Two Toms, Two Utopias
By Tom Wilkinson
Director, GM News Relations
In “Utopia,” Sir Thomas More proposed replacing the grit and struggle of Tudor England with an island in the Atlantic free from war, poverty and lawyers.
In his column, “Start up the Risk-Takers,” Thomas Friedman proposes replacing the turmoil of today’s auto industry with clean, green start-ups.
Like Sir Thomas, Mr. Friedman dreams of creating a clean, bright future by turning away from the messy buzz of the world that is. He proposes that the federal loans being used to restructure GM and Chrysler be given instead to inventors and venture capitalists. He says his pockets are bulging with business cards from potential beneficiaries who have chatted him up at local book signings.
In reality, the auto industry is quite complex, and too integral to our daily lives to be easily and painlessly swept away by and replaced by a few start-ups.
In the U.S. alone, carmakers and suppliers directly employ more than a million people. Perhaps a wealthy scribe like Mr. Friedman is comfortable gambling with the lives and livelihoods of those people. We are not so cavalier. We think there are solutions that protect many of the workers of this industry and their families, while speeding the restructuring that must occur for the U.S.-based carmakers to survive and thrive against the global competition.
And just because we all take cars for granted doesn’t mean they are easy to make. (Just ask Tesla, the Silicon Valley-based start-up that launched several years ago and has recently produced its 200th car.) The reality is that even a basic econocar is among the most complex consumer products ever created — and one of the most reliable. Don’t believe me? Try leaving your laptop outside in the rain overnight and see how well it starts, day after day, year after year. Imagine having to reboot your car on a winding road late at night, or having your engine cut out unexpectedly because you are in a bad driving area.
Today’s vehicles represent generations of research, accumulated knowledge, and capital investment. That’s why the smart solution is to combine the people, plants and intellectual capital already in place with the fresh thinking Mr. Friedman advocates.
That is exactly what GM’s restructuring plan proposes. And it is precisely what GM is doing with projects like the electrically driven Chevy Volt. As any journalist who has spent time in Detroit with the Volt team knows, it is fueled by the very passion for innovation that Mr. Friedman finds at Barnes and Noble.
For centuries, Utopians have dreamed of letting the old world burn and building a fresh new world just over the horizon. In the case of the auto industry, which holds a key to solving the global energy puzzle, such dreams are a dangerous diversion from the hard work at hand.
Even Sir Thomas More couldn’t escape reality in the end. He lost his head when he crossed King Henry VIII. Maybe he could have used a better lawyer.
For Mr. Friedman, we propose a more civilized reality test. We renew our previous invitation for him to visit Detroit, where he can research his next column by actually meeting men and women who are doing what he advocates – creating the technologies of the future and putting them into production.
We guarantee that he will find it fascinating — and firmly rooted in the real world.
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Amen!
And even if we go along with the concept of giving money to startups, it still makes more sense to support the companies with infastructure in place for shifts in alternative propulsion. What many are failing to recognize, or blindly dismissing, is that GM has rendered itself a startup with many of the technologies on the road today. Tomorrow’s offerings prove yet again that we haven’t stopped changing today. As these technologies become mainstream, we can take advantage of the volume capabilities of established plants. We CAN hit the ground running!
It makes no sense to start a new bridge just because, through the fog of their personal ideas and agendas, some do not see the state-of-the-art bridge almost done.
Well, Tom, please don’t forget the power of good design and quality. I know you are improving on that slowly. GM and american cars have always seemed more clunky than many Japanese and German cars. There is an intangible difference that has driven import sales. Just develop a great simple lineup of cars.
I think you are right and I want you to know that many people outside Michigan are pulling for GM and know GM will emerge an even better company than before. The skeptics will be proven wrong. GOOD LUCK.
Nice post Tom. It would be nice to see Mr. Friedman come out and see for himself the realities of the auto industry. While it is nice to think that we should scratch it all and start over, Tesla and even Fisker are examples that it isn’t as easy as it seems.
A great piece. As anyone with even a modest knowledge of modern car design can tell you, today’s automobiles are far more reliable than just about any other device we use in our lives, and far superior than they were just a few years ago. Mr. Friedman won’t come to Detroit, or anywhere else outside his hyper-urban Manhattenized viewpoint. Without the D3, our ability to become more energy indpenedent is effictively dead, at least using our own capability. Furthermore, without the D3, I fervently believe American manufacturing itself will “wind down.” Without any significant industrial base, we’ll become a colossal nation of dependants, incapable of producing any sort of tangible product with value. America without the auto industry won’t be much more poised to chart its own destiny than a third world country. Does Mr. Friedman actually believe that if there was some magic technology to make cars zero emission and affordable that any auto company wouldn’t jump at the chance to rapidly develop and market it? Has he looked at how competetive the global auto industry is, how many nameplates compete?
Makes one seriously question his own capability and value.
“In reality, the auto industry is quite complex, and too integral to our daily lives to be easily and painlessly swept away by and replaced by a few start-ups.”
Wasn’t your Saturn division essentially a “start up?” And you managed to botch that.
You started Saturn with an excellent premise ~ an independent division that would use a new business model that could compete with the Japanese; that was in Tennessee where you could take advantage of lower labor cost; that would be nimble and flexible using the latest in management and design theory; that would use cutting edge engineering; and that would set a new way for U.S. auto companies to operate.
How’d it work out the last time GM tried to operate as a start-up?
“The reality is that even a basic econocar is among the most complex consumer products ever created — and one of the most reliable.”
Doesn’t have to be. Look at the Willys MB and Ford GPW jeeps designed and built in WW II. Rugged, reliable, and easy to repair with little more than a screwdriver, Crescent wrench, and a pair of pliers.
As long as he flies coach.
Tesla isn’t a good example of a true green start-up, as the buy the vehicle minus power train from Lotus.
I recall seeing Bob Lutz on 60 Minutes saying that it was Tesla’s willingness to build an innovative car in San Francisco that got GM’s attention. Why didn’t GM consider the Volt as a viable innovation before Tesla? Were there internal projects that didn’t get attention because of funding shortfalls? Did management forecast oil volatility on the lower side and believe oil would come down in the future?
Friedman’s assumptions are not entirely wrong but his conclusion is far fetched. The assumption is that GM doesn’t innovate of its own accord. It is not a market maker. Or a market leader. GM prefers to be a quick second. That’s why Friedman recommends a new American automobile revolution that is built from the ground up and based on new energy sources. Friedman also assumes that a venture capitalist approach would create more jobs across the USA rather than cluster them in the few locations that GM owns right now. Multiple companies, universities, government agencies, and non-profits would be involved whereas GM is tied to Detroit primarily.
Thank you Tom!
I can appreciate your post— and context for some false assumptions people have about the auto industry. The lean ‘2.0′ start-up style innovation paradigm that works for web companies, does not, by default, work with the auto industry. I’m glad to see you put that into context.
But at the same time, ‘…a diversion from the hard work at hand’ is not the message I want to hear from General Motors. It sounds like incrementalist thinking, and a classic systems archetype of ‘fixes that fail’.
I think we all agree that the foundation of the global auto industry (the combustion engine) has reached a point of diminishing returns. The problem isn’t the carbon footprint, but the manufacturing footprint.
Yes, Detroit is blessed with talent, but I think it does need to tap people outside the traditional auto industry community to explore new modular platforms for building cars (e.g. Autonomy) and new revenue streams (e.g. After market; telematics; software services).
My own desire is to see General Motors move out of ’safe harbour’ and start sharing with the world its vision of the future of vehicles in a post-combustion engine era.
I’d hate to see GM stay in a defensive position of the combustion engine.
I am captivated by a future based on new ways of building vehicles (Autonomy) and new software based mobility serves (OnStar; drive by wire, et al).. and know that the rest of the world would be as well if they could see a new future for the auto sector.
We all agree this is a multi-decade long transition. But I believe it’s time to share new visions of the future, not defend the past or present.
Best
Garry Golden
Editor
The Energy Roadmap.com
Related post if you allow for external URLs:
http://www.theenergyroadmap.com/futureblogger/show/1648-10-future-focused-ideas-for-obama-s-car-czar-imagining-life-after-the-combustion-engine
Never assume a “Start Up” can’t beat you at your own game. Quick to market with quality and affordability can easily take a bite out of your market share.
Remember that little car company in the 60’s called Toyota? I had a 68 Corolla as my first car that I drove to death. I sold it after I accumulated 168,000 miles on it and it still ran pretty good. I doubt any American made car can offer as much for so little.
You don’t have to be a Utopian to know the world burns in different ways.
Never forget!
It is shocking the lack of knowledge people have towards GM. Anyone who would like a good inside look at what GM has done over the last 10 years or more needs to read “Why GM Matters.” Thomas Friedman clearly has no idea about the changes GM has made and should be sent a copy ASAP. Well put response and classy that you guys are still sending out the open invite for him to see how the VOLT is progressing. I hope he visits and has a revelation instead of continuing to spew off his uninformed yet, somehow accepted popular opinion. In fact, forward the entire Obama auto team the book so they see where you guys have come from since they need to be brought up to speed and having knowledge of your history would help give them a better perspective.
I think there is certain amount of truth in both Wilkinson and Friedman’s views. It is true that a modern car is a complex machinery. Similarly, the design of a modern laptop is quite complex too.
Admittedly, Silicon Valley has done a much better job of developing new technologies and defending its turf than Detroit automakers. I am not a car historian, but I remember well that car innovations like multi-valve and efficient four cylinder engines, independent suspension, four+ speed transmission, front-wheel drives, high quality material and tight insulation widely appeared first in imported. In contrast, Silicon Valley technology companies have mostly remained ahead of their competitors by outsmarting them with a continuous wave of innovations.
In the area that is most relevant to today’s auto industry, both Detroit and Silicon Valley have failed in producing an economical battery technology. As evidence, GM has to buy its electrical car batteries from Korea. But again here, Detroit is more to blame for because it never elevated the issue (until recently, of course) to the degree that encouraged innovations.
Going back to the laptop issue, it would have been a terrible idea to design a laptop that can reboot after one night of soaking in the rain. Such a laptop would have been too bulky and too hard to use, and probably called something other than laptop!
The original VW bug proved that a small car can be high in quality, simple in design, low in cost and inexpensive to own. I regret they quit selling them.
For the next decade, that’s going to be the consumers choice- vehicles high in quality, simple, troublefree design, low in cost and cheap to own… regardless what continent they’re made on.
Over the decades I’ve noticed it seems to be a lot simpler to enlarge a small, quality car than it is to downsize a mediocre large car and end up with a quality result. For the record, I’ve owned Falcons, Corvairs, Mavericks, Vegas, Chevettes, Cavaliers and Sunbirds; also Datsuns, Toyotas, Subarus and Hondas, among a lot of others.
I recently looked at a new, heavily discounted Malibu and a 5-year-old Lexus, for roughly the same price (the Lexus is a bit more, but license and insurance will be cheaper, so it’s fairly close). I’m leaning toward the Lexus because the dealer is offering a better warranty, and because in 5 years it’s still going to be worth more than the Malibu. I’m pretty sure I’ll be able to get Lexus parts in 5 years, not so sure about GM.
Whatever you decide to build and/or sell, you really need a 10 year, 120,000 mile transferable warranty.
Mike,
Toyota wasn’t a “startup” in the 1960’s they were part of “Toyota Industries” one of Japan’s oldest and largest manufacturers of components used by companies like Mitsubishi, Fuji, etc. They were founded in 1926 and began their automotive operations in 1937.
Toyota Group consists of the following entities each including the year they were founded.
Toyota Industries Corporation (founded in 1926)
JTEKT Corporation (1935)
Toyota Motor Corporation (1937)
Toyota Auto Body, Co. Ltd. (1940)
Aichi Steel Corporation (1940)
Kanto Auto Works, Ltd. (1945)
Toyota Tsusho Corporation (1946)
Aisin Seiki Co., Ltd. (1949)
Toyoda Gosei Co., Ltd. (1949)
Denso Corporation (1949)
Toyota Boshoku Corporation (1950)
Towa Real Estate Co., Ltd. (1953)
Toyota Central R&D Labs., Inc. (1960)
Toyota Communication Systems Co., Ltd. (2001)
Toyota Financial Services Corporation (2000)
Daihatsu Motor Co (1907; Toyota owns 51% of the company since 1999.)
Hino Motors (diesel trucks and buses. Toyota owns 50.5% of the company since 2001.)
Toyofuji Shipping Co. (Shipping company for Toyota vehicles overseas)
Affiliates or partially owned companies:
Kyoho kai group – Auto parts company – 211 companies.
Kyouei kai group – Logistic/facility company – 123 companies.
Fuji Heavy Industries, Ltd., manufacturer of Subaru automobiles. (Toyota owns 8.7% of the company.)
Isuzu Motors Ltd. (Toyota owns 5.9% of the company.)
Misawa Homes Holdings, Inc. (Toyota owns 13.4% of the company.)
United Australian Automobile Industries (UAAI) – a joint venture between Toyota Australia and GM-Holden (1989 to 1996)
New United Motor Manufacturing, Inc. (NUMMI) – a joint venture between Toyota and General Motors (1984)
Why on earth does the NYT still have this windbag writing Op-Ed pieces?
Thanks, everyone for the for the comments. A couple of them suggested further thoughts.
Ben — Saturn wasn’t a real ’start-up,’ in that many of GM’s best and brightest were attracted to the fresh start that Saturn offered, and they brought their experience with them. Also, GM funded Saturn from the start, whereas most start-ups are deep in debt from day one to their venture capital backers. As for the simple cars of the past, a lot of us miss those days. (My first car was a Morris Mini Minor — about as simple as they come…) However, modern safety and environmental standards add a lot of complexity, and as the father of a teenage daughter, I am glad she is driving a relatively complex Impala, not my old Mini.
Mike — As for Toyota, it started precision manufacturing more than 100 years ago with looms, and built its first cars and trucks in the 1930s. So by the time Toyotas started arriving here in volume in the 1960s, the company had a few years under its belt.
There is no question that GM faces a major shakeup if we are to compete successfully in the future. Again, if you haven’t read the plan we filed with the U.S. Treasury on the 17th, please do. It describes pretty clearly what we need to do, and intend to do.
Thanks again for reading Fastlane.
To Ben’s comment above: your argument about Willys MB and Ford jeeps is specious. A new Aveo has more technology in Federally-mandated emissions controls than either of these cars put together. The best guitars in the world can and are essentially made like they were in the 1940s and 1950s; safety and emissions requirements prevent this kind of “Wonder Year” simplicity you so admire.
To Jensen: GM designs, engineers and produces vehicles globally, I think they sold more Buicks in China last year–designed there–than in the U.S.
To Mike: my 1993 Beretta GTZ (laugh, but 180 hp/160 lb./ft. in a 2800 lb. car with a very tied down chassis was very entertaining) made it to 221K miles. Original clutch. One alternator.
To all: Tom Friedman is a smart, optimistic blowhard who operates in the theatre of the theoretical.
He has little idea (but would tell you he would) how many regulations actually need to be meet these days. I work for a supplier to OEMs and Tier 1s and know a little bit about this. India and China still have a lot of money, so where are all the Chinese and Indian cars that have been certified by DOT/EPA/NHTSA to be sold here? The last company to really pull this off has been 25+ years in the making and that’s the Hyundai group. A seven year old can write the code to make the next killer app, but she cannot mass produce motor vehicles to would pass the zillion rules enforced by all of these agencies.
Lastly, Tom W., great post, but one minor rhetorical recommendation: the bit about Tom F. being affuent is ad hominen, purposefuly distracting and thereby disengenuous . . . the psudo-class warfare/Nietzschean resentament (envy+hatred) is not a real argument, is it?. Otherwise very well played.
Plus, your 8ths and unclassifieds are not exactly in the 15% bracket, are they?
Mr Friedmen likes to stir up controversy and does not like to face the facts. He should go to Detroit and find what is really going on with Ford, GM and Chrysler before shooting his negative mouth.
Buddha Uber —
I don’ have problems with anyone being affluent. But I think there is some contradiction in a jet setting journalist, married into a shopping mall fortune, living in a massive mansion in Bethesda, who wraps himself in a “green” mantle. If you really care about environmental issues, you have to start with your personal footprint. I recently spent a little time with Ed Bagley Jr. While I may not agree with everything he says, I will sure as heck listen, because he is walking the talk.
BTW, Nietzsche wasn’t an economic class warrior, though some of his “followers” were.
Thanks!
“Saturn wasn’t a real ’start-up,’ in that many of GM’s best and brightest were attracted to the fresh start that Saturn offered, and they brought their experience with them.”
Mr. Wilkinson,
If Saturn had GM’s “best and brightest” and were able to launch with such a fully-funded, refreshing, and promising start, why didn’t GM reinforce Saturn’s early success and build on it?
Why did GM let the Saturn brand deteriorate and come a cropper? Perhaps the GM “experience” those best and brightest brought with them wasn’t all that good an idea.
“Why on earth does the NYT still have this windbag writing Op-Ed pieces?”
To stir the pot and generate debate ~ something he seems to have done very successfully.
Buddha ~ “…your argument about Willys MB and Ford jeeps is specious. A new Aveo has more technology in Federally-mandated emissions controls than either of these cars put together. The best guitars in the world can and are essentially made like they were in the 1940s and 1950s.”
Buddha,
It’s not specious. Those WW II Jeeps were simple, rugged, and reliable, and as someone else pointed out, so were the first VW Beetles ~ and may I add to that list, the Citroen 2CV “Duck”. That the new Aveo has to be so complicated is only because of bureaucratically-imposed regulations and standards.
And the best guitars (and violins) in the world use techniques that go back much further than the 1940’s and 50’s. The techniques of the Stradavari, Amati, and Guarneri families go back hundreds of years. It’s a good thing the bureaucrats stayed out of the way of C.F. Martin, Gibson, Fender, and Gretsch.
great post Tom! I cringe at how fast these analysts are to destroy people’s lives. It really sickens me think about how cut-throat Americans have become. It’s apparent that these upper class people seem to think change on this level is ok because it won’t affect them, just everyone else. I’ll bet 100 to 1 that if it did affect them they would singing a totally different story. Yes GM has a long way to go and I for one am willing to step up my game and see it succeed. There is no “other” option for me or my family.
Karma baby, its coming for those that got greedy.
Blue Wing,
From your comments I’m not sure you quite understand the modern automotive landscape. And as a side note musical instruments were and are produced often times with non changing mathematical rules on acoustics, materials and the like. Musical instruments in general are as much an art as a science. But none the less the rules haven’t changed in science that allow these companies to produce such masterful sounds.
Comparatively speaking those simple Jeeps are akin to a drumset, while a modern Aveo is more like a concert band or symphony. If you want to drive simple then by all means drive your old cars… there are plenty of them out there. But for the rest of us who prefer to live in the modern world… the Aveo is full of sophistication that in its own right is amazing in the simplicity of how it does what it does at such and advanced level.
The real truth is that the bureaucratically-imposed regulations have been a double edge sword… both complicating cars and simplifying them at that same time. In the years since the original Jeep cars have gotten better, more powerful engines, better fuel economy, better safety, MUCH better reliability, better comfort etc… All of these rules you seem to have issue with have either directly or indirectly impacted these products and made them better. If I were to modernize the original 30 or 40 HP Jeep engine it would make 80 to 100 HP and use quite a bit less fuel.
If you want simple buy used and start a company to sell parts for old cars…. if you want to keep up with the rest of the world consider a new car and trying to understand the modern technology inside.
Ben — There were many missed turns in the Saturn journey. Staying too long with small cars as Americans moved to SUVs and trucks in the boom years of the 1990s was probably the biggest.
Companies don’t bat 1000. Witness the massive expansion of truck capacity by the transplants just at the point where the truck boom peaked.
Saturn is still a strong brand with a great retail network and a fresh lineup of vehicles, and some of the ideas for taking it independent are intriguing. As Jill Lajdziak said in her recent letter to Saturn customers, “Stay Tuned.”
I’ve read both of Friedman’s Flat-world books…and while he presented good points and the books were mildly enjoyable reads, he’s a idealistic idiot, frankly. He ignores the facts that don’t support his theories, and Tom — you illustrated that with your open invitation to him.
What I got out of that, is that apparently he hasn’t been to Detroit and seen the recent developments the big three have made. That worries me because he has such a big mouth…It means he doesn’t know what he’s talking about, which makes his respected opinions on the subject baseless.
My theory? If he doesn’t want to visit Detroit and see the Volt, Provoq, and the Cruze, etc, etc….I think it’s because he KNOWS that those projects are exactly what he wants to see, however — the fact they exist would challenge his rhetoric, and he can’t have that now can he……………
….Provoq, and the Cruze…
Awk! Please, please change those names.
Tom,
Of course Nietzsche wasn’t a class warrior, I just wanted to use his idea of (italics required) resentament, a subtle twist on resentment. And while you can’t say so explicitly, yes, the hypocrisy is really obnoxious . . . not quite Al Gore-level of “do as say . . . ” but you get the point, it’s very hypocritical. Same goes for Kerry’s b.s. I was only suggesting that GM has a great story and with some finesse, can marshall the facts to its favor quite easily and provocatively, the ad hominen can and should be kept to a minimum. Argue the facts and GM has a great chance of convincing folks (even if you’re totally right about Friedman, which of course you are).
Now, Blue Angel, you missed on two marks: one, you’ve essentially agreed with me on the first point about emissions and safety controls (GM didn’t lobby for more regs, trust me, except on Daytime Running Lights) . . .while the safety features and crash tests (don’t bet me started about roof crush, the Claybrooks of the world screwed this up bigtime, along with forcing OEMs to make airbags that decapitated front seat passengers . . . and GM warned them . . . NHTSA essentially said, “Make those airbags save people even when they’re not wearing seatbelts”, which forced them to meet FMVSS 208 with no seatbelts!!!!! This is your gov’t on drugs, folks) have saved lives, the emissions controls have added ridiculous weight and cost incommensurate with benefits . . . the euros have it right on this, this is why we have no light duty diesels under $25K. Drive an Astra with their best diesel, you’d be shocked how good it is).
You missed the guitar comment because I said the best guitars were made in the 40s and 50s, not the techniques . . . and by the way you’re even wrong on the techniques because there was no carved archtops until Lloyd Loar invented (yeah, it’s a violin, I get it) the Gibson L-5 in the 20s. Of course, the electrics hit the market en masse in the 50s . . . point being, the electronics in a 50 Esquire or ‘59 Les Paul (PAF, yeah yeah yeah) are the same as they are now. Thank God the cars aren’t (my ‘68 Camaro was beautiful and fairly fast, but braking, steering and stopping have gotten exponentially better in the last 35 years) and we’re all better off for it.
Keep up the great work Tom, be provocative. Now is not the time for dull elbows. Between Volt and Camaro and the Arcadia that went to Boyne last month, the product mojo is flowing like water through the Three Rivers dam.
Thanks, everyone, for the great discussion so far.
Anita Lienert at Edmunds (http://www.edmunds.com/insideline/do/News/articleId=142726) noted correctly that I did not identify Sir Thomas More as being one and the same as Saint Thomas More. Since he received that honor posthumously, I though it best to focus on his earlier career as a writer of Utopian philosophy.
Anita was also quite graphic in describing Sir Saint Thomas’s execution. As a former journalist, I cannot recommend such a grisly end for any writer, no matter how annoyed I might be with them.
great blog entry Tom
Great to see GM standing up for itself!!
but I must re-iterate my previous concerns…all you GM folk keep talking about the Volt as if it were some kind of saviour.
I am convinced that Volt is not GM’s strongest ‘green story’ why?:
1. The world is starting to wise up about the impact batteries have on the environment.
2. Internal combustion technology is advancing, reducing the advantage that the Volt has.
3. Low gas prices and job losses is the wrong time for a $40,000+ car that doesnt use gas.
4. Volt is not going to turn a profit for GM
5. Volt only carries 4 passengers but looks rather big – a Prius costs half the price and carries 5.
6. There is a backlash against the “Smug” factor of expensive green cars (see http://www.priusdrivers.com/ )
I dont mean to ‘bash’ the Volt, my point is mereley that there is a much better green story GM should be talking about:
Diversification of propulsion systems should be the main message…GM is big and it is working on so many green technologies worldwide…Let’s hear about all of them!!
Car Fan —
I personally like looking at the Volt and Cruze as two tools in the same toolbox. The Volt is important as an image vehicle, and as a tool for accelerating the development of batteries and electric drive technology. The Cruze is just as important as it will bring significantly improved efficiency to a mainstream compact car.
As a global carmaker, we need to push ahead with a range of energy saving technologies. The demands of new regulations and expected rise in energy prices cannot be met by any single technology or any single vehicle.
Attn: ANDREW ROSENTHAL, Editor of The New York Times Editorial Board
Subject: Tom Wilkinson Director, GM News Relations
This writer is perfect for the Editorial and Op-Ed section.
Thank you for the feedback for Mr. Freidman…..people like him are living in a a fantasy world.
As someone who has been involved in telecom / high tech for 20 years I equate this talk of auto start ups to the what we see in the high tech world (autos are high tech BTW). In all cases these folks show up w/ a demo of some neat project and say “gee….whats taking those other guys so long to deliver this stuff…we can and we’re small…”). What people don’t realize is taking that CONCEPT and turning it into REALITY is a much larger job than getting the CONCEPT running.
The delats between concept and reality are all those non-sexy things like quality, production in volume, supportabiity…the list goes on.
I laugh when I hear people talk about Tesla. Are they really building a car? Can you say Lotus? Give me a break. Let’s see how that car does after being on the road for 12 months and we’ll see how many of those enthusiastic supporters are still “rah rahing” these start-ups. Don’t get me wrong, there is a place for startups but they are not a panacea that Mr. Freidman and others think.
I think Tom Friedman’s continued negative comments toward the automotive industry, specifically the American automotive business, are not worth response. I want to see GM ignore his comments. I do not know Tom or why he has just a personal hatred for GM and others, but it appears irrational enough that GM need not continue to engage with this individual.
Im glad you told this New Yorker the way it is Tom.These guys think the sun sets and rises in their buts.I work for GM and GM makes the best cars and trucks in the world.I didnt see Friedman say anything about what he would do with the crooked bankers in New York,but he sure knows how to fix GM..Friedman is a joke.Detroit is the car capital of the world.Let him come to Detroit and see what its like to get his hands dirty.
Thanks, Tom
While Mr Friedman is sometimes interesting, his take on automobiles is so terribly wrong as to be nearly comical, if people didn’t take him seriously.
Yes, we need to have a restructuring, but not just of GM, but of the entire US health care system and other dinosaurs to be competitive,
The simple fact remains that the US will be dependent on the automobile for the next century. We need to make them better, and we need to design, create, and build them here if we are to prosper as a nation.
I have always enjoyed Mr Friedman’s political columns, and I think he should stick to that. He’s an expert on Israel/Middle East history and politics – should stick to his area of expertise.
To say that GM cannot build a relaibe and durable vehicle is insane. I had 1990 Chevy 2WD S10 pickup built in Shreveport, LA. It had a 4.3l V6 with and OD auto trans. Other than basic maintenance, idler arm-water pump-alternator at 165,000 miles it was a well-engineered and solidly built vehicle. I sold it with 236,000 miles and it did not use more than one-half a quart of oil in between 4000 mile oil changes. Everything worked on it and I commuted over 100 miles per day in that truck. It could still FRY the rear tires and it launched great out of the hole right before I sold it.
I absolutely agree. Again you have individuals that don’t have a clue about the auto industry (like our senators and congressmen) trying to say they know what’s best. As they drive their Mercedes, BMW’s, and Lexus’s or ride in their tax payer owned government cars to tax payer funded jets so they can fly to their homes on the coast.
Some people are to far out of reality to understand how the real industrial world works.
Go GM!!!
I have always bought Gm cars, and love my 2007 new Silverado, the one thing GM needs to do is start building some cars with just 2 doors again, I have heard people who do not like the 4 door models who ended up with foreign cars just because of that. I hate 4 doors on a car, and if I did not like the truck, I would have checked out a Ford or Chrysler.
Suggestion to advertising department:
Drop the word “first” from the slogan: “Everyone’s first car should be a Chevy”
It belittles the brand to that of a starter or beginner car.
I think: “EVERYONE’S CAR SHOULD BE A CHEVY!!!”
Chevy makes great vehicles that are great buys.
Both Toms are wrong.
TF fails to account for the time and number of startups required before one comes up with something that sticks. Even in the early auto biz 100 years ago we had dozens of low-volume producers using all kinds of technology before Ford’s gasoline-powered Model-T emerged as the front-runner. Today’s economic crisis is no time to divert money to TF’s experiment and put thousands of people out of work.
TW fails to acknowledge that today’s auto industry is a wealth-destroying money pit. A new car is worth less than the sum of its parts. Just look at the huge depreciation hit when a new car leaves the dealer lot and becomes a used car. It simply costs more to produce a street-legal vehicle than most consumers are willing to pay. GM’s incremental cost cutting does not do enough to close the gap between cost and value, let alone to return a profit making cars.
The truth is somewhere inbetween. It is a huge waste of government money to just maintain the current GM and its too-litte, too-late “parade of progress”. The money going in to GM should be used to put GM’s people to work in a new kind of car company. The right business plan would have short product development lead time, low initial investment, low inventories, low break-even production volume, customer pull driven production, and actually return a profit.
Almighty, the oldest of my three GM cars is a 1987 S15 Blazer that only has 216000 miles on it. The 2.8L six is no barnstormer, but it was great to have it in Michigan this winter. By the way, it has a gas gage and seat belts…unlike the bug I drove many years ago (why not just walk in the first place).
Others: comparing laptops to automobiles is like comparing birds to trees. Not even close to apples vs oranges.
My Martin guitar was made (completely) in Pennsylvania, where they have been made since C.F. came here.
Carl ~ “It belittles the brand to that of a starter or beginner car.”
But Chevy is exactly that ~ a “starter car.” If GM wanted everyone to own a Chevy, who would upgrade to buy Pontiacs, Buicks, and Caddies?
You obviously don’t understand the American class system and the concept of “upward mobility.” How will you impress your neighbors if you don’t upgrade that Chevy to a Buick someday?
I can understand where Friedman is coming from. When the dust settles, if GM is still standing, GM will be indebted to the US government for over $30b (and another $10b to other governments). And what will GM look like? Essentially, it will look the same as it does today, just with fewer employees. GM’s restructuring plan includes 4 brands: Chevy, Buick, Cadillac, and GMC. What is hurting GM is not its vehicles, but its brand image. GM has about 20% of the market, but significantly less than 20% of the teenage market, and of people in their 20’s and 30’s. As a result, GM’s market share shrinks every year. Regardless how revolutionary the Volt will be, and no matter how many hybrids GM makes, the car buyers of the future will not buy a car with a GM brand on its hood. Even if GM survives, it will never make enough money to repay the government. The goverment should take the money and invest it in a company with potential.
Tom,
I have already been through the phase of ire and disdain for Thomas Friedman last year. Op-ed after op-ed of drivel about the US auto industry drove me to write several responses to him, without any satisfaction of being published.
My ire and disdain now is directed at the New York Times which lands on my driveway every morning.
But I also must say that I’m disappointed in GM’s communications tactics. You have not talked loud or often enough about the millions of dollars invested in fuel cell technogies and concepts, let alone the Equinox experiment. This is “start-up” investment in a long-term vision of fuel independence. Is it a bet, gone bad? Too soon to tell, but why aren’t you using it to defend yourselves?
GM and the UAW failed to make some hard choices for decades, which leads to a current crisis perhaps better described as a firestorm.
Tom Friedman puts the Administration’s problem into its proper focus. If we have $20 billion to invest in future growth opportunities… where do we invest it?
If the answer was, “GM,” then GM’s stock price wouldn’t be at $2.50.
It’s unfortunate that Mr. Wilkinson and others continually fall back on the “We’re too integrated into America to let fail” argument. This tripe has been foisted on the American people in order to hold us hostage. The ransom we must pay is billions of dollars that will be used to subsidize a failing business model. Only now are GM management and the UAW realizing that the rest of America cannot afford to subsidize unrealistic benefits and lackluster design and engineering. Too bad they are realizing this at least 5 years too late. Free enterprise creates a marvelous environment: only the fit survive, and if there is a recession (which there always are), what survives under its own power is more powerful and adapted to the environment when it emerges on the other side.
WS–
Have you sat in a new Malibu or CTS? Lackluster design? Really? This company has had dark days; I’d say they hit bottom about 1981 (then again, so did Ferrari). The idea that we as Americans live in some mythical “free enterprise” society is just that: an idea. Maybe even an ideal. But there’s nothing free about operating in the most onerously regulated and litigious industry in the world. Nothing free about the billions in tax dollars GM has paid into the system over the last 100 years–and only the fit survive huh? The Japanese haven’t been the recipients of untold billions in gov’t largesse for the last 45 years? How about the Germans? Did their government help them ever? You bet they did. Free enterprise is anything but. America in 2009 is not some Ayn Rand novel–even though you or I might wish it to be. GM isn’t saying they’re too big to fail, but if the catastrophic ripple effect on suppliers (Toyota goes down, too . . . would that be marvelous?), dealers and the like doesn’t scare the daylights out of you, you must not know much about how pervasive the industry is, or just not care about your countrymen. My guess is both. Yeah, the UAW had it rich for too long, they’re eating it now in order to survive. And should we allow domestic manufacturing to altogether get tossed into some ceremonial sacrificial firepit at the altar of some pure capitalism that exists nowhere in the world, and China and/or Russia decide to unload tanks to take back Alaska, who is going to mass produce the armaments to protect us. Not you. You know how we won WWII? We outproduced our enemy. If history repeats itself, you might want to support your country’s ability to once again raise it conventional arsenal.
Finding the solution to the Elitist problem in Washington and Wall Street.
Thomas Friedman doesn’t make sense, but that’s probably not the point. He seems to be a diversionary columnist. Thomas Friedman is but a sqeaky wheel in the cog of America’s elitist problem. His thinking is typical of the elitism that plagues Washington and Wall Street. His foreign policy solutions seem to advocate war while his statements are designed to shock:
“I DON’T GIVE TWO CENTS ABOUT BOSNIA. NOT TWO CENTS. THE PEOPLE THEIR HAVE BROUGHT ON THEIR OWN TROUBLES.” (New York Times, Op-Ed page, 6/7/95).
Friedman went on later to advocate heavy handed bombing in Bosnia. He has been heavily criticized for his motto, “give war a chance.”
But Elitists don’t give two cents about American families and American workers either. They imagine impractictical solutions to their self made environmentalist hoaxes in order to manipulate.
Disruption and upheaval are venom of elitism. Their criticisms of each other are more designed to amuse.
Solutions like Alternative fuels really frighten elitists, since they know they will work. That is why elitists dwell on phony fixes which typically cost billions that will never produce results.
The U.S. economy and Americans in general have fallen victim to war as a repeated solution by these elites. The Elitism Problem manifests itself in trade as well. Elitists have pursued an insane policy of what they know is an unsustainable current account deficit on trade and incredibly they find willing dupes in both parties that fall for it. The U.S has a trade surplus with Australia and Canada, facts that seem to evade the elitists.
This gap between everyday Americans the the two politcal parties have led many conservative Americans to coin the term Rino (Republican in name only) for some Republicans, such as John McCain. John McCain lost the election probably on the issue of jobs, trade, and economy by themselves. He found himself like most elitists on the wrong side of the American voter and he, like many in DC circles, is unwilling to admitt their error over the unsustainabitly of a current account deficit and its long term damage to the economy. We no longer need to argue theory we have the proof their unilateral trade policies failed, its called TARP. Most Americans identify themselves as economically conservative, yet lately, voters are presented with a choice of which candidate will ignore them more. Incredibly the Senate Banking Committee
Reagan’s Peace through strength policies kept America out of foreign wars and put the economy on a path to prosperity. The U.S. has seen few good managers of the economy. Eisenhower, JFK, Reagan, and Gringrich. Except for the stewardship of these leaders, the U.S. economy has been ravaged by wars, financial bungling, and mishandlings of foreign affairs.
Many TV pundits in their quest to redeem President Bush when comparing the prosperous 1990s, seem to have forgotten what everyday Americans know: That it was Speaker Newt Gringrich who balanced the budget and his fiscal discipline which brought much prosperity and investor confidence in the 1990s. In the 1990s, the U.S. saving rates rose and American companies were on the road to prosperity. In the 1990s, the Republican Congress made payments to reduce the national debt. The bull market was not a bubble, it was real.
Elitiists in Washington had the nerve to mistreat CEOs of American companies while they live lavishly off the taxpayers.
But sadly, Washington has not chosen to reduce America’s debts and increase savings rates, but rather to increase the national debt. Instead of giving tax credits to bond holders/debt holders to accept equity, Washington is on a spending binge.
America’s current debts are unbelievable:
$10 Trillion federal debt
$10 Trillion in mortgage debt
$10 Trillion in nonbank corporate debt
$12 Trillion in bank debt
Two-thirds of the America’s GDP is consumption spending.
Time to help the producers in the American economy especally the American auto companies for a change – its pretty obvious.
And Thomas Friedman wants know who are the risk takers?
The American auto companies have taken on on the biggest risks: Doing business in the U.S., where taxes are too high, regulation (CAFE) is too much, and politicians with brains are in short supply. American business constantly risks that the U.S, will get out of war for a few years to they can make some profit.
Notice that American manufacturers make a profit when the U.S has sound leadership and advisors, when the U.S is in in a War-Recession-War-Recession. In the 1950s, 1960s, 1980s, and 1990s, – under the stewardship of Eisenhower, JFK, Reagan, and Gingrich specifically – American companies could make a profit. Nearly every other time in the last half century American companies were the victims of the misguided and misadvised in Washington, who sought long term war as a solution. Elitism is ivy-speak for stupid economics. After the collapse of Long Term Capital fund in the 1990s, the Senate asked Mr. Greenspan if they needed to regulate the hedge funds. Oh no he told them. Then for another decade the ship without a rudder at the Fed mismanged the banks.
Let’s give American Manufacturing a chance for a change.
Typo correction above:
Notice that American manufacturers make a profit when the U.S has sound leadership and advisors, when the U.S is NOT in a War-Recession-War-Recession.
————————————————
Garry Golden,
We aren’t here to tell you what you want to hear. Hydrogen is combustable and burns clean. The future consumer is less likely to prefer the impracticle and costly diversion called the battery. There are already too many batteries. Alternative fuels are the answer to the world’s long term needs.
Bob and GM leadership,
I’m in total support to a profitable auto industry in Detroit region, of which i’m a resident and have been exposed to working at the D3 customers.
Let me get to some simple cost-cutting factors and the point I want to relay is “do whatever it takes to stop the bleed”
1. GM Vacation for salaried employees- Great as an industry standard, but needs to be re-visited at this juncture.
2. Salary reductions across the board for white collar
3. Car and gas benefits for GM manager grade employees.
These may be minuscule, but the hair-cut needs to be comprehensive at least to a point when the company can get over this turmoil. The risk is losing some talent, however I would suggest that they can stay with some bonus compensation or because they need to SAVE the company.
On a congratulatory note, it is painful to all of us, but finally you have made BOLD decisions to cut replecating models (Saturn, Pontiac) and SAAB to stop the bleed.
PS: Big fan of Bob Lutz. I’m amazed at what you have accomplished in terms of car design at GM. The cars before were dull.
-Wellwisher
Is China buying GM?
WS,
Your generalities are generally true, like all sweeping statements. Thats easy. Until the banking crisis last fall, GM still sold millions of vehicles to willing customers. Does it cost GM alot to do that…yes…. too much to survive an economic firestorm not seen in our lifetime, unfortunately, yes.
Were they well into a turnaround plan to create wanna-have vehicles, and investing millions in alternative propulsion system including fuel cells and ground-breaking plug-in hybrids? Yes.
In the last few years the vehicles coming out of GM are far from lackluster in design and engineering. The evidence is out there and has been heralded by a very critical auotmotive press as leading Toyota and Honda.
Your perceptions of GM are based on a GM that no longer exists, except for complicated legacy costs and obligations from years past. If you research what has been accomplished in the last 8-9 years, you would be less accrimonious. I don’t intend to change your mind, just make the readers here more informed.
There has been so much talk lately about how this country ever got started on the top that “manufacturing in the US does not matter and the US Aoto industry does not matter.” speaking with a leading economist for a major bank during his radio show on WJR on Wednesday, Feb 25, Paul W. Smith asked the question how thisconcept got started.
Part of the answer is Thomas Friedman. Friedman, a writer for the New York Times and former foreign correspondent, is also one of the leading and best accepted authors on the the topic of “Globalization”. He has a number of best sellers including “Lexus Nexus” and “The World is Flat” addressing the subject. A number of universities are teaching Globalization based on his writings.
There are some serious flaws in his concepts and they have often been neglected. He argues that farming is the lowest level and manufacturing is the second lowest level of economy. He suggest that as countries and economies evolve, they start with framing the move to manufacturing then move to service industry. He writes that there is some higer purpose after that but does not have any suggestion of what it might be, He jsut states the the US needs to figure out what it is or parish.
He reports that farming is 2% of the US GDP and manufacturing is 4%. He concludes that if farming and manufacturing completely go away in the US, it only reduces replacement of a total of 6% of our GDP. Clearly we now see the error of his analysis. Failure of the US auto industry would also eliminate many other support industries and businesses but that is not my main issue.
What Friedman fails to recognize is that the US as a 100% importing economy is not a sustainable condition. For cash to go out to pay form imports, there must be a return path or the value of the currency deteriorates until it does not have sufficient value to pay for the imports. Once the value of the currency has deteriorated to a certain level, it no longer will support purchase of the imports. The issue I am discussing is the Trade Deficit. It is the metric that measures what is happening on this topic.
He also states that the gap between the haves and the have nots in the US will widen. What he fails to acknowledge is that the middle class provides a large percentage of the customers for the products manufactured and purchased in the US economy. If the middle class truly goes away, then the customers of products also decreases or disappears for many products with it. Again, not a desireable condition for the US economy.
So, my real question is, “what will it take to wake up the economist, government and the non-midwest areas of the US to the fact that Thomas Friedman’s concepts are seriously flawed?” The leading economists in this country need to wake up and quit being fatalists about the future of the US economy. We need to take charge of the US economy.
Edwin,
I think perhaps you might want to rethink the way you stated things. From my experience elitists (and rulers in general) want the masses to be happy and compliant. This makes their job of staying in power much easier. Rulers do not want to shake things up because it puts them at risk for being pushed out of their position of power (take a look at the current scene… people don’t want truth, they want what they perceive will make them feel better).
Well Wisher,
You are the first GM person I’ve heard on this blog site who seems to be willing to make personal sacrifices to “stop GM’s bleeding”.
If only more people had your attitude (which if I read you right is a logical one of downsizing GM and cost cutting across the board to bring GM back to life).
What exactly do you do at GM?
Peter Davis,
In all honesty I think GM was on its way to where it is at now for about 6 years not 10 (at least publicly). I think back to our 2003 and 2004 vehicles and many of them were lackluster, dull and not very great at all… there were a few like Equinox, Duramax, and Trailblazer.
It has only been the last 3 years that I can see that GM may be ready to return to a leading position, though I have my doubts.
Only the future will tell I suppose.
Nate, unfortunately, you won’t hear much about what employees are willing to do. The vast majority of people get their information from the news and who does the news like to interview? Those who whine and moan about having to give back and take cuts. The arrogance of some flies in the face of the realism of our situation, and I don’t care who has a problem with me saying it.
I am surrounded every day by co-workers who are more than willing to take whatever cuts have come our way recently, including a pay cut. Personaly, we have wondered why it wasn’t asked of us earlier. And if Channel (insert station here) would interview us on the way out the gates, you would hear a different attitude. The majority of us GM employees are eager to do what it takes to keep our jobs and help bring GM back to profitability.
I read the blogs and I hear the banter. I wish more of us had a mic and a camera pointed in our direction. For now, click on my name for an idea of where we stand as GM employees.
“I am surrounded every day by co-workers who are more than willing to take whatever cuts have come our way recently, including a pay cut. The majority of us GM employees are eager to do what it takes to keep our jobs and help bring GM back to profitability.”
Bravo for you Dominic, but how do your union leaders feel about that?
Dominic Gerace,
So are you a union worker?
Thomas Friedman is a fool.
However, GM is so badly mismanaged its almost comical.
Seriously, I could take anyone on this blog and put them in as CEO and it would be an improvement.
You’re going to make the flagship Caddy FWD on Epsilon II? Are you for real?
You’re changing the name of the compact whose name you changed 5 years ago? And to the Cruze? Are you for real?
Yet you keep the name LaCrosse that means nothing to anyone. Are you for real?
You keep the ‘G’ names for Pontiac even though they almost single handedly destroyed the brand. Again, are you for real?
Bill Ford realized he wasn’t a good CEO and also realized he had to go outside of Ford to find the CEO who could save the company. Mulaly has Ford on track to be successful. He came from outside the company and energized it, realized he had successful and much praised cars in Europe and made the smart move to bring them over. He also realized that names don’t need to be changed, but the car itself just needs to be continually improved. Thats why the name Focus will continue on the Euro based Focus that will be replacing the abortion Ford now sells.
GM? We get something called a Cruze. Cobalt SS winning comparos, tuner shops selling Cobalt accessories, Cobalt fan sites, but no, lets change the name to Cruze. Good lord.
I have tried desperately to support GM but if you go through with changing the name Cobalt to Cruze I am switching to Ford and buying the next Focus and I know I’m not alone. I will do this even though I have almost 2 grand on my GM Card towards a new car.
Cruze? Not a chance.
Nate,
America’s elitist problem is a foremost global problem; these elites don’t care if the people are happy; they always seem to plan to destabilize and disrupt. Their repeated war-recession cycles have destabilized American business over time and have significantly impacted American companies by placing them ever deeper in debt. America’s key companies must realize that they are the victims of these elites. So called ‘legacy costs’ are more a result of the elitist war-recession cycle. To answer your question, keeping producers in debt and at bay is an elistist mode of maintining compliance. Same old top down problem. Of course, its nothing new.
Let’s put it in perspective.
———————————–
The thief cometh not, but for to steal, and to kill, and to destroy: I am come that they might have life, and that they might have it more abundantly. – John 10:10, King James Version -
The left leaning Thomas Friedman has been cheer-leader for the elitist drum beat for more foreign wars; here’s why he and others like him are wrong:
During the last half century, American companies have had to seek credit after each war-recession cycle in order to recover from the respective economic downturn and in order to maintain benefits, pensions, and other difficulties which resulted from U.S. entanglement in foreign wars.
PEACE THROUGH STRENGTH = LESS WAR
Some of America’s great leaders have risen above this and seen the light. Reagan’s Peace Through Strength policy kept America out of entanglements involving long term wars as a solution. During the term of President Eisenhower (1953-1961), America remained free from war. The wisdom of Eisenhower brought Armistice and swift end to the Korean war. America’s companies prospered and American jobs were plentiful. Douglas MacArthur warned against America’s involvement in Vietnam. President John F. Kennedy cut taxes and kept America out of any long term wars and America continued to prosper. President Ronald Reagn kept America out of long term wars. All three, Eisenhower, Kennedy, and Reagan pursued a policy of Peace through Strength which kept America out of long term foreign wars and kept America’s defenses strong. For example, Reagan resisted long-term entanglements in the Middle East following the Marine Barracks bombing in Lebananon and Reagan dealt swiftly and strongly with Libya. JFK similyarly kept America out of entanglements with a policy of Peace through Strength. Further, Eisenhower, JFK, and Reagan pursued sound economic policies for their time. Speaker Newt Gringrich balanced the U.S. budget and strenghened America’s economy in the 1990s. American companies prospered under the direction of these leaders specifically.
MORE SAVINGS + LESS DEBT = PROSPERITY + CASH FLOW
Foreign wars have cost America’s companies grievously and taken a severe toll on American workers and American families. The same pattern of debt growth is occuring in America’s newer information technology companies following the September 11, 2001 attacks and subsequent long term War on terror. Microsoft, Cisco, and Google are incurring increasing debts by the $ billions. Note the recent Wall Street Journal report Wave of Bad Debt Swamps Companies (February 13, 2009). The Wall Street Journal reported that Bond market defaults are expected to triple this year:
http://online.wsj.com/article/SB123446235205578373.html?mod=rss_whats_news_us
The U.S. is experiencing the lowest savings rate since 1933:
http://www.msnbc.msn.com/id/11098797/
The Congress and the White House have failed to address the economic problems of high debt and low savings, and sadly have opted instead to go on a spending binge, when they should have enacted job creating measures and debt reducing incentives like giving tax credits to bond holders to swap for equity stakes or tax credits to debt holders to reduce the principle amount owed. Instead, Congress has enacted a punitive stimilus bill which requires states to raise taxes on companies to pay for higher unemployment benefits and which will result in a risk averse job market where companies hire fewer and fewer workers. Dr. Lawrence Lindsay, whom Bush layed off in 2002, noted payroll tax cut = jobs creation:
http://online.wsj.com/article/SB123318933384726785.html
Wars have a devasting effect on U.S. saving and American families. The Economist highlighted, The shift away from thrift (April 7, 2007) the devastation of U.S savings, and note the Benanke still doesn’t seem to grasp the problem. Note that during periods of higher U.S. savings, the American auto industry prospers. Obviously, Greenspan and Bernanke missed the boat and didn’t read listen to Margaret Thatcher’s economic advisor. Margaret Thatcher’s economic advisor, Sir Keith Joseph detailed a key reason for Great Britain’s economic decline in 1975: Growth in the wealth consuming sectors like service, retail and goverment, and contraction of the wealth producing sectors like manufacturing and computer programming.
From “Monetarism Is Not Enough” by Sir Keith Joseph:
Perhaps I can here touch on the particular discouragement of the manufacturing sector. Normally in a balanced economy we need not worry about the direction of enterprise – primary, secondary or tertiary sectors, farming, manufacture or services – because the advantages and disadvantages are market questions and enterprise will go where there is demand for it. But the choice is no longer balanced: legislation, taxation, inflation, union[fo 11] attitudes all make the employment of labour and the risks of manufacture more and more disproportionate to the potential rewards. So the balance has been shifted sharply in favour of service activity – and the consequent loss of manufacturing enterprise narrows the base on which all depends
http://www.margaretthatcher.org/commentary/displaydocument.asp?docid=110796
Mr. Greenspan and Mr. Bernanke also apparently missed it again when New America Foundation’s David Friedman spelled it out for them word for word:
From “No Light at the End of the Tunnel” by David Friedman (June 15, 2002 Los Angeles Times):
From 1994 to 1998, nearly 12 million jobs were created. About 4.6 million of them were in goods-producing sectors–manufacturing, construction, business services and trade. Government, health-care, social and education services added just 2.4 million jobs. Virtually none of these trends, nor any newer, more promising ones, can be discerned in today’s economy. Over the last four years, wealth-producing manufacturing, business services, construction and trade industries steadily declined, . . . . . But wealth-consuming sectors–government, state-supported social and education services, health care–grew even more rapidly from 1998 to 2002 despite the most recent recession. These sectors added more than by 3.2 million jobs, one-third more than from 1994 to 1998, and constituted 60% of U.S. total employment growth. If growth in retail employment is factored in, an astonishing 80% of total U.S. job growth since 1998 has been in wealth-consuming sectors, compared with just 35% from 1994 to 1998.
http://www.newamerica.net/publications/articles/2002/no_light_at_the_end_of_the_tunnel
But they were constantly reminded of it by Reagan economic advisor Dr. Paul Craig Roberts so they have no excuse:
http://www.vdare.com/roberts/060203_jobs.htm
The Elitist Problem makers have convinced the easily influenced in both parties to blame the American worker or ‘American management’, in order to deflect focus from the elitist quest for more foreign wars in order to maintain the cycle of war debt. The drive by media elite, the slogan junkies of the movement, have dubbed older hard working people a ‘legacy cost’, when its really the cost of economic downturns resulted from the drum beat of elitist foreign wars. These elitist problem makers have so confused the current Republican party that our real leaders are kept from the podium amidst all the fracus. They calculate they if they keep enough chaos in the election, they can prevent real leaders like Reagan from emerging victorious. The economic conservatives will knock each other out and the Rino (Republican in name only) will get the nomination (aka John McCain).
America’s current debts are unbelievable:
$10 Trillion federal debt
$10 Trillion in mortgage debt
$10 Trillion in nonbank corporate debt
$12 Trillion in bank debt
Two-thirds of the America’s GDP is consumption spending.
Sadly, George W. Bush’s advisors seem to have gotten in the way of his compassion.
cc: Rush Limbaugh, Sean Hannity, et. al.
Right on Dominic!
99% of the people I work with are willing to do whatever it takes to turn this thing around. Where do they find some of these people that they interview on T.V.? It’s as if they go out of their way to make the hourly workforce look bad. My dad used to say “When someone asks you a question that you are not prepared to answer, it’s better to let them wonder if you are ignorant, than to open your mouth and remove all doubt”. We are building great cars, and if given a chance to survive this economiic crises that was created almost exclusively by bankers, wall street traders and our wonderful politicians in Washington, we will show the world what we can do! Why doesn’t anyone question the pay and perks of thhose people? They were handed the money to survive. There is no chance that the taxpayers will ever see that money again. At least with the LOAN to G.M. they have a fighting chance of getting their money back and possibly saving a million good paying jobs in the meantime. Thomas Friedman has been repeatedly asked to see the great things that are being accomplished in Detroit, and has refused. He is a COWARD, and I have personally written him and let him know my opinion of his complete lack of objectivity. He is truly living in a fantasy world. To all my G.M. partners, we will keep going to work every day and fighting for the success of our company.
Dominic – Thank you for providing an inside look into a day or more of your life as an employee of GM. The perception out in the media does not capture the changes made at GM over the last several years. The book “Why GM Matters” is the first real inside look at the positive changes GM has made around the world and I am happy to say I have read it. It is too bad that these positive changes have not been noticed as the credit collapse effectively clouded over the entire end result and is now forcing further drastic cuts. The new system in place is robust and will benefit the remaining brands with world class products. I know GM will pull through this crisis and be strong again with dedicated individuals such as yourself working hard every day. Good luck and god speed!
P.S.
Anyone who would like to read some objective articles about the auto industry, Google Ed Wallace Dallas-Fort Worth and read what a writer with some automotive background and knowledge has to say about this sad state of affairs.
For another interesting take on the GM story, I recommend William Holstein’s new book, “Why GM Matters: Inside the Race to Transform an American Icon.” Bill spent most of a year interviewing people at GM and telling the story of the transformation of GM from their perspectives. It is a great look at the complexities of the car business, and a good reminder of why there are no quick fixes.
The review in Friday’s Wall Street Journal didn’t really do the book justice, as it reflects the negative view of GM and hositility toward unions that some of the Editorial Page Editors seem to have. The book is available now in many book stores and from Amazon.
“Yet you keep the name LaCrosse that means nothing to anyone. Are you for real?”
Wrong Steve, the name “La Crosse” does mean something. If you happen to be French, it is the word for “The Cross.” The mystery is why GM picked the French word for a religious icon as the name for a car.
Unless you live in La Crosse, WI, then you might be chauvinistic enough to think GM named the car for your city.
Tony Rubicon,
GM probably picked LaCrosse because it sounds upscale and high end. Many marketing people pick foreign languages for products to give them an aire of eloquence. LaCrosse is just another one. GM would have been better off with the name Allure as they use in Canada.
Then again why did GM name its older buicks LeSabre? Doens’t that mean The Sword?
Tom, once again you nailed it. Industrial theorism is the domain of people who play Sims all day long, knowing they can create utopia with mouse clicks. On that logic, the New York transport system would be better if you scrapped it all and started again. But hang on, you can’t do that can you? Reality has set in – reality which is not required in 500 words of regular musings from a guy who certainly can think laterally. Mr Friedman’s ideas are not necessarily without basis … but they’re just ideas. Either way, why won’t this famous world-weary traveller just take a plane/train/automobile trip to Detroit and see for himself?
Edwin,
Why are you so anti war? There are some good reasons for war in the past? I’m missing your point? Had it not been for War America would be a Colony yet and we’d be flying a British flag.
America has prospered not just because of its leaders but because its people continued to work hard and do what had to be done day in and day out to rise above many other countries. America’s work ethic put us on the map (amongst a few other things).
An economy that can not secure the resources it needs and protect the resources it has is not a strong economy. Not to mention an economy with people unwilling to do what it takes to do said things is an economy on the downturn and destined to fail.
Foreign wars haven’t just cost American companies… it has cost Americans who work for those companies and own those companies. But often times that is the price America pays for being America.
It should be pretty obvious that the “debt” american companies are racking up is being paid for by the common people one way or another. What is the alternative though? Get attacked and totally lose the American life style to violence and our home turf being attacked…. If that is the option I say let every company in America eat the debt for what has to be done and every person stand for their values.
I think you are dead wrong. It was the inability for previous administrations to look far enough down the road and act proactively that has gotten us here. I agree that this spending binge isn’t good but we shouldn’t be where we are today. The “free market” lost its damn mind and forgot how to run itself properly, and instead ran itself into the ground. The solution to todays problems were created in the past a while ago…. trying to fix them quickly now isn’t even a reasonable option. It is going to take time to educate people for new jobs and get them there. I can’t offer any better solution to what you say about trading in bonds for equity stakes… However I don’t think hands off is the way to go anymore. Americans as whole want to do what they want when they want… nature doesn’t seem to work that way and people seem to have forgotten that.
The reason the American auto industry prospered wasn’t just savings… it was the fact that they weren’t trying to sell the quantity of cars they now try to sell… and when business shifted they reacted (which hasn’t’ quite happened until recently). Additionally the companies weren’t trying to sell cars to people they couldn’t afford (or if they were people had the common sense to not buy them).
“Margaret Thatcher’s economic advisor, Sir Keith Joseph detailed a key reason for Great Britain’s economic decline in 1975: Growth in the wealth consuming sectors like service, retail and goverment, and contraction of the wealth producing sectors like manufacturing and computer programming.”
How about a little REALITY on that one… you can’t keep producing indefinitely before you have saturated the market with manufactured goods…. I’m not sure why thats so hard to understand for people (including GM). The reason the wealth grew is because of time mutlipliers like machinery and computers… at some point you hit the limits of them and you are back to real time where things actually take time to create and produce.
“Perhaps I can here touch on the particular discouragement of the manufacturing sector. Normally in a balanced economy we need not worry about the direction of enterprise – primary, secondary or tertiary sectors, farming, manufacture or services – because the advantages and disadvantages are market questions and enterprise will go where there is demand for it. But the choice is no longer balanced: legislation, taxation, inflation, union[fo 11] attitudes all make the employment of labour and the risks of manufacture more and more disproportionate to the potential rewards. So the balance has been shifted sharply in favour of service activity – and the consequent loss of manufacturing enterprise narrows the base on which all depends”
Or perhaps we are re-establishing a natural equilibrium. Perhaps the new conditions required in the market to make such products demand such shifts and increases in cost. As population (both of goods and people go up) so to does the competition increase (for resources, customers and space).
As an example the EPA regulations so many people have an issue with… if we remove them how long will it take before we cause enough damage that we feel the effects of our own doing?
Quote all the intelligent people you want but at some point the impact on the world around us will factor into the economics in a real actual and honest way. As an example consider the deer population in a forrest. As the population of deer grows so too does the population of predators… until the population of predators starts to out-consume its supply of food (deer). The deer population will continue to grow until their available food becomes scarce. At that point the deer population drops off. As the deer population drops off the predator population decreases as well (there is a phase lag). At some point the population stabilizes or reaches an equilibrium but there is always a correlation between deer, predators and resources. And the populations oscillate (we even have differential equations to model these types of things).
“From 1994 to 1998, nearly 12 million jobs were created. About 4.6 million of them were in goods-producing sectors–manufacturing, construction, business services and trade. Government, health-care, social and education services added just 2.4 million jobs. Virtually none of these trends, nor any newer, more promising ones, can be discerned in today’s economy. Over the last four years, wealth-producing manufacturing, business services, construction and trade industries steadily declined, . . . . . But wealth-consuming sectors–government, state-supported social and education services, health care–grew even more rapidly from 1998 to 2002 despite the most recent recession. These sectors added more than by 3.2 million jobs, one-third more than from 1994 to 1998, and constituted 60% of U.S. total employment growth. If growth in retail employment is factored in, an astonishing 80% of total U.S. job growth since 1998 has been in wealth-consuming sectors, compared with just 35% from 1994 to 1998.”
The reason no new jobs can be discerned today is that there isnt’ sufficient motivation to keep people working hard. What new and upcoming industries are driving people to compete? New Cars? TVs? Computers etc… What is the NEW product line that makes people wake up in the morning and go to work with a goal in mind? How many people just do what they have to today to survive?
Have industries declined because demand for them has declined? Or because they have saturated their target markets?
It seems to me that people build wealth then spend wealth… it is a predator prey cycle. People with wealth will inevitably have to spend it and thus the system will continue on its own natural cycle. I don’t think it is that hard to understand.
Our debts are pretty bad. But might I ask who this new loan of ours is taken against? (China?)
A little good sense and hard work seems to be the new prescription… and personally I’m fine with that it sure beats watching TV.
Edwin,
Lets not also forget that so much of what we have today (including our economy growth) has been in some way created by a small number of extremely hardworking and talented intellectuals. I am referring to those responsible for creating modern mathematics, science and all the theories that go with them and are applied daily by corporations around the world. Many of these people have written books in engineering and often times were lowly paid professors. Without their work today’s society wouldn’t exist. So before you quote business and trade policies and other things of that nature take a good hard look at the infrastructure of learning and knowledge that has been in slow decline in the background of its very use.
Matt,
I think the issue is that the business people who caused many of these problems need to be flushed out of the system.
It is good to hear people from GM have that kind of spirit as opposed to what has been shown on the news. I can only hope that the people internal to GM can push their management to make their products better and more what people need.
Hopefully more of GM’s engineers and development persons read these blogs. It would be nice to have more interaction with development people and be able to post suggestions and feedback that wouldn’t be turned down by management like one of my suggestions was by Mr. Lutz when I sent it in.
Nate,
Most of what America has comes from the great entrepreneurial genius of men like Henry Ford, Bill Gates, Larry Page and those like them across the land.
If you’re talking about business genius, the American auto companies are the most excellent companies on the earth. To their credit, they have managed through the excess of big government regulations and taxes on three continents. GM is a founding memeber of the DOW.
As to the so called bean counting intellectuals, Henry Ford didn’t even have accountants and created one of the biggest companies in the world. The so called theororists came along afterward to live off the excess of American prosperity that was created for them by great entrepreneurs.
Your comment to Matt is completely misplaced (business people that caused . . ). Caused what? A large manufacturing enterprise requires credit. Its so simple.
GM builds the products people need. Families with children have needs that the sterile utopian intellectuals simply cannot grasp. That’s why families buy SUVs. They buy them because they want and need them.
As to blogger suggestions, GM obviously listens to our collective suggestions, but these are just brainstorming ideas that we hope can help GM see what’s going on in the market place. We know that GM engineers are the best experts in their fields and we have great confidence in their judgements. They’ve built on the finest companies in the world, they’ve proven themselves.
Nate,
You asked about anti-war.
I’m certainly not a pacifist. Wars should be rare. The elitist problem has taken America to war at regular intervals in the last half century and is responsible for the war debt cycle. Strong leadership of Eisenhower, JFK, and Reagan kept the U.S out of wars with a policy of Peace Through Strength.
Free markets are not to blame. Where did you get that idea. Read the book Greenspans’s Fraud by Ravi Batra and Bad Money by Kevin Phillips to gain some better insight.
Edwin,
When I speak of business people I speak of people who went to school at business schools and have soaked up the theories that are taught and seem to have caused a lot of this wonderful mess we are in.
Sure a large manufacturing base requires credit. I just don’t see that as a good thing. Much of America’s success as a nation was built on credit since WWII. To me this makes it an artificial success. And one that can not last.
Trace back to the industrial revolution and pre WWII how different were businesses run then? How much credit existed then?
You are to a large degree correct… GM does build the products people need… unfortunately right now (well prior to this down turned economy) people didn’t WANT those products. This should be evident in the somewhat irresponsible spending habits of a percentage of people of this country.
You are right they have needs that utopians can’t imagine… but contrary to your version of reality (and theirs), this was not always the case. People didn’t always have cars. Therefore that need you claim is false. It is a convenience today. But the question I ask is how long we can maintain and keep that around before nature and reality (aka energy and resource availability catch up).
People buy SUVs largely because they are foolish and self satisfying, which I suppose is ok as long as they realize what the consequences of their actions are in the long term. I don’t think this trend can go on forever though. Eventually it will change and end. But only time will tell.
Personally I don’t know if GM engineers are the best… actually I’m wise enough to not make such comments. There isn’t much that separates GM from any other company out there that utilizes engineers. GM is given the same set of physics laws and data regarding people as any other company out there. Sucess in GM’s field is a function of talent, creativity and problem solving. If GM gets the mix correct they are competitive. When they don’t … they aren’t.
Finest companies? Not in my book. How do you judge the fineness of a company? What parameters do you put onto it?
GM does a decent job making cars and other technology. They have had to learn a lot recently in what people want and have done a pretty good job reacting. I hope they aren’t done because that would be disappointing…
GM the company will never stop needing to prove itself… that is what the market has proven in the 80’s and 90’s when GM thought its products were great and people stopped buying when the competition stepped it up.
I do agree though that GM has the capacity to be a leader and hopefully will do so after some tough changes are made.
Nate,
You said, “How about a little REALITY on that one… you can’t keep producing indefinitely before you have saturated the market with manufactured goods…. I’m not sure why thats so hard to understand for people (including GM).” –
People are constantly buying vehicles for various reasons. Wealth is constantly being generated. With more savings, the economy prospers. That was most evident in the 1990s when the savings rate rose to healthy levels. The implication of a business cycle (other than seasonal) is a theorectical fallacy when its placed in the real context of the war-recession cycle that has taken place fo the last half century. As noted, the long peace time expansions under Eisenhower, JFK, Reagan, and Gringrinch show that business cycles (other than seasonal) are not inevitable as some suppose. One can make the case that the government itself has caused the periods of recessions through fiscal and monetary policies.
Hopefully you see the experts point above that wealth producing sectors (eg. manufacturing, computor programming) create the lions share of jobs, while weath consuming sectors (gov’t retail, service) don’t.
Your notion of saturating target markets is merely temporary to the extent it may occurs at all. Population is growing too. About 20% of vehicle purchases are new with 80% of purchaes being used. Excessive gov’t regulation (CAFE) and over taxation drive the percent difference. The competition is not necessarily the other brand in every case. Suppose new vehicle purchaases could be upped to 30 % of the market total with only 70 used. All auto companies would stand to benefit from the overall profit and beable to innovate even more. You see, excessive gov’t regulations and over taxation causes market distortions and problems in the economy. Excessive regulation decreases money for innovation a market. The governments conflicting regulatory scheme of CAFE/emissions should be repealed or struck down. Its a market distortion that drives up cost, drains capital for innovation, and impedes the business ability to respond to the type of vehicles that people want to buy.
Carmakers could better afford to make changes to offer higher mileage vehilces profitably without the failed and conflicting regulatory scheme of CAFE/emissions.
The free market itself hasn’t caused the problems, its the government policies that have caused it.
America is a free country. People are free to chose. Families like and need SUVs, that’s why they buy them. Once again some sterile elitist intellectuals may be able to get by with a small car – so what. The Founders specifically denied to the government sumptuary power over people’s spending choices at the Constitutional Convention – It was nearly unamiously rejected.
Some on the far left might like to live the third world life – in a hut on a dirt floor without running water – well they can hop a plane and go for it – but they ought not be trying to force their Marxist world view on others. Totalitarianism is a failure.
I just want to know when Tom is going to take GM up on its offer for a visit. Since he has so much to offer he should not be afraid.
Only in America can a journalist with no in depth knowledge or background about a particular company or industry be one of the media’s most sought after voices on matters related to that company and industry. Has anyone ever asked what are Tom’s qualifications to speak with authority about GM’s mistakes and product decisions? Does he have an engineering degree? Has he ever actually talked to any GM engineers or product planners? Does he know how a car works?
Nate:
I can definitely see how some of your suggestions would be ignored. You seem to disregard any facts or common sense obstacles that could make some of your ideas unrealistic or impossible. EVERYONE on the internet has an opinion, but not every opinion can be called a useful idea. I would think ideas from this blog would stand a greater chance of being accepted if there is consensus amongst numerous posters. Oftentimes your ideas don’t seem to resonate with others here. I certainly don’t understand or agree with much of what you suggest to GM. I don’t think GM engineers or designers or execs can be expected to respond to every single suggestion posted here, especially when some are hard to take seriously.
Edwin,
I still can’t agree with you. Then again I DO take an engineering view point. If what you say is correct then applying AC circuit and signal processing algorithms to the market should make sense of things. Here’s where I find fault in your argument.
1) Wealth is a function of several factors whose simplest forms are: Resources, Energy, Labor (a function of resources and energy). Wealth can only be generated if resources and energy are available.
2) An economy can’t prosper indefinitely on savings alone. Our current economy is a great example of his. People have been saving for retirement for a while and without more money in the system the savings have to be spent….. though in the present case there was wealth being built by people collecting money that others were spending via debt. The whole idea of wealth and savings is relative. And in regard to savings it almost must follow the same rules as an engineer has to apply to physics. Excluding imports and exports (sinks and sources) our economy’s balances must add to zero. Otherwise monetary (and thus resource and energy) conservation don’t exist (again neglecting imports and exports).
You can talk war spending all you want but the only real reason wars are bad is when the US pays other countries to fix the damages we cause. Otherwise 90 to 95% of war spending is put back into the country via various defense contracts.
Again explain to me why the war-recession cycle happens? and why it is bad?
So let me understand what you said “Hopefully you see the experts point above that wealth producing sectors (eg. manufacturing, computor programming) create the lions share of jobs, while weath consuming sectors (gov’t retail, service) don’t.”
Doesn’t that mean they should add to zero? If one is producing wealth…… then those same industries are also spending and consuming it. I think your statement is flawed from a logical standpoint.
You are correct to a point. Markets do get saturated… but markets also change constantly (GM’s big problem in the past was not being able to keep up). So yes a saturated market is only temporary. But that doesn’t mean that GM’s new car market doesn’t have a ceiling. A little reality check should make almost anyone realize that ALL car companies can not continue to grow their markets forever… at some point they will no longer be able to grow (supply/demmand and resource/scarcity).
If new vehicle sales go up to 30% some other market suffers (excluding population growth and resources expansion). Again I must have missed your point.
Sure excess gov’t regulations cause market distortions but in what time scale (1 year, 5 years, 20, 50, 100, 1000 etc..)?
I disagree Excessive regulations moves innovation to a different spot where it is “needed” whether or not that spot is right or not is a different issue. Now I pose this question to you. If the EPA wouldn’t have passed emissions laws in the 1970s would cars of today be as good power wise or as fuel efficient as they are? Or would we still be running 400+ Cubic inch engines with carburetors?
I don’t have the answer to that one personally. But I can tell you that the EPA being around caused a shift in R&D. The same applies for the space race. Some argue that it was a foolish way to spend money. But how many people have a clue as to what industries were effected and benefitted from that government program?
I guess you haven’t realized that in the long term CAFE/emissions laws are a good thing overall. They force research work to be done on engine technology and also force more efficient use of energy… something that wouldn’t happen until energy prices became an issue. At least this way automakers are being forced to be proactive rather then reactive. Despite the cost and arguments by the old school thinkers… I think that is a good thing.
I also notice that cost cutting is what has helped to drive our economy where it is. If it were not for cost cutting and companies trying to get away with less people doing a given job would we have the unemployment we now have? (Another question I can’t fully answer to a reasonable degree of certainty).
People are free to chose… and many of them have done so regardless of government policy (yes I’m talking about those who chose to take out loans they couldn’t afford because they were free to do so).
Alocholics like and need alcohol… that doesn’t make it good for them…. why would people wanting and needing SUVs be totally ok? Sure it may be an odd comparison but the reality is that many Americans live day to day with little regard for their impact on their neighbors and the world around them. Most of the time this is ok (even now). But at some point that freedom we all love will be limited because of our own carelessness.
You are 100% right the founding fathers denied the government that power… unfortunately they are long dead and gone. Additionally times have changed somewhat and a portion of the population thinks the Constitution is old and no longer as valid as it at one time was.
Again I will state that ALL people CAN and HAVE gotten away with NO cars… so who cares what the elitist says? The founding fathers used horses to get to their meetings and it took them days. I suppose you want horses to come back because it is what the founding fathers wanted?
Have you ever lived without running water?
What gives you the right to force you ways on other people? (and I’m not saying your views are necessarily wrong… just asking what gives you that right) And based on that ending statement you made.. you sound like the elitist now.
sheth,
Do you really think everyone in GM knows everything about GM? Certainly one doesn’t have to be a complete expert onto GM to make some comments.
sheth,
Maybe my suggestions are being ignored. But forums like these are exactly what GM needs. Forums encourage people to discuss issues surrounding GM’s product line. And with a bit of direction People could discuss and eventually agree upon some things (not everything), and that would provide GM with some useful feedback. Certainly more useful then nothing at all. Or random chaotic discussion noise.
I’m not sure why you think I disregard facts or common sense. If common sense were really common everyone would have a few copies. I try my best to be common sense oriented in the most general, overall way possible without losing specificity or objectivity.
Please feel free to name places where I disregard any facts or common sense obstacles that could make some of my ideas unrealistic or impossible.
If anything I have thrown common sense back into the mix with things regarding the Volt, electrical power, market issues etc… From my point of view there are a lot of people lacking in common sense. Which is ok and I am not criticizing them. I justify my own statement by looking around at the economic world in the US and at GM’s position. If everyone else’s views are so spot on why is GM in the position it is right now?
Everyone does have an opinion… there are however on occasion right ones and wrong ones. Sometimes my opinions are wrong, other times other people have opinions that are wrong. That doesn’t make their opinions worth any less. I just try to back mine up with technical information when possible… and at other times they are purely opinion.
I don’t think there necessarily needs be consensus for these blogs to be effective. Disagreement and diversity help to strengthen ideas and the positions they hold. If this weren’t the case would the US constitution be what it is? Just how long did it take to agree on the final draft (perhaps you know). Discussion is good… Consensus is even better…. consensus would sure help GM.
The problem with a consensus all the time is that GM doesn’t get the best solutions. However, with open discussion GM can see multiple angles, customer viewpoints and sometimes even ways of looking at things they never had. The downside is trying to make some sense of it all or trying to do it all at once.
In all honesty I don’t expect all people to get what I say or understand it. Here is why. 1) My opinions and views are much different then what theirs are. and 2) I look at things from a total different angle then most people. 3) I backup my viewpoints with the collection of my technical expertise and knowledge (which is stronger in some areas then others).
As an example the dropping of Chevy and replacing it with Opel… many people object to this because Chevy is such a well known brand. BUT if GM drops Chevy and reinvents Chevy as a new brand name GM can regain market share lost to the “Imports”.
Simply because there are many people out there who will not buy a Chevy simply because it is a GM (the same way a lot of GM people won’t buy Fords). Replacing Chevy with a mostly unknown US brand (Opel) gives GM the “hey we’re new and do things differently” image. Saturn was supposed to be that way… supposedly it worked for a while (I’m not sure what happened on that one). Sure some GM customers are going to be lost out of disgust… but did that really effect GM sales when they shut down Oldsmobile? Did Oldsmobile customers move to other brands or find other GM products that fit their preferences.
But I’d be willing to bet that most of them are such die hard GM fans they will buy anything GM makes even if its a new brand name no one has ever heard of (in a while) like Opel.
Additionally GM is going to be forced with some difficult decision soon that will all but dictate reduction in models to perhaps 15-20 or so cars worldwide (I predict 10 in the US). So why not start the process now and figure out the most effective way to do it?
As for branding, it should be pretty obvious that GM could call their car “POS” and if it looked good and had a good value people would buy it (just look at where Hyundai has gotten (and what they have done) with the Genesis).
But branding and model names have an impact on perception. GM has a loyal base of followers who think GM makes a good car (or just want to buy domestic). These people won’t really be phased in the long run by a GM name change. On the other hand GM has a reputation with a lot of other people that GM products aren’t worth buying. That reputation GM has to change. Some of the fight is simply stubbornness by these people. The rest of them probably would buy a Chevy on a recommendation by a friend or relative. With that said wouldn’t it make sense to remove as many of the buying issues from people as possible even if it is something as simple a a name or logo?
As another example… I personally think the new Malibu isn’t a bad looking car… but the Chevy logo I think kills it. Would the Opel or Oldsmobile (new) logo look better…. I sure think so. Does everyone agree. Probably not. But consider it. What if a logo change is all it took to get a 5% increase in customers. Would GM do that?
What is your opinion? How much does a logo and brand name really mean? Can we take any car on the market and put a different brand name on it and change the way it sells? Could I for instance rebrand a Hyundai as a BMW or Toyota and change its sales numbers? How about a Toyota or Honda and branding it a Chevy, Ford, Chrysler or Toyota?
What about rebadging a Lexus as a Toyota? Or an Acura as a Honda? How would that change things?
Do you see my point?
So is that really such a crazy plan? I’m not sure…. it could actually work. But GM fans only see things from their GM point of view. How often do they talk to people who refuse to buy GM and find out why or figure out a way to solve the problem?
I’m out there all the time asking people why they wouldn’t buy a GM or why they trash talk them. A lot of it is lack of (technical) knowledge. Some of it opinion and some of it habit. How much do other people ask similar questions to people they know and run into?
My ideas don’t have to resonate with others. This isn’t just a GM fan site. This is a GM information and awareness site. A site for GM to get some insight into their customers and POTENTIAL customers, and a place for GM to communicate with us. If you want harmonic ideas pickup the latest Chevy or Pontiac enthusiast magazine and read about camshafts and 550 HP V8s.
There are a lot of enthusiasts here, and there is nothing wrong with that… but this site hopefully serves more of a purpose then patting GM on the back (especially when GM is having trouble). This site should serve to aid GM.
Being a creative engineer myself I can to a degree be objective and reasonable in my technical assessments. Any engineer with a bit of logic and common sense should see some logic in things I discuss. It certainly is more useful then those with no technical background trying to comment on technical things they know next to nothing about. At least give GM technical people something that make sense to them and they can relate to and work with.
A 100 MPG car that runs on compressed air would be tough to take seriously. A car that is Turbocharged, gets 32 to 34 MPG and is competitive with other brands shouldn’t be to much of a stretch for GM engineers.
Suggesting ways to improve products and encouraging other bloggers to think more about their posts shouldn’t be considered a bad thing either. In fact if I get one person to stop and think about a post and what is said and going on… then I have accomplished my goal.
Hopefully I don’t sound to full of myself in writing this. If I do, my apologies. That isn’t my intention nor has it ever been. But I find that often times people need to be grounded in technical reality and at least aware of what GM’s engineers have to work with. That way they can offer more educated commentary and feedback, which IS more useful to Engineers at GM.
Nate:
Economists would include your notion of energy, creativity, and labor, for example, from the above statements regarding wealth creation. The point was simply that there are wealth consuming sectors (sectors that overall tend to consume wealth), such as government, retail, and service.
Looking at your statements above again, It seems you may have meant corruption or mismanagement in the free market rather than the free market itself. If that is what you meant then that’s fine. Free market is an economic term of art so to speak. To clarify, some pundits have confused the ‘free market’ with criminal activity, corruption, and mismanagement at the Federal Reserve. Corruption and mishandling of complex instruments like credit derivities doesn’t imply that its fault of the “free market.”
Regarding the Volt, it seems to be a niche product. Its fine to a diverse array of choices for consumers, that creates competition. However, I believe that alternative fuels show more promise as a technology than batteries per se. Alternative fuel offerings may one day include combustable hydogen booster devices such as hydroxy gas, but that is for another topic.
To answer your question about branding, the issue is not the name of the core brand per se, its creating Brand Mystique with new model offerings. Changing brand names would only confuse the customers about the segment and alienate the base. Building brand loyality is an important part of sales. A core brand energizes the base with its classic appeal, its very important to GM customers. To win those who are disenchanted, or those who had a negative experience, its energizing/re-energizing the Brand Mystique and reinforcing the quality perception that are the issues. Placing models correctly within the various brands is also an important issue.
(Holden and Opel contribute GM’s overall strategy and consumers appreciate that too).
To illustrate. Chevy is an entry level brand, that gains appeal form its racing brand image. The Corvette generates Chevy’s strong brand mystique. Thus, Its a part of the GM energy and enthusiasm The Malibu is a great looking car.
To answer another one of your questions, if the GM had a Malibu offering called a Cutlass Supreme, sure it would sell in huge numbers in addition in a stronger economy and generate added profit. The GM strategy appears to be that the Oldsmobile customers should buy the 2010 LaCrosse. Oldsmobile customers may be fine with that especially if it included a small V-8 with a performance name like LaCrosse Grand National which would energize the ‘brand mystique’ for the higher level buyer at Buick. Buick needs a shot of youth, a performance name/ or a classic name appeals to the consumers with a higher taste for brand mystique. GM enthusiasts are trying to convice GM planners that this is not, “competing with ourselves” as some have alleged. GM enthusiasts would contend that youth appeal should be across corporate line-up in every core brand, from from GM’s the lowest price point to the highest price point in some form – older buyers like style and performance too, just as some younger buyers appreciate and desire refined looks.
A great way for GM to capture the tuner crowd from Honda (Mugen enthusiasts) for example would be to use the brand within a brand concept at Chevrolet by expanding the use of the racing flags emblem from Corvette on select models such as products like a Chevy Stinger (formerly Saturn Sky) sitting beside the Corvette.
Brand Mystique is multifpiled by advertising through various media, and high profile performaces at the auto shows. GM enthusiasts are the ones who want the auto shows to be high profile celebrity oriented affairs, they must make a big splash on the stage, like a lavish inaugural event.
The Firebird Bandit is a hot product that will energize the youth market to GM. That is a way to wow the public. Pontiac should drop the G5, and let the Cobalt dominate this model segment. Pontiac should have the Solstice, the Astra, the G6, the Firebird Bandit, and the G8.
Cadillac should offer an entry level Alpha platform that competes with the BMW 135i and Lexus IS taste. Its important to energize the upper class youth taste toward GM with this type of a product. The CTS-V appeals to them, but a small affordable entry level perfermance teaser, i.e. a miniature copy cat, would bring them into the GM fold and keep them there.
Lexus ES and IS are essentially rebadged Toyotas, and Acura likewise is a rebadged Honda. Of course, the higher name generates more sales.
THE CASE AGAINST EXCESSIVE REGULATION:
The comment was excessive regulation, not good regulation. A benefit such as having no lead fuel for example and using ethanol as a octane booster (as opposed to toxic MTBE) are good regulations.
CAFE is a failed policy, its original authors even say so. The conflicting regulatory scheme of CAFE/Emissions together is excessive and wrong. Excessive regulation destroys innovation by reducing profits. Excessive CAFE/Emissions may in fact have slowed the development of more fuel efficient vehicles by reducing industry profits.
Incentives are fine, but mandates are not, especially unfunded mandates. The auto industry has led on innovation from its inception.
Utopian critics are also dead wrong that customers would not chose an innovative product on their own with government manipulation. For example, a key selling feature of the Escalade is that it has the highest fuel economy and horsepower in its class. Even customers that aren’t concerned about the price choose the more fuel efficient Escalade. GM responded to free market competition and beat the foreign SUVs.
You brought up the 1970s. Again I say, It was the debt war cycle – Vietnam and stagflation in economy – that delayed innovation and reduced operating profits for the car companies to implement their newer technologies. The auto companies were victimized by the elitist war-debt cycle. Hard working Americans in the auto industry are not a slogan ‘legacy cost’ and American management is not to blame for government’s excesses. The drive by media must have missed the economic impact of the Vietnam War when they wrote their misplaced critique of the auto industry.
The Malibu gets better fuel economy than the Camry or Accord. Its not CAFE or even gas prices that did it, its free market competition that did it. Fuel economy and looks are a selling features of the Malibu. Consumers just like more fuel efficient vehicles by vehicle class on their own without government mandates. Consumers do like the information on the window stickers. Let’s repeal or strike down the conflicting regulatory scheme of CAFE/Emissions and have a voluntary rating system. Its fine to have a EPA displays of fuel economy and emissions on the window sticker for customers to have the freedom to choose. Providing Information is a good regulation. Have confidence. The consumers will choose for themselves. Take the shackles of excessive CAFE/Emissions off and let the auto industy innovate – it will happen much faster with more profits. The top of the market generates profits that helps to fund the innovation.
The auto industry would be better with goals, EPA ratings with posted consumer information, instead of excessive conflicting reguatlory schemes of CAFE/Emissions. Let the consumers choose. GM regularly builds vehicles that exceed federal safety standards for example. Thats free market competition that does it, not the reguation. A key selling feature are five star crash safety ratings, for example, and not the regulations themselves at all.
Let’s repeal or back off CAFE/Emissions for while and let see how consumers act on their own instead of imposing gargantuan excessive reguations that will take away money from innovation and create market distortions.
About 20 percent of vehicles sold are new, 80 percent used. If reducing excessive regulation increased new vehicle sales to 30 percent of the total, all car companies would benefit, and consumers would have more of the latest, newest, technology on the road faster. Therefore, excessive regulation also slows down the flow of new technology to the market place.
There is much engine technology that could generate a profit during an economic recovery that GM has had to delay offering because of the cost burden of excessive regulations and the recession.
Let’s give American manufacturing a chance for a change.
Edwin,
My point is there are just to many brands right now. GM has to many models. They need to get rid of the overlapping ones and consider further consolidation. If they don’t the ship will soon sink.
The Malibu is a great looking car… I just don’t like the rear tail lights and certainly think the nice curves of the grill are broken up by the UGLY chevy Bow Tie. The Bow Tie belongs on a truck not a sleek looking car. Even the Corvette has its own Model Logo… where is this thinking with the rest of GM?
Why doesn’t have the Malibu have its own emblem? or any other GM car?
I’m not looking for a new Cutlass that ship has sailed…. I was again merely stating that the old 1990 would have been worth putting a modern drive terrain in (by me), unfortunately the interior and under dash guts started to fall apart. AND a lack of reasonably priced replacement parts weren’t justified for a car only worth a few thousand dollars….. And on that note if it weren’t for that surplus of new cars our old ones wouldn’t drop in price so fast… how about repower kits? or fixing older cars? Or even offering hard to find parts that aftermarket companies don’t offer? Ok that may be a unreasonable but would be nice.
Sure I think the LaCrosse is nice but it is stacking up to be a bigger car then I want. If I’m going to a car that big (and probably at that price) I’d rather buy a used CTS with all the bells and whistles…
GM would be bette off with the Insignia. Additionally one of the COOL things about the Cutlass I had was the push button computer (which by the way was found in not only the 1990 Cutlass but also the 2001 Aurora not bad for something so simple). There was an appeal to me of the Cutlass with its all computerized (very 90’s) feel. It was almost like driving around in night rider with a computer to tell you all kinds of neat things… I don’t see that now in cars oh well….
Buick does need a shot of youth the Insignia would be it as would a Subarua WRX like car with a nice interior…. perhaps a re-bodied, re-interiored, direct injected, renamed Saab or G6??
But isnt’ that a reason to replace Pontiac? Let Chevy handle the cheaper ones and then give Buick high end versions?
Well with regard to the young appeal… cars are no longer about transportation with a few enthusiasts wanting power and performance… now everyone wants that. Now there are a small number of people who just want a regular car.
Sure Chevy could do that but they are better off making a new emblem for the Saturn Sky… the real issue is the interior. There are people out there that want cheap small cars and those that want small high end cars… compare and contrast Mazda Miata to BMW Z4, Mercedes Kompressor etc.. if you want to market a car like the Sky to this market area they need to offer a full array of options and features… For example offer the Solstice body as the low end and then the Sky as a high end with V8 engine or turbo V6 option with a high end Nav interior…..
Sorry but the Pontiac Bandit is an old name that I find nothing interesting with. In fact the word Bandit isn’t even part of modern parlance. The name seems dead to me.
Cadillac could have a small Alpha platform… take a Saab and redo the interior and exterior OR perhaps an Astra… but there again is the problem…. the buyer doesn’t want a badge engineered car. It dillutes GM’s creditability when people finaly figure it out. The CTS for example is probably a modified STS or vice versa but it doesn’t seem that way… GM needs to avoid grabbing something from the parts bin…. if they want a 1 series competitor they need to do what I suggested in other posts… Make two brands Opel and Cadillac… they can share cars between them but they have to be different enough that no one ever suspects they are at all related… then they will have a full lineup.
Cadillac has the BLS in europe.. but its not RWD.. personally I want a Small G6 sized AWD car with Cadillac exterior and interior. The BLS isn’t a bad reference car.
Well… Lexus ES and IS an Acura aren’t perceived as rebadges… and honestly I can’t tell at all…. if anything I think the Accord is a rebadged Acura. perhaps there is a way to spin it… GM needs to launch flag ships first like Cadillac and Buick. Then launch the watered down versions. this way people say “well the ______ is just a cheaper version of the ________” Rather then GM developing a low end car and making into high end (as would be the case for example of re-engineering a G6 into a 1 series competitor Cadillac)
On regulations I slightly disagree. There needs to be a strong push on economy. Consumers will never demand as bad as government can push it. But considering that the US has spent so much money on foreign fuel the first step is to increase efficiency or reduce demand or both. The real problem is that the average person could care less about their country wide impact. Sure I can afford gas… and you can afford gas and could care less about MPG. BUT when we add all the people with that attitude all of a sudden we have a real resource issue… or more so a foreign trade issue.
I think CAFE is smart and should have been done years ago. There is no reason a G6 can’t get 32 or 34 MPG… sure you want 250 HP… where are the turbochargers? Sure it costs more money to the consumer… but cars in my opinion are being produced far to fast and being devalued to quickly. If GM hadn’t ramped production they wouldn’t have out supplied the market and wouldn’t be in such a mess right now. Additionally if people valued cars more replacement would go down and value would stay higher… it would be a market shift.. How much more can saftey standards improve? How much more can we buy cars on the shinny factor?
CAFE makes sense from a national standpoint. We as Americans expend energy in a careless manor. The least we could do is be willing to pay for a bit more intelligent use…. the money we save would go back into the economy instead of up in smoke to foreign companies that are in possibly politically unstable countries.
I’m not sure where the problem with CAFE is besides people being cheap and not wanting better products. If GM can’t compete with new CAFE regulations then tough…. they should have had wise people looking ahead far enough to realize tht higher MPG was inevitable rather then people only concerned with this year’s profit. And they should have had their top, most creative engineers working on turbo cars and their alternative energy vehicles with a goal in mind to bring them as soon as possible.
Now with that said I think there is a practical limit to MPG right now…. probably about 36 to 38 MPG equivalent. It will be hard to get many cars this way.
I agree on the unfunded mandates… but then again GM is now Government funded.
I could see backing off CAFE a bit but not totally repealing it. Perhaps lowering CAFE to 32 MPG would be a bit easier for GM… but I think they need to mandate a super high mileage research and marketing program. Where GM is required to sell X number of super high mileage vehicles (like Cobalt Diesels or super range Volts).
I don’ think new vehicle sales is a big deal. Or at least I don’t agree that we need more new vehicles as a country (and this gets back to why I support CAFE). If CAFE would have been pushed 10 or 15 years ago the fleet wouldn’t need to be turned over so fast. Making cars to make cars doesn’t totally make sense to me. People need new cars but there is a point at which there are just to many of them and the industry is saturated.
Just my thoughts.
What I disagree with you on is that regulations are what has made much of current technology. So removing them would most likely reduce technology levels in the future because of cost burden.
No matter what people have to pay the costs associated with their energy consumption.
We Americans have given GM a chance for more then 15 years. I personally have put off buying a new car because GM doesn’t offer what I want and I just can’t bring myself to buy non GM. So I will keep waiting and keep driving my 29 MPG 20 year old Buick until GM makes something that makes me want to go out and buy a new car. Even a that I prefer not to take the depreciation hit of a new car. Perhaps GM can fix that… figure out why resale is so low……
Hey David, you seem to be reeping with information regarding Toyota. So where can you still view a Toyota built in the 1950’s, not like the classic GM vehicles people still take pride in showcasing. I have never seen an older Toyota, wonder why????