Excuses For Why The US Auto Industry Failed, And Then The REAL Reasons
GM icon Bob Lutz has a deserved reputation in the auto industry for being a visionary and an innovator. Lutz is a former Marine Corp aviator, a successful businessman, and he’s had a hand in developing a long and distinguished list of vehicles including the Dodge Viper, Ford Explorer, BMW 3-series, Cadillac CTS, the new Camaro…the list goes on.
In an interview at last week’s New York Auto Show, Lutz listed off five reasons for the failure of the US auto industry between the late 60’s and the last couple of years. These reasons are:
- Government fuel economy regulations
- Unfair Japanese exchange rates propped up by government subsidies
- Auto execs who were too focused on the bottom line
- The UAW (with the caveat that this was also partially a management failure)
- The media
You can read all of Lutz’s interview comments here (subscription req’d), but let me save you the trouble. Lutz just repeated the tired old excuses US car companies have used for decades. Here’s a break down:
Excuse Number 1: The government’s fuel economy regulations favored Japan. Government fuel economy regulations were a response to a 73-74 oil embargo. The government’s decision to force automakers to build fuel-efficient cars was made in 1975, and it didn’t gain any teeth until 1978. If GM, Ford, and Chrysler didn’t see the need for fuel efficiency coming by late 1973 or early 1974 – and started designing new products to be more efficient – they should have.
Excuse Number 2: Japan had an unfair exchange rate. This is a tired old excuse to be sure, as US automakers have been complaining about exchange rates since imports began to grab share. The fact is, the US economy enjoyed a very strong dollar for decades, and as any economics 101 student will tell you a strong dollar is both good and bad. Good because it means that imports (like clothes and electronics) are cheap, bad because it means U.S. made goods are more expensive than imports. While it’s true that Japan’s government definitely manipulated exchange rates to boost exports to the USA, so have Canada, Mexico, and every other country on the planet. It’s par for the course when you have the world’s largest economy.
Excuse Number 3: Auto execs were too focused on profits. Really? If all their decisions were profit-driven, why didn’t they crack down on excessive UAW compensation in the 70’s? Why didn’t they implement a just-in-time inventory system, or give workers incentives to eliminate waste and improve processes? The fact is, many US auto execs were simply inadequate. They stopped innovating.
Excuse Number 4: The UAW got too greedy. Did the UAW abuse their power over the automakers for most of the 70’s, 80’s, and 90’s? Absolutely. Does that make them responsible for the decline of the US auto industry? Yes and no. Yes in that some UAW leadership suffered from incompetence, but no in that UAW contracts were signed by incompetent auto execs. It takes two to tango.
Excuse Number 5: The media never gave us a fair shake. Really? The media “had it out” for the US auto industry? Does Lutz really think that all the stories of piss-poor reliability from the 70’s, 80’s, and 90’s were all made up? Does Lutz really think Consumer Reports and JD Power cooked the books on all their reliability studies for the last 40+ years? Stop the madness.
Why Some of The US Auto Industry Failed
I say “some” because Ford isn’t a failure. They’re back on track. GM and Chrysler, however, needed a big damn check to stay solvent. Here’s why:
1. The Wrong Culture. The US automakers had a culture of entitlement, from the lowest factory worker to the most extravagant board room. This is as much leadership as it is a symptom of America’s biggest problem: I can’t walk out my front door without hearing someone say “[America] is the greatest country in the world,” and it’s that tendency to pat ourselves on the back that hurts us the most.
2. Incompetence. This is by no means a slam on veterans of the US auto industry, as I have met many and I will tell you that most of them are smart, competent, and hard-working. However, when you look at the leaders at Ford, GM, and Chrysler since the late 60’s, the number that you would regard as ‘competent’ can be counted on one hand.
3. Product. Do you know why the Japanese ate everyone’s lunch for most of the 80’s and 90’s? It’s the exact same reason that Hyundai is starting to eat everyone’s lunch right now: great-looking, inexpensive products with excellent quality.
4. Bad Process. American designers and engineers are just as talented as designers and engineers anywhere in the world. However, the typical design process at US automakers was poorly managed for most of the last 40+ years. Ford corrected their process in 2003, and since that time they’ve been growing. GM? Look no further than the new Impala: It’s a 20 year old platform with a V6 that makes less power than some newer 4cylinders…and it’s not going to be updated until 2014! How does this happen?
5. Too Many Excuses. I think it speaks volumes when Bob Lutz, one of the superstars of the US auto industry in the last 40 years, is willing to offer excuses for the industry’s failures. When Toyota was wrongfully accused of having runaway vehicles, I don’t recall Akio Toyoda blaming anyone but himself for the company’s problems.
What do you think – did I get it right?
Filed Under: Auto News