Friedman Is Wrong on Detroit

New York Times columnist Thomas L. Friedman is getting a lot of air time re his commentary on the Detroit auto mess. I no longer calling it the “US auto mess,” because Toyota, Honda, Nissan ARE profitable and manufacture product (good, reliable, cost effective product) in the United States. Toyota for instance produced 1.3m cars in the US last year which is about 10% of this year’s projected market. Friedman blames Michigan politicians as much as anyone for protecting the Decimated 3 (maybe I won’t call them the Detroit 3 anymore), an argument that has some merit.

I rarely disagree with Friedman who is a superb writer (The World is Flat is awesome) on world issues – economic and political, but to suggest that the answer to the D3 woes is fire all management and impose a government mandated seer is not something that stands well to examination.

Like many other observers, I am gob-smacked at the poor sales and market share performance of Detroit over the last 40 years. I mean these companies have recruited some of the best and brightest marketing, sales, development people in the US over the years with little success. Ford and Chrysler have had management makeovers in the past two years. Chrysler most obviously has brought in Bob Nardelli, a very effective if unpopular executive, recruited respected Toyota veteran Jim Press to head up sales and poached a number of other executives from the Japanese car companies. Chrysler seems to be getting the right people on the bus, just as it is veering off the cliff.

Ford’s recruitment of Alan Mulally appears to be a good move and this company whose market share was 50% higher than its current 16% at the start of the decade is getting its act together in terms of product design and quality.

GM management is GM management which must be part of the problem. This company needs a giant kick in the butt with a major change in marketing and production mindset. For instance Bob Lutz, GM vice-chairman recently told journalists that “global warming is a crock of shit.” How can that mentality still exist in a car company? How can that mentality drive eco-friendly, green, low consumption vehicles. Change in GM is unlikely to happen without serious outside involvement. Of course, if the government does bail out D3, it will be tied to uncompetitive executive compensation which IS a crock! GM and others need the likes of Nissan’s Carlos Ghosn to give them some chance. He ain’t gonna take a job like that for peanuts!

I visited the GM plant in Janesville, WI last year when things were still going relatively well. The people were quite simply nice and friendly. Now they and thousands of others are out of work with bleak futures. This whole thing is a complete mess and worst of all, no one seems to have a good answer.