Tuesday, March 31, 2009

More About GM

Looking down on a lighted walkway in Detroit's Renaissance Center, and, below that, a display of GM cars.
I never did figure out how to actually get to that walkway.

My family continued to weigh in on the troubles of the Big Three auto makers. In the comments on my last GM post, Brock Yates Jr., second cousin on my dad's side, referred to his dad's recent critique of the Big Three, Grosse Pointe Blank.
The Big Three’s bosses work is unlike that of any other boss of a major manufacturing operation. In a sense, they must function more like television or movie executives. They must link with their audiences’ daily lives– and dreams– or lose business. They must be one with their sales people– and the “real” people.

And yet, the geography of the business and its “show biz” component makes the men who run Detroit's car companies a culture unto themselves. They live in fancy houses well away from inner city squalor; their private clubs are among the finest in the world. Their social set links them with each other, and connects the major companies like Europe’s nobility linked eighteenth century nation states. They are seldom fired, downgraded or even moved laterally. They are stars in their own little universe. but this universe is distant, and finite.

You could even say these execs live cloistered lives. The Motor City’s Princes and Kings have more privilege and perks than other major executives, yet remain behind closed doors. They make millions from but rarely deal with the Union men who actually build the cars upon which their livelihoods depend. PR flacks protect them from the snooping media. And they seldom deal with the public– beyond an occasional visit to a motor show or a speech written by their media men delivered to some fawning special interest group.

In the world of powerful men, here or in Europe, few live within such a bizarre combination of privilege and insulation.

Like many bosses in industries under assault from "barbarians," Detroit’s isolated auto execs work tirelessly to maintain the status quo. Safe in their gilded cages, they continue to ignore their customers' changing needs. And they continue to build the same products over and over: the same damn automobiles that their fathers and grandfathers built.
There is a lot of meat, even in these few paragraphs. The auto execs' implicit assumption is that America will buy what Detroit decides to produce. When we can't or won't buy they cry foul, even though many of us bought American vehicles long past the point where it made sense.

My parents were loyal GM buyers for decades. They lived in a GM town, Mom had grown up in a GM family, worked at GM on summer break when she was in college. Grandma and Grandpa were retired on a GM pension. When Mom's last GM car spontaneously combusted with a few thousand miles on the odometer, she called the dealer to report the unusual event. At least my mom thought that having to escape from a flaming automobile in the course of an otherwise normal drive to town was an unusual event. Nobody at GM seemed surprised, or apologetic, or even curious. Her hometown Chevy dealer said "You're in luck! I've got another one like it right here!" assuming that she would collect her insurance money and settle into an identical vehicle. that was the end of a lifetime relationship.

My brother Chris, the small business guru, describes a hierarchy of customer loyalty:
.....I’m always looking out for good and bad customer experiences. Like many of you, I keep a mental list of businesses that I’ve placed on “probation” (I’m not going there for awhile), “double secret probation” (Why did I come back here again?) and “boycott status” (I’m not ever coming back here again!).
For most products and services companies move down the ladder of shame one step at a time, and even a monumental experience like my Mom's could be turned into a positive experience if the customer is treated with respect and empathy. Taking customer loyalty for granted is deadly.

If GM was losing my parents' generation, they never had my generation. When I was in high school, during the first oil crunch, the gear heads were already dividing up into two groups: there was the "go fast" group, but there was also the guys looking to stretch their paychecks by eeking more mileage out of their vehicles. Cousin Brock Jr accurately describes how GM failed to honor that subset of car lovers:
During the first fuel crisis in 1973 consumers witnessed the contempt Detroit had for the marketplace as they tried to discredit small cars with such swill as the Pinto, Vega and Pacer. This allowed the Japanese and Germans footholds in the country where before they were less than niche brands. Over time, as the executives became more insulated from the marketplace, they become increasingly incapable of understanding what consumers wanted and started losing market share.
I always thought I would someday buy a GM car, once they got their act together and built a car for the future, one with breakthrough gas mileage. GM has tantalized people like me with various concept cars, basically holding off the environmentalists' criticisms by showing us technology that was perennially "on the horizon." Suddenly it's the future already. Everyone from our governor to the electric company to the county extension agent is bullish on wind energy, expecting GM to honor its 2010 launch date for the plug-in hybrid Volt. While Michigan's cheerleaders are looking for GM to help turn the state around, automotive insiders are skeptical, as Jack Lessenberry notes in a recent column:

Now, people are pinning their hopes on the Chevy Volt, the new electric car scheduled to go into production next year. Last week, I talked to the man who may be most responsible for making electric and hybrid cars happen, the legendary Stanford Ovshinsky.

He was the principal inventor of the nickel-metal-hydride battery that powers your cell phone. He worked for years on an earlier GM attempt to build an electric car, the EV-1, until GM got cold feet.

If you want to know more about that, go rent the movie "Who Killed the Electric Car," in which Stan and his late wife Iris play starring roles. Stan, by the way, recently launched a new company, got remarried, and is working as hard as ever. And why not? He is only 86. I asked him about the Volt. "Well, it is a start," he said. "They will probably sell a few thousand, but... they are fourteen years behind the Japanese." Back in the 1990s, he went to Japan and saw that the hybrids were coming. He tried to tell GM, "and they laughed at us. They said they would never work, or sell."

Ovshinsky hopes the Volt is a success. But, as he noted, the company still hasn't decided on the battery to run it. The car will also cost more than $40,000, out of many people's reach.

It's so tempting to throw up our hands and let the car companies sink or swim on their own. Here in Michigan, things are more complicated. It's not just that Michigan's economy is intertwined so thoroughly with the auto industry. Michigan is a place where people know how to do things, to grow things, to make things.

This era's broad declarations about the new "idea economy" sound just as stupid and unsustainable as the broad announcement of the new "service economy" did back in the 1980's. America's auto industry is the backbone of our nation's manufacturing industry, the same "we can do it" people that churned out the tanks, planes, and armaments that won WW II. Lately we have been experimenting with outsourcing almost all of our nation's manufacturing, and a lot of the food production, to whoever could promise to do it cheapest. Even in peacetime this outsourcing gave us lead in the toys, fake medicine, and melamine in the pet food. Could you imagine if we were actually at war?

Maybe my dad gets at the root of the problem when he talks about the adversarial relationship between management and union workers. Union workers, with no big war to win, went to work winning better contracts and better benefits. Somewhere along the line, the auto workers went from leading the way in improving the lot of the working people to becoming an elite class onto themselves, with benefits (cosmetic surgery? free legal advice?) that leave the rest of us shaking our heads. Management seems to have missed the news that American workers as a whole have seen stagnant wages and increased costs over the past twenty years. We just can't afford to buy a new car every three years, no matter how much they spend on advertising.

Maybe my kids' generation is key. They are so overexposed to advertising hype that they seem practically immune. Many twenty-somethings like cars, for road trips, but aspire to be car-free in their day to day lives. Paying for car insurance, car payments, and running the risk of getting pulled over on the way home from a night out seems like a rat race, without even thinking about the hassles of actually commuting to work. No wonder they are looking at walkable communities and filling the Amtrak trains. What would you have to build to sell to the next generation? I have an idea that the answer is something as far from today's cars as the Model T was from a horse and buggy.

It all looks to me like that picture of the lighted walkway at the Renaissance Center. The people on that walkway were going somewhere, talking to each other, busy at their tasks, never noticing the rest of us. Now they need a bridge loan? Maybe they should walk alongside the rest of us, and we'll talk about it.

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