Toyota, Nissan, and Honda are likely to be smiling today. Not because of the GM bankruptcy. It would definitely be un-Japanese to gloat.
They're smiling because the U.S. government thinks all it has to do is follow the management guidance of the White House auto team, give GM lots of money, fire the CEO, get labor concessions, set fuel efficiency standards, urge the company to create hybrids, and competitiveness will be magically restored.
According to The New York Times, this miracle will be wrought by a 31-year-old; a very bright young man who has never set foot in an auto plant, has never run a manufacturing business, and is advising the already laughable "auto rescue team" about running a competitive auto company in a market where Toyota is already whipping their body parts!!!
I started to laugh because I thought this was part of the Jay Leno farewell skit. No one could make this up!
Then I sobered up with the recognition that, in two
weeks, I could be a shareholder in GM! My God! It doesn't matter
that it's a .000000 % shareholder; I own a share in a company that is surely
bound to fail if its future is designed and advised by a group of financial
engineers--people who have never even set foot in an auto factory and only know
politics/financial engineering. So what am I to do? Exercise
shareholder rights and lobby for a new board and management team.
I nominate James Womack and Greg Brenneman; let
them pick a third. Never heard of them?
James Womack wrote, with Daniel Jones and Daniel
Roos, a highly acclaimed book in 1990 called The
Machine That Changed the World: The Story of Lean Production, which was
the result of a five-year study of automobile manufacturing worldwide.
Central conclusion: American and European auto companies were doomed to fail if
they continued to operate with the out-of-date, Industrial Age management
mindset of mass production coupled with a union stranglehold.
"If GM and Chrysler fail to go through a creative
crisis that breaks the logjam of old ideas and narrow interests...and if the
economy should slump badly during this period, we have great concerns about the
outcome." Womack and his co-authors must have had a crystal ball for
2009.
Greg Brenneman is simply THE best corporate manager
and business dealmaker I have ever known. He was the president and COO
who helped turn around Continental Airlines, later CEO of Burger King, CEO of
Quiznos Sub, CEO of PwC Consulting, and others. He knows good management
and knows how to make deals. None better in the nation.
By no means let the board or management team be
investment bankers, brokers, or anything remotely resembling the dead hand at
the switch in Wall Street. Put it in the hands of people who know auto
manufacturing and management.
If the government finances and directs
restructuring and bankruptcy with Geitner and Summers as pallbearers, it will
rival a Saturday Night Live or Monte Python farce. Their
idea of restructuring is fly a helicopter over the plant, drive new cars, and
walk through plants, upstaging the stupidity of the three auto CEOs who flew
their private jets to Washington. Workers' jobs and my investment will be
safer if a new team is in charge.
C. Jackson Grayson, chairman of APQC, led the first
White House Conference on Productivity in 1982 and served as chairman of the
U.S. Price Commission, which managed the only peace-time price controls in U.S.
history during the inflation crisis of the early 1970s.
I largely agree with the commentary. Financial engineering made it possible for people to buy commodity cars that they weren't in love with but couldn't otherwise afford.
My concern is that branding and Lean Production are now now merely entry-level givens in the market context.
At some point, someone is going to have to actually innovate and create a "New Machine" building cars that are genuinely innovative in several dimensions and that people love. It may be time to draw lessons from the niche auto players (look at Morgan from the UK). We need a new Ayn Rand to write the sequel to "Atlas Shrugged" within our emerging context.