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Wednesday

The US auto industry is broken and only I can fix it


The U.S. owned auto industry is dominated by the Big Three - Chrysler, Ford and GM. All three are losing money and watching their market share either shrink or flatline.

The U.S. auto manufacturing industry (cars built in the United States, but not necessary owned by U.S. companies) is thriving in some sectors. Toyota continues to build car plants across the U.S. and hire thousands of workers.

But lets look at the U.S. owned auto industry.

We know what the problem is, and here is how I can single handed fix the whole industry!

1. Instead of the Big Three, it's time for the Small to Medium Three Hundred. Break up Chrysler, Ford and GM into smaller regional operating companies which focus on specific market segments and geographical regions only.
Big companies eventually sink under their own weight and temporarily fix their earnings problems by freezing hires and laying off huge numbers of workers.
Rather than let the horse out of the barn, I would have every auto company no larger than a few thousand employees total. If it gets too large, split it up and make it smaller - and more competitive.

2. All vehicles are built upon a limited series of chassis and motor displacements. All parts are interchangeable and available for each vehicle. No longer will there be 400 different filters, belts or tires, but rather 40 or fewer.
Emphasis will be placed upon using environmentally friendly, low cost, easy to produce parts whenever possible.

With number 2 in mind, we can now build the models for number 3...

3. Create separate businesses based upon make and model. Here are my suggestions:

(Chrysler/Ford/GM) Classic - Famous named cars from successful models redesigned for today. For instance, the Mustang, Imperial, and Bronco and other famous makes now available for limited runs of three years. Like Disney markets select classic cartoons, the vehicle is out for three years and then pulled to build interest and avoid becoming stale.
Using the standard chassis and engine with varying exterior designs this model quickly becomes cost affective.

(Chrysler/Ford/GM) Green - Environmentally friendly vehicles for the twenty first century. Hybrids, electric and new fuel options.

(Chrysler/Ford/GM) X - Experimental and concept cars available for limited production runs. Want a gull wing, turbine or bubble car? We can build it!

(Chrysler/Ford/GM) Commercial - Fleet and commercial vehicles for the delivery, livery and service industry.


4. Manufacturing plants will be built in Sun Belt states along the periphery of the United States from California to Florida. This geographical placement means easy access to international markets, lower labor costs and fewer work interuptions due to weather.
Plants will be located in cities using reclaimed distressed property leased from the cities for substantial tax breaks.

5. Employment will be based upon individual contract only.
Great individuals make great companies. If each business unit is run as a separate business as defined in number 1, then open positions can be determined and filled in a more economical means. The goal is not to hire thousands of employees in a short amount of time and then lay them off when the market changes. The goal is to hire great contributors long term.

Employment for the new Chrysler/Ford/GM will look more like Google and less like U.S. Steel and other old line industries.
Employment will be a mix of full time, part time, contract and consulting.
There will be a greater emphasis on flex time and self management rather than top down centralized control.
Employees are rewarded by sales results, market share, returns, service and revenues rather than tenure or title.

Full time employees will receive salaries and will be eligible for profit sharing after one year of employment. All employees will be co-owners of the business in which they work. Regular meetings will be held which show the company's financial position, market share and projected sales and how the company can increase sales and revenues.

Every employee is a salesperson - Full time employees will receive a car free of charge for personal use after one year of employment. Using the "eat their own dog food" mentality, the only cars available to an employee will be the ones produced by their business unit.

The terms "management" and "labor" will not be used or allowed - all employees are described as co-owners.

All plant positions are open to any employee who wishes to apply for them.

6. Vehicle design, functions and features will be built upon market demand. Designs and features will be routinely co opted from competitors and improved.
Often, design work will routinely be farmed out to non-auto design firms and even over the Internet in open competition.
The emphasis on design will be collaboration by highly motivated users rather than with centrally established norms and culture.

7.Marketing will be done primarily on the Internet.
Vehicles can be ordered and viewed online and built to buyer specifications.

Marketing of products can be tested and measured on an ongoing basis.

Certain models will be pulled within weeks or months rather than years if sales are flat.

Dealerships are distributors and receive pricing based upon volume commitments, customer support and sales revenues.

Extended warranties will no longer be a sales line item - they will be standard value added services as part of the commitment by the manufacturer to the product they produce.

8. Chrysler/Ford/GM Small to Medium 300 will bid on and complete piece work for other auto manufacturers such as the Toyotas, Nissans and others of the world. This can include component manufacture to complete vehicle assembly.

9. The U.S. auto industry will build vehicles. It will no longer run finance companies, pension plans, non-profit organizations or any other operation not directly related to building cars and trucks.
All other functions will be outsourced to third party companies.

The U.S. auto industry can be repaired and run successfully like so many other industries in the United States today. We need only to put the emphasis on small, fast moving and creative work with plenty of individual contribution rather than on the large, plodding old industry waste and replication of yesterday.

Detroit - I am available for consulting work. I have this Friday afternoon free if that works with your schedule. This should only take about 30 minutes.

Thanks!

2 comments:

Dan Moran said...

GM is starting down the limited chassis road. Their alternative fuels project is focusing on one drive platform that uses fly-by-wire technology (bye-bye rack-and-pinion steering!) that they can bolt just about any body style on top of. I hope they're able to make a go of it before they "sink under their own weight."

- Dan

Jack said...

Dan

Thank you for your reply.

Limited chassis is one part. The biggest problem, which I don't specifically identify, is the broken, failed, dying culture of the Big 3.
It is found on the assembly line and in the executive hallways.
The Big 3 are small minded and short sighted and now the entire industry is going down the toilet.
The industry has to be broken and up and rebuilt based upon 21st century innovation.

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