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My wife Catherine and I live in Ottawa, Ontario in Canada; I am co-owner of two small strategic technology management consulting firms and she also runs her own business. We have never owned anything but North American cars. Other than my dad's old 66 Chrysler Windsor, my own cars have all been acquired new and have included an 80 Ford Mustang, 82 Mustang, 86 Pontiac Firebird Trans Am, 92 Chevrolet Lumina, 95 Chevrolet Astrovan, 94 and 97 Chrysler Concordes plus 99, 02 and 04 Cadillacs, 2000 and 02 Chrysler Intrepids and an 07 Mustang convertible. Catherine has also had a Dodge Shadow plus Omnis and K-Cars. For family use, I have also leased or owned 85, 92, 97, 03 and 07 Dodge Caravans; these have been used in my wife's business, to haul a long succession of six little kids and (later) teenagers among events, to traverse this country as a family and to take dogs to and from their exercise. This would seem to put us very close to the core of Chrysler's market demographic for the mini-van. We love North American vehicles because their wide range of options permits us to order them to exactly suit our needs and because they are generally better suited to the far-suburban and rural environments in which we have lived.
Catherine's 07 Grand Caravan was recently involved in an accident resulting in our being provided an 09 Grand Caravan rental vehicle as a loaner. Our use, and close inspection, of this vehicle has resulted in our reaching the alarming conclusion that after FOUR successful generations of mini-vans, Chrysler has chosen to give away the store. Our assessment of this vehicle after using it for a while is as follows:
-the whole vehicle is unduly boxy, almost ungainly, in appearance and does not have the pleasing and balanced style of its predecessors - nor is the handling as good;
-entire dash panel looks like it was designed only to minimize cost and please accountants - it is overly busy and badly organized and the materials used are just too cheap;
-lighted row of buttons along the top of the radio in the bezel can be a source of distraction at night;
-sticking straight out of the dash panel, the gear selector is in an inconvenient place, it has no
3-2-1 gear settings and would also be a hazard during a crash;
-the wiper stalk is way too busy and confusing to use and the cruise control stalk can be easily
bumped without realizing it;
-the heater buttons are not useable when wearing gloves and a single control to move the vents
up-down and left-right would be better than the existing two controls;
-twisting bolts up from the floor to get at the spare tire is basically ridiculous;
-way too much force is required to close the sliding doors
-the overhead glasses holder has a nasty reflective coating which can cause glare if opened at
night when other drivers are following;
-the sound of the horn is closer to that of a bleating sheep;
-the washer fluid fill spout is still far too close to the alternator;
-the fob-only key is most likely useless if its battery fails and in any event it is likely to be confused
with a toddler toy;
-the rear window openers are the clearest example of K-Mart quality we have seen in a long time - they are pathetically cheap-looking and cheap-feeling - any young child could easily break them accidentally; and
-the rear-seat middle shoulder belt retractor in the roof is not recessed sufficiently to avoid being
a hazard if a little guy should bounce up and hit it with his head, even when the vehicle is not
moving.
>>> We could go on, but surely the point is clear; the new mini-van is not as good as the one we soon will receive back from the repair shop, so we won't be buying or leasing the next-generation Grand Caravan.
What this vehicle says to us is this: it seems that Chrysler cares more about this-quarter profits than
about providing our family with a quality and durable vehicle. In fact, it is obvious that they are now in the process of totally exploiting - indeed rapidly emptying - the vast well of goodwill which their mini-vans have built up over the past two decades.
In my view, this new mini-van is an icon for what is wrong with the North American auto industry; they have become so dominated by their finance sector that they can hardly see past their noses and they certainly cannot see far past the next quarter. Let's consider a few examples, these drawn from GM but there are plenty to go around for the others.
1. Between World War Two and the mid-1970's GM dominated the transit bus and intercity bus industry based on its early leadership in the design of diesel engines, its early commitment to hydraulic (automatic) transmission and its willingness to offer almost any combination of vehicle width, length (hence passenger capacity), gas or diesel engine and manual or automatic transmission which even the most finicky municipal transit authority could specify. Put simply, GM had a broader catalog and built a better bus. However, despite receiving some U.S. federal government development funding under the Transbus innovation program in the 1970's, GM never really re-invested enough money to maintain its leadership in the bus business and by the 1980's they had forsaken it. Short-term thinking eroded the long-term future - too much money paid out in dividends to please the financial community and not enough re-invested in the core business.
2. During the same time period GM's Electro-Motive Division (EMD) also dominated the diesel locomotive business with over a 50% market share, ultimately driving all of Baldwin, Fairbanks-Morse, Lima-Hamliton and Alco out of the business. However, this same undue dominance by the CFO eventually afflicted EMD as well and (in terms of re-investing money back into the business) during the 1975-1990 period they fell far behind General Electric (GE), the only major remaining competitor in North America. By the end of the 1980's GE was beating GM hands-down in both quality and market share and EMD was placed on the block, with no would-be buyers. While GM then did put some money back into resuscitating its loco business it also again turned to cost-cutting by shutting down the giant LaGrange, Illinois plant and moving all production to Canada when our dollar was particularly low. Soon afterwards, railroad demand for new locomotives skyrocketed and the remaining London, Ontario plant could not cope with the level of demand; build quality began to suffer. GM was ultimately forced to deliver "kits" to railroad customers and have them assemble their own locomotives in their maintenance shops. What a humiliating testament to idiotic corporate decision-making.
3. John Delorean wrote a great book called On a Clear Day You Can See General Motors in which he described how a stifling management system with a galaxy of committees had turned GM into an unfathomable mess in which it was almost impossible to get a final decision on anything.
4. Then there were the GM buying binges in such areas as aerospace (Hughes and others) and advanced technology (most notably EDS) and there was also the remarkable good sense that Ross Perot brought to the GM Board - he so badly rattled the lot of them that they eventually paid him something like $800M to go away!
5. Just one more example; when the 2000 Cadillac DTS (DeVille) was introduced - for the first time since 1949 - it had no fins at its rear. Traditional Cadillac owners decried this un-branding of the car, resulting in the fin style re-appearing in the following incarnation of the DTS - a not-very-tacit admission that GM had blundered once again.
So, what is the FIX for the North American big-three car-makers? There are some things which can be done to move us forward.
1. First and foremost, as with Chrysler's earlier bailout (all of which was paid back), what we need to do is force long-term thinking and force commitment to a practical business plan. This means putting strategic thinkers, risk-takers and real leaders - not bean-counters nor senior chief bean-counters - in charge of each of the companies. For example, Lee Iacocca has never been described as anything other than a car guy; I cannot recall anyone ever calling him either a bean-counter nor a stuffed-shirt bureaucrat. Without him there would have been no Chrysler recovery during the 1980's.
2. Bring in bright younger people and un-shackle management from its long-standing traditional thinking. For example, why not build turbine-electric cars with one or two very small turbines which could generate electricity to drive an electric motor at each wheel. Such a car would have several important advantages:
-a turbine can burn almost anything - gasoline, diesel fuel, ethanol, jet fuel, paraffin, kerosene,
stove oil, very bad wine, maybe natural gas etc;
-turbines provide high efficiency and very complete burning of fuel when run at a constant high
speed, which would be required to drive a generator or alternator;
-with smart power controls you basically get free anti-skid and traction control and you can also
use the motors in reverse mode as dynamic brakes, turning kinetic energy back into electrical
energy (just like they do on locomotives) and then - in the case of a car - putting it into batteries;
-take bleed air from the turbines to operate major power accessories including steering, brakes,
windows, internal and external defogging and anti-ice and even to put a jet of hot air ahead of the
wheels when on glare ice to improve traction;
-to reduce pollution the vehicle could shut down the turbine and operate in pure electric mode
when in downtown core areas; and
-far-suburban and rural residents could buy stills which would permit them to refine some of their
own fuels from yard waste and other organic materials.
>>> Yes, this program would require a few billion dollars of R&D funding, but the outcome would not only offer the above advantages - it would also be complimentary with having many more millions of home workers, some of whom would surely choose to locate farther away from urban areas - in places where they could easily grow more of the organic inputs for their own fuel stills.
3. Since many batteries used in electric cars have significant common componentry, have the three national governments mandate a standardized electric battery unit - across all makes and models of electric cars - which is rapidly replaceable at any gas station (think of sliding a briefcase out of a slot). You could either recharge your battery (or multiple batteries for a larger vehicle) at home for short trips or simply exchange it for another at a gas station when on longer trips. Batteries will naturally tend to become less re-chargeable over time, but surely we can concoct an accurate way to estimate how much power a battery is likely to give, so that your own vehicle can automatically calculate and display the range available from the replacement battery which you have just inserted.
>>> It is ironic that any of the big three, particularly GM, did not already take the initiative of creating an industry standard in this regard. After all, when GM created multiple-unit locomotives where one operator could control several units, they published the specifications enabling those built by other vendors to be inter-mixed with their own. It proved a very wise move and helped GM come to dominate the locomotive business. Those who resisted standardization (i.e. Baldwin Locomotive Works) went out of business first.
4. Just as we have to remove the hand of the CFO from the tiller of the corporation we also have to remove the hand of the marketing whiz from the tiller. Harley Earl, the father of auto styling, spent his entire career making the North American automobile longer, lower and wider. So what do we do 30 years later - we introduce the Sport Utility Vehicle (SUV), the off-road vehicle that it seems hardly anyone ever takes off-road and which has the same proportions - and center of gravity - as a 1920 Chevrolet sedan - which is to say boxy and top-heavy. The K-car, the min-van and many other great cars were not only what the market wanted, but also what it needed. However, the SUV has had success generated primarily by marketing departments seeking to make it chic or cool to own one - most owners didn't realistically assess their transportation requirements before buying one; they bought it to keep up with the neighbours.
5. Lead from the traditional areas of strength - don't by psyched into giving up the high ground. Just because you hear something N times does not mean that it is true. We have been hearing for about a decade now that big cars are wasteful, irresponsible and bad. While Detroit should continue to produce good small cars there is every reason for it to continue building big cars too - albeit with better efficiency and environmental friendliness. While, for example, the Smart Car may be ideal for running around in an urban core, and despite its good crash rating (crashing into stationary objects) if I am driving a big Cadillac DTS and you are driving a tiny Smart Car and we hit together in a serious crash you are almost certain to get the worst of it. Big cars are almost always safer than small cars - people who live in the country and people who do a lot of driving at highway speeds are better off with bigger cars. Period. For most of the past five decades this has been conventional wisdom, but somehow the marketing machine has recently convinced us that only small cars are efficient and that they - plus SUV's and minivans - are all that we really need. Not true. Small cars have their place as do medium-sized ones, but so too do big ones - as well as other vehicles which GM, Ford and Chrysler build better than anyone else, such as pickup trucks.
6. Create a better financing system for cars. It was lunacy for GM to sell GMAC to a bunch of people who care only about finance and not about cars. Now, GMAC really does not care about GM so it has no incentive to help me buy a GM car; hence, its retreat from leasing which is really going to hurt GM dealers. We need a wider range of financing options including credit unions, syndicated ownership and shared ownership concepts.
7. The concept of free trade in sectors where both parties to a treaty gain is a wonderful thing. The Auto Pact has been a great treaty for both Canada and the U.S. and even admitting Mexico has had its advantages. However, global trade arrangements give us nothing like free trade with the Japanese and the Koreans - they are quite simply eating our lunch. What is missing in Washington and Ottawa is the political backbone to tell the Asian car-makers that we will import one of their foreign cars for every one of our cars which they import. Seems fair to me. GM has only been able to market a small handful of models in Japan and even then with much difficulty. That is because Japan and Korea have terrific non-tariff barriers to imported cars. The idea of our car markers having access to their market is a sham. While we cannot do this tomorrow, we certainly can phase it in over two or three years and it is what is really needed if the North American industry is to be saved. Cars the Japanese and Koreans build here would be counted as domestic production. This measure alone would likely double the size of the domestic market available to our big three.
Dan Perley
dperley@mtc-stm.ca
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