. Perhaps it's a time when we might reconsider the supports needed to drive the radical change required in the States. We have become accustomed to live in fear in the US. And fear will inhibit us from taking crucial steps forward. Perhaps this suggests that it's not only private industry that needs to take some leaps forward, but our Government as well in support of that private industry shift to modernization.

Posted by Tom O'Leary at March 7, 2006 8:35 AM

one more point:

...our government is driven by petroleum as much as our car industry is. They MUST get the oil off of their hands if there is going to be any radical shift forward, and support rather than inhibit the push forward. But when decsision-makers are getting filthy rich from oil, inefficiency and mis-management, it's not too easy to convince them of that.

Posted by Tom O'Leary at March 7, 2006 8:52 AM

World-wide corporations make it difficult to determine how best to support USA business.

A bit guilty that I drive an Infiniti RX because it was made in Japan with Japanese precision parts - safety 1st kids on board.

Flawless so far after 3 years and styling is radical fun. Have a small GM Cad sedan though - so bravo GM hope you come back in a lighter tighter whiter profitable version.

Posted by Sean at March 7, 2006 9:50 AM

Much has been said about the importance of design and how GM designs miss the mark. I agree but not because their designs are inherently bad. I would suggest they miss the mark by millimeters. Inside & outside. Seems to me like most things in life it's always about proportions.

Posted by Robert Ballard at March 7, 2006 12:09 PM

Ooops Ross - sorry!! I take your point. We are obviously using Brit brain power to good effect -thanks for correcting me.

I like your statement ....

"Last heard, British workers at Nissan were the most productive in the group!

It really is interesting that we are now considered productive BY the Japanese. The poacher/gamekeeper roles have truly been reversed

Posted by Trevor Gay at March 7, 2006 12:37 PM

"It would be far more dangerous if we waste any more time throwing coal into our out-dated business engines." I mostly agree with this. And more or less to the point, a Harvard business history prof, fascinated with Silicon Valley, informed me that if you want to understand the times you must begin with the fact that the net-worths of Larry Page and Sergey Brin, the Google founders, is larger than the fabled Harvard University endowment! A "yo mama" moment!

Posted by tom peters at March 8, 2006 2:12 AM

Good comments on the car industry in the UK Ross.
But as we have seen this week in the context of other industries, the ownership of major companies is an important issue. At least, they think so in France,Germany, and Spain. Would that we had any British owned car manufacturers who could be targets for takeover.

Posted by Michael from UK at March 8, 2006 5:56 AM

Ross, I meant to ask if you could give the source for the comment on the productivity of UK Nissan workers (preferably with a link.

Posted by Michael from UK at March 8, 2006 8:20 AM

This is the new world that GM does not get. Article in the Wall Street Journal today, and a really small article at that - "Toyota is going to make changes at all of its North American plants to make them more efficient." Probably the most efficient manufacturing in the business, but they're not happy. How much more efficient can they get? They'll let us know, you can bet on it. Where art thou GM, Ford, etc.?

Steve

Posted by Steve USA at March 8, 2006 5:44 PM

Actually, if we are looking for a scapegoat, there's one ready and standing by - the import quotas that we've had for the past few decades did to our auto industry what quotas, subsidies, extraordinary tariffs and every other form of protection has done to every industry it has infected - in-built inefficiency, waste, and general malais to a industry that had been ultra-competitive for 50 years, and then hid the disease with false profits and the appearance of health.

I mean, how much history does a politician need to know that protectionism kills industries?

Posted by Marc Shiman at March 9, 2006 1:59 AM

Michael,

I got some help from Google, and there's a report at http://www.wmrc.com/press_release/20030708-1.pdf showing Nissan Sunderland producing 99 vehicles per person as the most efficient of all plants in Europe. get viagra no prescription

Posted by Tim Almond at March 9, 2006 5:41 PM

Why I won't buy a GM car:

I bought a 2000 Toyota Corolla in November 1999, and it's been almost scarily trouble-free. I admit to being a boring driver (point car in desired direction, set cruise control at the speed limit), and I'm a stickler for maintenance. I have a long commute, and have put 166,500 miles on the car so far. But other than consumables (tires, oil, filters, etc.), my car has needed NO repairs except for windshield dings, minor collision damage (a truck backed into me), and a brake relining job last fall.

This is my third Corolla. The first lasted 10.5 years and 110,000 miles. The second went 14 years and 245,000 miles.

My Corolla was manufactured at a Toyota plant in Kentucky; its predecessor was also manufactured in the U.S. (I forget where). The problem with GM isn't American workers, it's the company.

Posted by Paula Lozar at March 10, 2006 11:09 AM

Of course GM recently sold its stake in Subaru,
bought by Toyota of course.

Just to drive Tom's point home.

Posted by Stephen Dennis at March 11, 2006 10:54 PM