Recently, Jason Linkins featured an article by Thomas Morton that ridiculed the standard Decadent Detroit journalist’s tour that always includes a photograph of the closed Packard plant on East Grand Boulevard. The deluxe, VIP version of the standard tourist itinerary is the one followed by Ralph Nader and Ross Perot, the one that includes a few private conversations with "real natives" that leave them experts on the state of the automotive industry.
Stale as it gets, the Packard plant does, in fact, symbolize everything that was once good about the automotive industry and much that’s bad about the city.
The building, designed in 1905 by Alfred Kahn, was the first to use reinforced concrete. His early factories were several floors high, and strong enough to support the weight of vehicle production and assembly. After the perfection of distributed electric systems, Kahn built the first modern glass and concrete, one-story plant for Dodge in Warren in 1937.
He innovated in materials, construction techniques, and design. More important, Kahn didn’t retire after making one contribution or simply cash in on his contacts with commissions for private estates, but continued to experiment with industrial architecture. However desolate, his Packard plant still stands after more than a hundred years, and until recently, it could have been renovated.
Although Packard Motor Car Company, then part of Studebaker, closed in 1956, the final destruction of the building is recent. In 1960, the compound was converted into an industrial park that degenerated into a half-vacant warren of small businesses, while the neighborhood, near an interstate, became increasingly more dangerous. Young people used it for raves and paint ball fights.
In the late 1990's, the state held title to much of the adjoining property from unpaid taxes. In 1997, Detroit’s mayor, Dennis Archer, or his cronies, thought they saw an opportunity to convert the land into an Empowerment Zone with tax breaks, and began foreclosure proceedings for the million plus dollars owed the city in back taxes.
The next year, the state’s Department of Community Health was asked to evaluate the hazards at the 35-acre brown field. It determined the worst problems were asbestos, lead paint, bird droppings, tires and bales of plastic waste, costly to remediate, but not serious.
While the unnamed owners were fighting for title in court, the city evicted the tenants of Motor City Industrial Park, erected a protective fence, and posted guards.
Two years ago, the state supreme court ruled the owners had paid just enough of their taxes to retain ownership. The sitting mayor, Kwame Kilpatrick, removed the city’s guards, and vandals moved in with welding torches to strip out steel beams. The fire department is called several times a month, but now limits its efforts to protecting the area, because the buildings have become too dangerous.
The names of the new owners aren’t published, but are known to include Romel Casab, a bottom feeding land speculator, and are suspected to include Dominic Cristini, a convicted drug dealer. When the netherworld moves in, a site is doomed. In the years when Archer was mayor, my hometown was discovering one of its abandoned industrial sites had been systematically used for illegal chemical dumping and qualified as a superfund site.
The stand-off between rivals with different visions for creating personal wealth that negate each other and result in nothing is one enduring city trait the Packard Plant symbolizes. After 50 years, no one has even been able to tear it down as a public health nuisance, not even when Detroit was using urban development funds after the riots to reduce most of the city’s landscape to barren rubble.
However, the magazine story that prompted Morton’s outrage hasn’t been without its benefits. Earlier this month, Senate majority leader Harry Reid used it to justify giving four states special consideration in the evolving health care bill. He said "The cover of Time magazine shows a dilapidated city, dilapidated streets, the debris covering the road and windows knocked out of abandoned buildings. It looks like a ghost town" and then made sure his home state of Nevada was the one that got the Medicaid break.
Notes:
Cruz, John. "Welcome to Mt. Palmer: A look Inside Detroit’s Most Dangerous Neighborhood," posted on his cruzweb.net site.
Guthrie, Doug. "City Loses Site Fight: State Court Denies Detroit's Packard Title Bid," The Detroit News, 2 February 2007.
Linkins, Jason. "Getting The Detroit Story Right," Huffington Post, 29 September 2009.
McGraw, Bill. "Historic Auto Plant Shows Signs of Life," Detroit Free Press, 27 April 2008.
Michigan Department of Community Health. "Health Consultation, Packard Plant, Detroit, Wayne County, Michigan," 23 March 1998, posted on United States Agency for Toxic Substances and Disease Registry website.
Shepardson, David. "Senate's Top Democrat Pushes Bill to Aid Michigan," The Detroit News, 1 October 2009.
Showing posts with label Automotive Industry. Show all posts
Showing posts with label Automotive Industry. Show all posts
Thursday, October 29, 2009
Wednesday, October 21, 2009
Detroit Flight
People like to blame the decline of Detroit on the movement of Blacks from the south during and after World War II. However, Ford and Dodge had left for Highland Park and Hamtramack before World War I when the state’s Black population was 17,115 and less than a third, 5,741, lived in Detroit. In 1910, Blacks constituted only 1.2% of the city’s population and probably a number worked as servants and menials.
Ford’s move from Mack Avenue to Piquette and Beaubien in 1904 can be explained as the need for a larger tract of land to build the Model T, but it’s hard to believe he couldn’t find something available inside the city when he needed to expand in 1910. It’s also hard to understand why Highland Park and Hamtramack resisted annexation so strongly once Ford and Dodge had relocated unless large tax payers did not want to be part of the city.
There may be two sides to the flight from the city: the things Ford desired and the desires of men who controlled city politics
We know Dearborn and the area around River Rouge were not known for their open democracy in the 1930's when Harry Bennett ran Ford’s security or after the war when Orville Hubbard was mayor. For that matter, we also know Flint’s mayor, Harold Bradshaw, and his police chief, James Wills, were more responsive to Buick’s demands for union busting in 1936 than was appropriate for civic officials.
However, an unwillingness to provide or tolerate paramilitary corporate security were probably not important in 1910. Longer standing conflicts between Detroit area investors and local entrepreneurs may have been more important.
In the 1860's, Eber Ward was experimenting with the Bessemer process at a steel plant in Wyandotte. When he wanted to expand operations, his Detroit investors refused. He moved to Chicago, and his plant there eventually became a founding part of United States Steel.
In the same years, a local butcher, George Hammond, bought the patents for refrigerated rail cars. He too relocated his operations to the outskirts of Chicago in northern Indiana. Later, when cattle from the Great Plains were available, that move would have been logical, but in the 1860's animals still came from places like Ohio.
Detroit lost the steel, meat and some of railcar businesses because of a dysfunctional investor culture in the city. The same kinds of problems plagued Henry Ford. Similar problems may explain why General Motors and Chrysler avoided the area, or why the small companies that remained in the city failed to grow even when they had good product ideas.
I don’t know what was going on when rival automotive speculators were betting against Ford and Durant, but I suspect it drew on long standing cultural traditions that were more important to creating the distaste people held for the city than the later demographic changes.
Notes:
Metzger, Kurt and Jason Booza. "African Americans in the United States, Michigan and Metropolitan Detroit," Wayne State University Center for Urban Studies, 2002.
Ford’s move from Mack Avenue to Piquette and Beaubien in 1904 can be explained as the need for a larger tract of land to build the Model T, but it’s hard to believe he couldn’t find something available inside the city when he needed to expand in 1910. It’s also hard to understand why Highland Park and Hamtramack resisted annexation so strongly once Ford and Dodge had relocated unless large tax payers did not want to be part of the city.
There may be two sides to the flight from the city: the things Ford desired and the desires of men who controlled city politics
We know Dearborn and the area around River Rouge were not known for their open democracy in the 1930's when Harry Bennett ran Ford’s security or after the war when Orville Hubbard was mayor. For that matter, we also know Flint’s mayor, Harold Bradshaw, and his police chief, James Wills, were more responsive to Buick’s demands for union busting in 1936 than was appropriate for civic officials.
However, an unwillingness to provide or tolerate paramilitary corporate security were probably not important in 1910. Longer standing conflicts between Detroit area investors and local entrepreneurs may have been more important.
In the 1860's, Eber Ward was experimenting with the Bessemer process at a steel plant in Wyandotte. When he wanted to expand operations, his Detroit investors refused. He moved to Chicago, and his plant there eventually became a founding part of United States Steel.
In the same years, a local butcher, George Hammond, bought the patents for refrigerated rail cars. He too relocated his operations to the outskirts of Chicago in northern Indiana. Later, when cattle from the Great Plains were available, that move would have been logical, but in the 1860's animals still came from places like Ohio.
Detroit lost the steel, meat and some of railcar businesses because of a dysfunctional investor culture in the city. The same kinds of problems plagued Henry Ford. Similar problems may explain why General Motors and Chrysler avoided the area, or why the small companies that remained in the city failed to grow even when they had good product ideas.
I don’t know what was going on when rival automotive speculators were betting against Ford and Durant, but I suspect it drew on long standing cultural traditions that were more important to creating the distaste people held for the city than the later demographic changes.
Notes:
Metzger, Kurt and Jason Booza. "African Americans in the United States, Michigan and Metropolitan Detroit," Wayne State University Center for Urban Studies, 2002.
Thursday, October 8, 2009
Detroit City vs City of Detroit
This past summer Martha Reeves, then on the Detroit city council, showed her ignorance of her constituency when she complained that Jay Leno shouldn’t be putting on a benefit performance for Detroit auto workers in Auburn Hills. Everyone knows the city and the automotive industry aren’t the same. They just happen to share the same name.
In the early days, manufacturing was crowded along the Detroit River and the rail tracks that paralleled it near the narrows where traffic could cross into Canada. But, Henry Ford, a farm boy from Greenfield Township, never worked in the city’s industrial core. His first plant was on Mack Avenue, his second on Piquette, and his third in Highland Park, just beyond the city.
Ford soon began buying farm land to the west of Detroit, where he built his estate and his biggest factory complex on the River Rouge. For a while his son, Edsel, lived in Indian Village, but by 1921 he’d moved northeast of the city to Lake Saint Claire in Macomb County.
The Dodge brothers, Horace and John, came from western Michigan. They began building engines for Ford at a plant in Hamtramack, before they left to form their own company. When they died in 1920, the company was taken over by New York investors, who later reorganized it as Chrysler. Until 1992, the company headquarters was in Highland Park.
To this day, neither Highland Park nor Hamtramack is politically part of Detroit, even though both have long been surrounded by the city.
General Motors was never even close to Detroit. William Durant was a successful carriage builder in Flint, who took over management of David Buick’s company. When he had trouble with General Motors’ bankers, he organized Chevrolet in the same city. Michael Moore is absolutely correct to use Flint, not Detroit, as the symbol for the decline of GM.
Despite the centrifugal movement of the major automotive companies away from Detroit, the city was long the center for small companies and suppliers. Starting near the river, Richard Wright says the Commercial Company built cars on Franklin, while Hudson Motor, Hupmobile and Ransome Olds all began on Jefferson.
Reliance Automobile Company was on East Fort Street and Packard on East Grand Boulevard at Mount Eliot. Lozier was near Ford on Mack Avenue. The Everitt-Metzger-Flanders Company and Wayne Automobile Company were both on Piquette.
In the other direction, along Michigan Avenue and the New York Central tracks that go west to Chicago, the Rickenbacker Motor Company was on Michigan while both C. H. Blomstrom Motor Car Company and Cadillac Assembly were at Michigan and Clark Street.
As the automotive industry spread away from the city, it became a social network of designers and engineers, customers and suppliers who loved the mechanics of cars and the manufacturing process. After World War II, Ford middle managers may have moved to Dearborn Heights while GM executives may have gravitated toward Bloomfield Hills and engineers followed the Tech Center to Warren, north of Detroit in Macomb County, but they all were aware of one another.
That’s why today, when dealers can’t sell cars, it’s not just the city of Detroit that’s suffering, but every node in the network. The last large employer in my hometown, a hundred miles away, made parts for Visteon until the troubled Ford supplier canceled the contract and moved production to Mexico in 2002. The last small employer in Cameron made automotive fasteners. The process was fully automated, but it still was forced to move its operations to China a few years back to keep its contracts.
For lack of something better, it’s the cultural web of individuals, institutions and communities that people mean when they use Detroit as the label for the automotive industry, not the 138.8 square miles of urban real estate then represented by Reeves.
Notes: Reeves was not re-elected in August, partly because of this remark.
Wright, Richard A. "Once Teeming with Auto Plants, Detroit Now Home to Only a Few Nameplates," The Detroit News, 16 January 2000.
In the early days, manufacturing was crowded along the Detroit River and the rail tracks that paralleled it near the narrows where traffic could cross into Canada. But, Henry Ford, a farm boy from Greenfield Township, never worked in the city’s industrial core. His first plant was on Mack Avenue, his second on Piquette, and his third in Highland Park, just beyond the city.
Ford soon began buying farm land to the west of Detroit, where he built his estate and his biggest factory complex on the River Rouge. For a while his son, Edsel, lived in Indian Village, but by 1921 he’d moved northeast of the city to Lake Saint Claire in Macomb County.
The Dodge brothers, Horace and John, came from western Michigan. They began building engines for Ford at a plant in Hamtramack, before they left to form their own company. When they died in 1920, the company was taken over by New York investors, who later reorganized it as Chrysler. Until 1992, the company headquarters was in Highland Park.
To this day, neither Highland Park nor Hamtramack is politically part of Detroit, even though both have long been surrounded by the city.
General Motors was never even close to Detroit. William Durant was a successful carriage builder in Flint, who took over management of David Buick’s company. When he had trouble with General Motors’ bankers, he organized Chevrolet in the same city. Michael Moore is absolutely correct to use Flint, not Detroit, as the symbol for the decline of GM.
Despite the centrifugal movement of the major automotive companies away from Detroit, the city was long the center for small companies and suppliers. Starting near the river, Richard Wright says the Commercial Company built cars on Franklin, while Hudson Motor, Hupmobile and Ransome Olds all began on Jefferson.
Reliance Automobile Company was on East Fort Street and Packard on East Grand Boulevard at Mount Eliot. Lozier was near Ford on Mack Avenue. The Everitt-Metzger-Flanders Company and Wayne Automobile Company were both on Piquette.
In the other direction, along Michigan Avenue and the New York Central tracks that go west to Chicago, the Rickenbacker Motor Company was on Michigan while both C. H. Blomstrom Motor Car Company and Cadillac Assembly were at Michigan and Clark Street.
As the automotive industry spread away from the city, it became a social network of designers and engineers, customers and suppliers who loved the mechanics of cars and the manufacturing process. After World War II, Ford middle managers may have moved to Dearborn Heights while GM executives may have gravitated toward Bloomfield Hills and engineers followed the Tech Center to Warren, north of Detroit in Macomb County, but they all were aware of one another.
That’s why today, when dealers can’t sell cars, it’s not just the city of Detroit that’s suffering, but every node in the network. The last large employer in my hometown, a hundred miles away, made parts for Visteon until the troubled Ford supplier canceled the contract and moved production to Mexico in 2002. The last small employer in Cameron made automotive fasteners. The process was fully automated, but it still was forced to move its operations to China a few years back to keep its contracts.
For lack of something better, it’s the cultural web of individuals, institutions and communities that people mean when they use Detroit as the label for the automotive industry, not the 138.8 square miles of urban real estate then represented by Reeves.
Notes: Reeves was not re-elected in August, partly because of this remark.
Wright, Richard A. "Once Teeming with Auto Plants, Detroit Now Home to Only a Few Nameplates," The Detroit News, 16 January 2000.
Sunday, September 13, 2009
Cash for Clunkers
Despite people’s worst expectations, the government program to give people up to $4,500 to trade in their old cars for more fuel efficient ones spurred automobile sales, especially when dealers added their existing sales incentives.
Cash for Clunkers didn’t immediately restart any assembly lines, but it did clear the stockpiled inventory that has to be removed before manufacturing can resume. Now marketing specialists are studying the sales results for clues to forecast future demand that should reopen the lines.
Many of the program participants were loyal Detroit supporters upon whom the industry depends. The Department of Transportation listed the top ten swapped vehicles, and all the cars and trucks came from Chrysler, Ford and GM. Since the department didn’t give a percentage breakdown, like they did for new cars, it’s difficult to know from the published lists how many Japanese vehicles were brought in or how much these trade-ins reflected the relative popularity of what must have been durable cars and trucks made ten years ago when Detroit held a greater market share.
In general, the program began well for Detroit with these special buyers. At the end of the first week, 47% bought vehicles made by GM, Ford or Chrysler, a number slightly above the three companies’ market share that hovers between 44 and 45%.
However, as more people took advantage of the government’s offer, Detroit lost its preeminence. By August 14, the big three only accounted for 42% of the new car sales, and by the end of the program the number was down to 38.6%.
In the first two weeks, the Ford Focus was the top car, with the Dodge Caliber in eighth place and Chevy’s Cobalt in tenth. Two weeks passed, and Focus fell to third place behind Toyota’s Corolla and Honda’s Civic, while Chrysler and GM disappeared. By the end, the Focus was fourth behind Toyota’s Camry, but the Ford Escape had crept into tenth place.
While Bill Ford could feel vindicated that the changes he’d introduced in the past few years were finally being rewarded, General Motors could console itself the old strategy was still valid: that it had so many models in the market, that even though no one did well enough to make the top ten, the range of choices meant it still outsold their competitors.
At the end of two weeks, it had the largest market share, 18.7%, compared with Toyota’s 17.9%. However, the general drift of the market also affected them: by August 14, Toyota outsold them 18.9% to 17.6%, and by end Toyota was up to 19.4% while GM stayed at 17.6%. In 2008, before they went to Congress for money, GM’s share was 19.1%.
Ever since GM had problems with the Corvair in the 1960's, it has retrenched into the strategy that trucks and luxury cars were its core business. Unfortunately, the government’s sales numbers show people are no longer as interested in trucks. The nature of the program may have skewed the statistics by favoring people who had outgrown their pickups, perhaps because, at their stage in life, they no longer needed to haul things for their house and yard, and now needed a different type of vehicle for a changing family.
Still GM should be worried that at the end of the second week of the program, August 5, 83% of the participants brought in trucks, but only 40% bought new, more fuel-efficient ones. By the end of the program, August 26, the numbers remained essentially unchanged: 84% brought in trucks and 41% drove away with new ones. The cars it eschewed were the market.
Instead, GM’s chief sales analyst, Michael C. DiGiovanni, picked through the data and discovered strong interest in the Camaro muscle car and Equinox SUV. Over at Ford, the vice president for sales and marketing, Ken Czubay, saw hope for the F-series pickup trucks when sales rose for the first time since October of 2006.
These men seem to still hope the interest in fuel efficient automobiles is a passing flirtation, perhaps one encouraged by a matchmaker, but that people will return again and rescue their behemoths from becoming mere niche vehicles. Detroit is nothing if not consistent in its drive towards obsolescence.
Notes:
August 3. David Shepardson, "Big Three Sell 47 Percent of 'Cash for Clunkers' Sales; Ford Focus Top-seller," The Detroit News.
August 15. David Shepardson, "Japanese Sales Climb in 'Clunkers' Program; GM, Ford Slip Behind Toyota in Vehicles Sold," The Detroit News.
August 26. Department of Transportation press release 133-09, "Cash for Clunkers Wraps up with Nearly 700,000 Car Sales and Increased Fuel Efficiency, U.S. Transportation Secretary LaHood Declares Program ‘Wildly Successful’."
September 1. Bill Vlasic and Nick Bunkley, "Clunker Program Spurred August Sales," The New York Times.
Cash for Clunkers didn’t immediately restart any assembly lines, but it did clear the stockpiled inventory that has to be removed before manufacturing can resume. Now marketing specialists are studying the sales results for clues to forecast future demand that should reopen the lines.
Many of the program participants were loyal Detroit supporters upon whom the industry depends. The Department of Transportation listed the top ten swapped vehicles, and all the cars and trucks came from Chrysler, Ford and GM. Since the department didn’t give a percentage breakdown, like they did for new cars, it’s difficult to know from the published lists how many Japanese vehicles were brought in or how much these trade-ins reflected the relative popularity of what must have been durable cars and trucks made ten years ago when Detroit held a greater market share.
In general, the program began well for Detroit with these special buyers. At the end of the first week, 47% bought vehicles made by GM, Ford or Chrysler, a number slightly above the three companies’ market share that hovers between 44 and 45%.
However, as more people took advantage of the government’s offer, Detroit lost its preeminence. By August 14, the big three only accounted for 42% of the new car sales, and by the end of the program the number was down to 38.6%.
In the first two weeks, the Ford Focus was the top car, with the Dodge Caliber in eighth place and Chevy’s Cobalt in tenth. Two weeks passed, and Focus fell to third place behind Toyota’s Corolla and Honda’s Civic, while Chrysler and GM disappeared. By the end, the Focus was fourth behind Toyota’s Camry, but the Ford Escape had crept into tenth place.
While Bill Ford could feel vindicated that the changes he’d introduced in the past few years were finally being rewarded, General Motors could console itself the old strategy was still valid: that it had so many models in the market, that even though no one did well enough to make the top ten, the range of choices meant it still outsold their competitors.
At the end of two weeks, it had the largest market share, 18.7%, compared with Toyota’s 17.9%. However, the general drift of the market also affected them: by August 14, Toyota outsold them 18.9% to 17.6%, and by end Toyota was up to 19.4% while GM stayed at 17.6%. In 2008, before they went to Congress for money, GM’s share was 19.1%.
Ever since GM had problems with the Corvair in the 1960's, it has retrenched into the strategy that trucks and luxury cars were its core business. Unfortunately, the government’s sales numbers show people are no longer as interested in trucks. The nature of the program may have skewed the statistics by favoring people who had outgrown their pickups, perhaps because, at their stage in life, they no longer needed to haul things for their house and yard, and now needed a different type of vehicle for a changing family.
Still GM should be worried that at the end of the second week of the program, August 5, 83% of the participants brought in trucks, but only 40% bought new, more fuel-efficient ones. By the end of the program, August 26, the numbers remained essentially unchanged: 84% brought in trucks and 41% drove away with new ones. The cars it eschewed were the market.
Instead, GM’s chief sales analyst, Michael C. DiGiovanni, picked through the data and discovered strong interest in the Camaro muscle car and Equinox SUV. Over at Ford, the vice president for sales and marketing, Ken Czubay, saw hope for the F-series pickup trucks when sales rose for the first time since October of 2006.
These men seem to still hope the interest in fuel efficient automobiles is a passing flirtation, perhaps one encouraged by a matchmaker, but that people will return again and rescue their behemoths from becoming mere niche vehicles. Detroit is nothing if not consistent in its drive towards obsolescence.
Notes:
August 3. David Shepardson, "Big Three Sell 47 Percent of 'Cash for Clunkers' Sales; Ford Focus Top-seller," The Detroit News.
August 15. David Shepardson, "Japanese Sales Climb in 'Clunkers' Program; GM, Ford Slip Behind Toyota in Vehicles Sold," The Detroit News.
August 26. Department of Transportation press release 133-09, "Cash for Clunkers Wraps up with Nearly 700,000 Car Sales and Increased Fuel Efficiency, U.S. Transportation Secretary LaHood Declares Program ‘Wildly Successful’."
September 1. Bill Vlasic and Nick Bunkley, "Clunker Program Spurred August Sales," The New York Times.
Wednesday, August 26, 2009
A Tale of Two Drunks
Chrysler and General Motors are out of bankruptcy, but their still behaving like two drunks just out of rehab. The one is repeating to himself the list of things he was told he needed to do to stay sober; the other is already eyeing his old hidey holes wondering how soon he can shake his handlers and relax with his old buddies.
Alisa Priddle reports the last of the top managers will leave Chrysler by year’s end and the new CEO, Sergio Marchionne, has been testing younger men from the lower executive ranks. GM still has Fritz Henderson at the top, aided by 77-year-old Bob Lutz, rewarding the next in line.
Now Chrysler workers are telling reporters they’re shocked they’re expected to change. They’ve been told the only thing they can take to their workstation is water. What do they expect?Cigarettes, snacks, cell phones? Just recently, two planes collided over the Hudson while someone in the control tower was on the phone on private business.
They’re surprised that when a car comes down the line with a quality defect, they’re supposed to stop work until the source of the problem is identified. When I was in Detroit in the early 1980's and Toyota was taking away their markets, people were surprised the Japanese would actually stop the line.
Priddle says that when Americans adopted the Japanese concepts, they changed that principal: cars were identified with problems and taken aside to repair after they were completed. They didn’t understand, not stopping the line was the reason people no longer were buying their cars.
For non-Detroiters, not stopping the line goes back to a time when cost accountants calculated the cost per minute of a downed assembly line and everyone understood they would be fired if they were the ones who caused that expense. Those responsible for what’s now called the supply chain covered themselves by ordering excess parts, so there would always be spares when a problem was found. People were hired to deal with storage problems.
When surplus inventory failed, substitute parts were used. I had a friend who worked as a secretary in Ann Arbor in the late 1970's who had an Oldsmobile with Chevy parts. When her car didn’t work right, the dealer forced her to sign away her rights to complain in exchange for fixing the problem. When the car still wasn’t right and she realized she’d been tricked by the dealer, she vowed to never buy a GM car again.
It’s not that the Japanese didn’t understand the cost of stopping the line. However, they didn’t have the land to waste storing excess inventory, so concentrated on supplier quality. When they stop a line, they identify the person or supplier responsible for the root cause. Their goal is to hold the right person accountable, not punish the one who recognizes a problem.
Over at GM, they’ve been promoting an electric battery powered Chevy Volt that could get 230 miles to a gallon of gas as the solution to their problems in late 2010. Only, Business Week reports, they’re already planning to shift the engine from Chevy to Cadillac. Lutz insists they do it even though the Treasury Department’s telling him it’s a bad idea. In fact, he used the bankruptcy organization to remove his internal critics.
Now, the attempt to sell Opel to the Russians without the proprietary technology is in trouble, and GM is thinking maybe they can force the German government to let them keep control after all. They can return to their old ways of surviving their failures: sell more expensive cars like Cadillacs that cost the same to produce as the cheaper priced Chevies; then when that doesn’t work, cover up the losses in the American market with sales from Europe. How they can keep their emerging market open in Russia after insulting Putin over Opel is a question they consider trivial.
A few weeks back the new chairman of GM’s board announced he had met the head of the UAW and some workers and discovered there was no cultural problem to change. Ed Whitacre
doesn’t understand, the cultural problem has never been about the workers, it’s always been about the managers who train those workers to keep the line running at all costs and let them bring anything to the workstation in exchange for filing no grievances that might cause a stoppage.
Meantime, Toyota recognizes it was wooed by GM in the 1980's and may have overindulged a few times, but not so often that it became addicted and changed its biochemistry. The same day Whitacre said there was no culture problem, Akio Toyoda was in Traverse City telling analysts we are "at a point where we must re-invent the automobile" and his company has to return to its original goal of providing affordable, quality vehicles.
Culture change takes time, and doesn’t always follow from severe crisis. Marchionne is seeing the differences at Fiat where no plant has yet achieved all the goals he set, and only three are close. At Chrysler, it’s a Mexican plant that seems to be leading the conversion, followed by one in Brampton, Ontario. The Americans, at all levels, are still having a hard time understanding, when a drunk changes his habits, life changes for the enablers in the family and the local liquor dealers. Change does mean them.
It’s too soon to know the results of government intervention, but at the moment, when both are competing with a sober Toyota, it seems Chrysler is still trying to stay dry, and GM is reminding us they really haven’t proven they have the will to change.
Notes:
Howes, Daniel. "Insiders at New GM Same as They Ever Were," The Detroit News, 24 July 2009.
Priddle, Alisa. "Fiat Takes Aim at Waste in Chrysler Plant Overhauls," The Detroit News, 24 August 2009.
_____. "Jim Press' Departure from Chrysler Will Mark End of Old Regime," The Detroit News, 22 August 2009.
Snell, Robert. "Whitacre: General Motors Will Roll out New Models Early," The Detroit News, 5 August 2009.
Tierney, Christine. "GM Board Sends Chief Opel Negotiator Back to Germany," The Detroit News, 25 August 2009.
_____. "Toyota President: We must Return to Core Principles," The Detroit News, 5 August 2009.
Welch, David. "At GM, Dreams of an Electric Cadillac," Business Week, 21 August 21, 2009.
Alisa Priddle reports the last of the top managers will leave Chrysler by year’s end and the new CEO, Sergio Marchionne, has been testing younger men from the lower executive ranks. GM still has Fritz Henderson at the top, aided by 77-year-old Bob Lutz, rewarding the next in line.
Now Chrysler workers are telling reporters they’re shocked they’re expected to change. They’ve been told the only thing they can take to their workstation is water. What do they expect?Cigarettes, snacks, cell phones? Just recently, two planes collided over the Hudson while someone in the control tower was on the phone on private business.
They’re surprised that when a car comes down the line with a quality defect, they’re supposed to stop work until the source of the problem is identified. When I was in Detroit in the early 1980's and Toyota was taking away their markets, people were surprised the Japanese would actually stop the line.
Priddle says that when Americans adopted the Japanese concepts, they changed that principal: cars were identified with problems and taken aside to repair after they were completed. They didn’t understand, not stopping the line was the reason people no longer were buying their cars.
For non-Detroiters, not stopping the line goes back to a time when cost accountants calculated the cost per minute of a downed assembly line and everyone understood they would be fired if they were the ones who caused that expense. Those responsible for what’s now called the supply chain covered themselves by ordering excess parts, so there would always be spares when a problem was found. People were hired to deal with storage problems.
When surplus inventory failed, substitute parts were used. I had a friend who worked as a secretary in Ann Arbor in the late 1970's who had an Oldsmobile with Chevy parts. When her car didn’t work right, the dealer forced her to sign away her rights to complain in exchange for fixing the problem. When the car still wasn’t right and she realized she’d been tricked by the dealer, she vowed to never buy a GM car again.
It’s not that the Japanese didn’t understand the cost of stopping the line. However, they didn’t have the land to waste storing excess inventory, so concentrated on supplier quality. When they stop a line, they identify the person or supplier responsible for the root cause. Their goal is to hold the right person accountable, not punish the one who recognizes a problem.
Over at GM, they’ve been promoting an electric battery powered Chevy Volt that could get 230 miles to a gallon of gas as the solution to their problems in late 2010. Only, Business Week reports, they’re already planning to shift the engine from Chevy to Cadillac. Lutz insists they do it even though the Treasury Department’s telling him it’s a bad idea. In fact, he used the bankruptcy organization to remove his internal critics.
Now, the attempt to sell Opel to the Russians without the proprietary technology is in trouble, and GM is thinking maybe they can force the German government to let them keep control after all. They can return to their old ways of surviving their failures: sell more expensive cars like Cadillacs that cost the same to produce as the cheaper priced Chevies; then when that doesn’t work, cover up the losses in the American market with sales from Europe. How they can keep their emerging market open in Russia after insulting Putin over Opel is a question they consider trivial.
A few weeks back the new chairman of GM’s board announced he had met the head of the UAW and some workers and discovered there was no cultural problem to change. Ed Whitacre
doesn’t understand, the cultural problem has never been about the workers, it’s always been about the managers who train those workers to keep the line running at all costs and let them bring anything to the workstation in exchange for filing no grievances that might cause a stoppage.
Meantime, Toyota recognizes it was wooed by GM in the 1980's and may have overindulged a few times, but not so often that it became addicted and changed its biochemistry. The same day Whitacre said there was no culture problem, Akio Toyoda was in Traverse City telling analysts we are "at a point where we must re-invent the automobile" and his company has to return to its original goal of providing affordable, quality vehicles.
Culture change takes time, and doesn’t always follow from severe crisis. Marchionne is seeing the differences at Fiat where no plant has yet achieved all the goals he set, and only three are close. At Chrysler, it’s a Mexican plant that seems to be leading the conversion, followed by one in Brampton, Ontario. The Americans, at all levels, are still having a hard time understanding, when a drunk changes his habits, life changes for the enablers in the family and the local liquor dealers. Change does mean them.
It’s too soon to know the results of government intervention, but at the moment, when both are competing with a sober Toyota, it seems Chrysler is still trying to stay dry, and GM is reminding us they really haven’t proven they have the will to change.
Notes:
Howes, Daniel. "Insiders at New GM Same as They Ever Were," The Detroit News, 24 July 2009.
Priddle, Alisa. "Fiat Takes Aim at Waste in Chrysler Plant Overhauls," The Detroit News, 24 August 2009.
_____. "Jim Press' Departure from Chrysler Will Mark End of Old Regime," The Detroit News, 22 August 2009.
Snell, Robert. "Whitacre: General Motors Will Roll out New Models Early," The Detroit News, 5 August 2009.
Tierney, Christine. "GM Board Sends Chief Opel Negotiator Back to Germany," The Detroit News, 25 August 2009.
_____. "Toyota President: We must Return to Core Principles," The Detroit News, 5 August 2009.
Welch, David. "At GM, Dreams of an Electric Cadillac," Business Week, 21 August 21, 2009.
Sunday, July 19, 2009
George Romeny and Robert MacNamara
General Motors has entered a new phase, and Detroit pundits are wondering how old veterans of the wars like Fritz Henderson and Bob Lutz can change its hidebound culture. When I recall the recent obituaries for two former automotive company heads, George Romney and Robert MacNamara, I realize the cultural problems have been there since World War II and are more characteristic of institutions in general than GM in particular.
Automobile companies have always grappled with the tension between creative engineers who design and produce new models and bureaucrats responsible for ensuring their creativity doesn’t lead to bankruptcy. Romney was the one who foresaw the market for small, inexpensive cars when American Motors introduced the Rambler in 1955.
On July 23, 1967, when the Detroit riots erupted, he was governor of Michigan with aspirations to be president. When it took the president, Lyndon Johnson, a day to find a way to send the military to the city without forcing the state to declare a state of insurrection, Romney suspected politics was more important than legality or civil welfare.
That experience with the failure of an institution to react to a serious crisis probably contributed to his growing concerns with the war in Viet Nam. Five weeks later, on August 31, he told a Detroit television interviewer that, when he had visited the war zone in 1965, the generals had misled him, and admitted he no longer accepted the necessity for fighting communism in southeastern Asia.
His political career was over. Those who believed in the war attacked him as personally unfit because he said he’d been brainwashed. Those who opposed the war attacked him for placing the realization of cultural failure beyond his normal experience by ridiculing him for his pipeline to God.
MacNamara rose through the bureaucratic side of Ford where he was always the brilliant implementer of other people’s ideas. Tex Thornton’s the one who told Ford’s grandson, Henry II, he needed to modernize the organization in 1945. MacNamara’s immediate predecessor, Arjay Miller, is the one who went on to spread the gospel of modern management at Stanford after he was fired by Ford.
MacNamara considers his biggest achievement at Ford to have been opposing the Edsel from conception, and finally killing it in 1959. When he realized he was headed for the same kinds of confrontations that led to Miller’s dismissal, he put his resume in the mail and moved on to the defense department.
MacNamara probably understood less about the dynamics of the military than he did the way engineers operate, but he also believed all he needed to do was apply the administrative procedures he’d been taught. Like the engineers at Ford, the generals would handle the rest.
When he began to doubt the success of the efforts in Viet Nam and realized in November of 1967 that he couldn’t influence Johnson he didn’t risk a public confession like Romney. Instead, he put his resume in the mail and moved on to the World Bank.
Again, he saw his job as applying the procedures of others, in this case those of the Chicago School of Economics. When he was judged by the consequences of his actions for the poor of South America, he dismissed his critics as uninformed, and continued the policies prudence and his peers told him were correct.
It’s their lives after Viet Nam that reveal how each man responds to events that threaten all a culture gives him, his world view and self-esteem. Romney became head of HUD during the period Detroit was razed after the riots. He probably didn’t develop the policies that left blocks of vacant land and forced people to move from the city, precipitating more white flight. Still, when you drive through the areas that were once Detroit’s most vital Black neighborhoods, it looks like he permitted revenge by again not questioning the reports of others. He then retired to devote his time to the Mormon church.
MacNamara spent his later years trying to justify his actions in Viet Nam, never, ever recognizing there was any possible link between his actions and the lives of people in Asia or South America. He admitted he couldn’t discern the moral difference between burning people in Tokyo in World War II, and killing them in Viet Nam in the 1960's, not to condemn both, but to justify them.
The difference between the men, I think, is that Romney was comfortable around the creative people at American Motors, while MacNamara was suspicious at Ford. When Romney realized everything he’d been taught was leading to catastrophe, he had the courage to speak out, as a creative person might. When he was punished, he retreated to the familiar. MacNamara always look for the best way to minimize the disaster for himself as a careerist would and never ventured beyond the familiar.
It wasn’t simply that one was altruistic and the other narcissistic. More fundamentally, Romney had the ability to occasionally see familiar things anew. He may have initially been embittered by the reactions of others, but he had enough confidence to know he could find a new life. MacNamara may have been bright, but he never was able to distance himself enough to fully understand the depth of the cultural challenges he faced, and so died genuinely puzzled why he was still so reviled when his intentions had been so culturally accepted
The fundamental difference between the two that determined who could change and who could not was that the one had more imagination, more comfort with creativity than the other, and ultimately less fear of the consequences of crisis, confrontation and change.
Automobile companies have always grappled with the tension between creative engineers who design and produce new models and bureaucrats responsible for ensuring their creativity doesn’t lead to bankruptcy. Romney was the one who foresaw the market for small, inexpensive cars when American Motors introduced the Rambler in 1955.
On July 23, 1967, when the Detroit riots erupted, he was governor of Michigan with aspirations to be president. When it took the president, Lyndon Johnson, a day to find a way to send the military to the city without forcing the state to declare a state of insurrection, Romney suspected politics was more important than legality or civil welfare.
That experience with the failure of an institution to react to a serious crisis probably contributed to his growing concerns with the war in Viet Nam. Five weeks later, on August 31, he told a Detroit television interviewer that, when he had visited the war zone in 1965, the generals had misled him, and admitted he no longer accepted the necessity for fighting communism in southeastern Asia.
His political career was over. Those who believed in the war attacked him as personally unfit because he said he’d been brainwashed. Those who opposed the war attacked him for placing the realization of cultural failure beyond his normal experience by ridiculing him for his pipeline to God.
MacNamara rose through the bureaucratic side of Ford where he was always the brilliant implementer of other people’s ideas. Tex Thornton’s the one who told Ford’s grandson, Henry II, he needed to modernize the organization in 1945. MacNamara’s immediate predecessor, Arjay Miller, is the one who went on to spread the gospel of modern management at Stanford after he was fired by Ford.
MacNamara considers his biggest achievement at Ford to have been opposing the Edsel from conception, and finally killing it in 1959. When he realized he was headed for the same kinds of confrontations that led to Miller’s dismissal, he put his resume in the mail and moved on to the defense department.
MacNamara probably understood less about the dynamics of the military than he did the way engineers operate, but he also believed all he needed to do was apply the administrative procedures he’d been taught. Like the engineers at Ford, the generals would handle the rest.
When he began to doubt the success of the efforts in Viet Nam and realized in November of 1967 that he couldn’t influence Johnson he didn’t risk a public confession like Romney. Instead, he put his resume in the mail and moved on to the World Bank.
Again, he saw his job as applying the procedures of others, in this case those of the Chicago School of Economics. When he was judged by the consequences of his actions for the poor of South America, he dismissed his critics as uninformed, and continued the policies prudence and his peers told him were correct.
It’s their lives after Viet Nam that reveal how each man responds to events that threaten all a culture gives him, his world view and self-esteem. Romney became head of HUD during the period Detroit was razed after the riots. He probably didn’t develop the policies that left blocks of vacant land and forced people to move from the city, precipitating more white flight. Still, when you drive through the areas that were once Detroit’s most vital Black neighborhoods, it looks like he permitted revenge by again not questioning the reports of others. He then retired to devote his time to the Mormon church.
MacNamara spent his later years trying to justify his actions in Viet Nam, never, ever recognizing there was any possible link between his actions and the lives of people in Asia or South America. He admitted he couldn’t discern the moral difference between burning people in Tokyo in World War II, and killing them in Viet Nam in the 1960's, not to condemn both, but to justify them.
The difference between the men, I think, is that Romney was comfortable around the creative people at American Motors, while MacNamara was suspicious at Ford. When Romney realized everything he’d been taught was leading to catastrophe, he had the courage to speak out, as a creative person might. When he was punished, he retreated to the familiar. MacNamara always look for the best way to minimize the disaster for himself as a careerist would and never ventured beyond the familiar.
It wasn’t simply that one was altruistic and the other narcissistic. More fundamentally, Romney had the ability to occasionally see familiar things anew. He may have initially been embittered by the reactions of others, but he had enough confidence to know he could find a new life. MacNamara may have been bright, but he never was able to distance himself enough to fully understand the depth of the cultural challenges he faced, and so died genuinely puzzled why he was still so reviled when his intentions had been so culturally accepted
The fundamental difference between the two that determined who could change and who could not was that the one had more imagination, more comfort with creativity than the other, and ultimately less fear of the consequences of crisis, confrontation and change.
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