Long Live the US Car Industry. It’s Dead.

I want to start by saying I have nothing but empathy for the workers who are now paying for bad management in Detroit, no matter the company. 

The U.S. car industry ought to be the core of our manufacturing base.  Instead, it has been so poorly managed, under a culture of complete entitlement, that it has made little progress, despite real threats to its survival, over the last two decades.  Want to buy a pickup?

I have been worried that the Obama administration was slipping into complete relativism after a month: all that matters is that everyone at the table is smiling.  Luckily, by getting rid of GM’s CEO, and telling Chrysler the truth even I know, this group has done the country a service.  Long live the King: the King is dead!

I guess it’s like dead tissue: you have to cut away the bad to save the patient. 

Given that I know nothing about the inside of the car business, here is what I see:

1. Japan, aided by a Mercantilist system with strong government support, uses American industrial techniques of constant improvement and quality circles to create winning models in the U.S. market.  They avoid the dumping laws (Super 301) by building plants in the U.S., and in so doing, essentially prove (outside of medical costs paid by their home government) that a) Mercantilism beats Detroit all to Hxxx, and b) they are better at listening to customers, anticipating their needs, cutting production costs, managing employees, and running companies.

2. China is now loaded and ready to do the same, literally within months.

3. Are you ready for India, Detroit?

Of course not.  I want to add my admiration for the combined team of Bill Ford and Alan Mulally: the former for having the courage to do somemthing different when it was needed, to understand efficiency and mileage and eco issues in transport, including reaching outside of the company for a new CEO; and the latter for bringing a new set of eyes, and a proven set of production skills, to the car business. 

Alan Mulally is going to be the best representative of the U.S. car business, and he’s only been in the saddle for a very short time.

Now is the time to be bold.  The government needs to give Tesla the money it has requested, and, if anything, insist that Tesla scale up faster and larger, for a larger sum.  We don’t need a thousand Tesla sedans in two years, we need a million in a year.  This is difficult, but not impossible.  

Chrysler is a private equity bauble at this stage; Obama’s team is right: get rid of it. 

It is as though we have to remove all of the Detroit car management DNA from the site, while saving the workers (assuming they are willing to negotiate and live in the real world of today’s costs).  

The Mercantilist countries are about to win hands down, destroying the core manufacturing companies (GM and Boeing) of the U.S.  (Yes, Boeing is next.  China is just getting set.)

Isn’t it about time to wake up  and realize that:

1. The U.S. needs a manufacturing base.

2. Those who are beating us often use “illegal” techniques, according to the WTO  (subsidized pricing, IP theft)

3. We need to act quickly and intelligently to create a new manufacturing base in the U.S., before we end up all working at Motel 6.

This is an opportunity to do it right, but our future success will depend upon getting out of Detroit’s management culture, and into a new way of thinking and managing.  This is achievable, it isn’t even particularly difficult, but it requires the two things Detroit has been short on for the last thirty years: vision and will.  I don’t care if GM survives, but I care deeply that the U.S. continue to prosper in the transport business.  

Obama and Geithner get an “A” for kicking ass in Detroit; now, I hope it will have some real results.  I expect those are more likely to come from Ford and Tesla than GM and Chrysler.