The enormous success of the hybrid cars from Japan shows once again

[KlatooBNikto]

why there is no hope for our corporations when they are thrust in a competitive marketplace.The Japanese corporate managements behave as though the wolf is always at the dorr and they have to keep performing to survive.Our corporate managements live bloated lives, deeply bathed in hubris and surrounded by yes men, with the fire in their bellies long extinguished.The only things burning in them is their greed, at once undeserved and unlimited.Their only objective is plunder and laying waste to the corporation that handed them the responsibility.

Because of this attitude of plunder, the corporations are constantly starved for capital for anything innovative like the Hybrid Car Technology.Investing in such a technology would have immediately drawn howls of criticism from the baying wolves of Wall Street who would not know what to do with a calendar that had dates past three months stamped on it.

Our corporations are sinking, not because the retirees benefits have become a burden or the workers are paid too much;they are sinking because they do not make good products and they don't plan for the future.In fact, they are unable to do either job because of the time and capital constraints placed on them by forces outside their company.

I do not hold out too much hope for either GM or Ford because the Japanese led by Toyota and Honda are beginning to widen the gap in new technology and product design and development with the success of their hybrid cars.That success will add to the mystique of their technical prowess which will be worth several thousand dollars in premium for their cars when GM and Ford rebates to unload their cars.

When the Chinese cars enter the market in a couple of years, the low end of the market will be dominated by the Chinese autos while the high end will be the domain of the Japanese.

We, of course, will be screwed.

[megatherium]

1. We were in this position in the early 1980s.

Ford and Chrysler came back (Ford with the Taurus and Chrysler with the first minivans). Quality was much improved. (See David Halbestam's book The Reckoning.)

The domestics made lots of money through the 90s with trucks and SUVs. But again they've neglected quality and the small car segment. Maybe this time, the message will really sink in and they will do something other than seek protectionism. At least that hybrid Camry you'll be buying next year will be made in Kentucky.

[idlisambar]

4. Chrysler is a now a German company

and despite some limited successes the overall trend over the last 30 years has been Ford and GM continuing to lose market share. The situation is much worse than in the early 1980's as now GM and Ford are fighting from a much weaker position.

However you slice it, the state of the US auto industry in the early 80's would be a big imrovement over what we have now.

[kwassa]

14. Chrysler is bailing out Mercedes right now

The Chrysler 300 is such a hit car that it has reversed the relative strength of sales at Daimler Chrysler, and Mercedes is having quality problems, and sales have slumped.

[suziedemocrat]

26. Chrysler owes a lot to Bob Lutz - at GM since 2001. He is product focused

People wonder if at 73 he is past his prime - or if he can pull some great new cars out of GM.

http://www.edmunds.com/insideline/do/Columns/articleId=105698

http://fleetowner.com/news/gm_global_fleet_commercial_event_051705/


Take this snippet - which could just be a lot of spin!

He (Lutz) also highlighted GM’s development work on a hybrid propulsion system for full-sized SUVs. It combines two electric motors integrated into the transmission with a 5.3-liter V8 Vortec engine equipped with “displacement on demand,” allowing the engine to “turn off” cylinders in slow driving conditions to improve fuel economy.

This hybrid system, which boasts a fuel economy improvement of 25% compared to gasoline-only powered vehicles, should be commercially introduced on GM’s Yukon and Tahoe SUVs in 2007.

“Having a great big SUV with great fuel economy is a no-brainer,” Lutz told Fleet Owner. “At highway speed, a hybrid doesn’t help much in terms of fuel economy, but in urban driving it’s a big advantage. However, right now, since we need to charge more for a hybrid propulsion system, fuel savings have to be calculated against that. But if fuel prices go up to $3 a gallon, hybrids really become a no-brainer. It really gives us options when it comes to addressing the fuel economy of large vehicles.”

That’s one reason Lutz believes GM’s current fiscal struggles are obscuring some of the real vehicle advancements the company plans to introduce over the next few years.

“We are on the road to a bright future, though we are hitting some serious speed bumps now,” he said. “But I believe we are going to handle these bumps just fine without losing too much traction on the strength of the products we have on the way.”

[kwassa]

29. What is Lutz's connection to Chrylser?

It is nice to see GM working on hybrids.

[suziedemocrat]

32. Bob Lutz guided Chrysler Corp. to its 1990s renaissance

http://www.thecarconnection.com/Industry/Industry_News/Cunningham_Legend_Reborn.S175.A3180.html

Snippet: He's back. Bob Lutz built a reputation as the resident "car guy" steering Chrysler Corp. to its 1990s renaissance, the guy who could scribble an idea on the back of a cocktail napkin and have it transformed into a sleek, sexy sports car like the Viper. When Lutz retired during the summer of 1998, shortly before the DaimlerChrysler "merger" was completed, few really believes he would vanish from the auto scene. Sure, he was 67, but his posture remained ramrod straight, his sense of style still impeccable, his reflexes sharp-as he was ready to prove to anyone willing to take a ride in his L-39 fighter jet.

I read about him in the mid-1990's when the Chrysler Seabring Convertible came out. He kept making them re-do the design to make it "less square" and "more rounded". He built one of the best car design teams ever. They came up with the PT Cruiser, and Viper. However, I read that the "cultural challenges" of the Mercedes/Chrysler merger led to many in the design team leaving DaimlerChrysler . From what I've read, Mercedes has a very slow and careful approach to car design. Chrysler was a very fast paced and dynamic culture. They did not mix well.

[kwassa]

33. I always thought Chrysler and Mercedes to be a very odd couple

I never, and still don't understand the merger. Talk about culture clash!

[LevelB]

2. You missed the most important point.

The CEO and the Board of Directors will in no way suffer from their incredibly shortsighted and malignant leadership.

They sent it down the drain, but they will not be following.

B.

[billbuckhead]

3. German designed cars from China will win car wars

Though Hyundai is a fast closing darkhorse.

The Dodge of the future is going to be a Chinese built Mercedes hybrid running on biodiesel.

[sendero]

13. And that is the root of the problem..

.... In America, simply reaching the position of management is considered reason for lavish compensation.

Elsewhere, actually performing and achieving in that position is.

In America, once you make it to the top echelons of the corporation, your financial success is assured whether you succeed or fuck up royally.

Why is it that business leaders never follow their own advice regarding "incentives"?

[NuttyFluffers]

5. after taking US-Japan politics course, i agree

i understand how the management culture in japan is so different from america. there's just no comparison, one is just doomed to failure, and that would be the american model. they are not responsible for anything, their wages are grossly out of synch with the rest of the company, plans are designed around quarterly results mostly if not only, management only listens to itself and its board of directors (if that), the gov't is viewed as an endless font of money so any brain-dead half assed scheme can be attempted and perpetuated to the breaking point because if you have enough lobbyists you'll be bailed out, etc.

it's a failed system. in the land of free markets and laissez-faire capitalism we have a corporate welfare state of blindingly huge proportions. no taxes, no capital investment worries, subsidies, grants, and loans by the truckload, courts and politicians willing to back you up, bail-outs in an emergency. with all that one cannot fail, unless one gets so lazy and myopic that they don't even try. and that's just it, they don't try, and we have to pay the price for their theft.

[KlatooBNikto]

6. You have correctly pointed out our ailment.It is the sense of entitlement

and privilege that allows us to think that we will always be at the top whether we deserve it or not.That sense of entitlement without having earned it is rampant throughout the upper echelons of our corporate managements.It is so prevalent even a green MBA from Harvard or Wharton thinks nothing of stepping into a corporation and start talking about earning six figure salaries without knowing anything at all about the products or the technical details of designing and manufacturing the products.

In Japanese Corporations the wrecking crew of our business schools would simply be laughed off and not given a chance to perform their miracles. That alone ensures their survival.Beyond that the cost savings in not having idiotic projects to waste money on provides the seed money for improvements in the current product lines.

You will also find that in Japanese Corporations, top managements do not jump from job to job in search of more money,perks and bonuses;such a person would no longer be credible in Japanese society.Only a person who has stood his ground and mastered his products,and performed well over a long period of time will be rewarded. This prevents the hit and run managers from stealing the corporation's money and running with their bonuses and stock options after putting in their time which usually does not last more then five years.

[dbt]

7. Wasn't "Japanese Management" all the rage back in the early 80s?

Try as I might, I cannot remember the exact title of the book, or the author's name. But it was an excellent read, even for the non-business-inclined.

The main thrust of the work compared American and Japanese companies, demonstrating how the latter were ALWAYS in it for the long haul; they were thinking ten years down the road instead of the next quarter. Moreover, the Japanese companies listened carefully to the workers, those most closely involved with the actual building of a product.

Then, IIRC, much was made of the long-term, symbiotic relationship between Japanese companies and their workers: the job-for-life concept.

It all seemd so simple! For the price of a paperback book, any CEO at any American car company had the blueprint for his organization's immortality! But nobody picked up one damn thing--exactly the way that nothing was learned from Viet Nam.

It would be so easy to say that the American car companies richly deserve what's about to happen to them, but one thought for the workers and for the ripple effects on the economies of the various communities in which the companies are located takes any joy out of it.

Suffice it to say that there are a handful of motherfuckers in thousand-dollar suits whose golden parachutes should open in Hell!

[Cooley Hurd]

8. Don't forget the movie, "Gung Ho..."

Of course it was a comedy and a caricature of the Japanese business model...

[Lannes]

11. Was this the book you were thinking of?

[dbt]

22. No, but thank you!

I swear the title was simply "Japanese Management," but Google will just bury you if you look it up that way. Ah, those brain cells couldn't have been that important...

:hi:

[Lannes]

24. Your welcome

It was a best seller in the 80s.I still have a copy.Prestowitz worked in the Reagan administration but spoke out against the re-election of W.Here is an article about it in Mother Jones.

http://www.motherjones.com/commentary/columns/2004/10/10_200.html

[etherealtruth]

12. Was it Deming?

I was in school in the 80's and I "think" Deming's management style was "all the rage" ------but, I wasn't a business major ...

[ProfessorGAC]

15. Answer Is Yes

The ideas implemented by Japanese industry were mostly those of Shewhart and Deming. That's how they went from low quality, low cost junk to high quality, but optimized cost goods.

Some of the methodologies do not apply to every industry (they were developed for the discrete industries), but the philosophy is valid everywhere. That's what i do as a consultant in the chemical industry, is promote the idea of process understanding and monitoring to assure minimum variation, maximum quality at best possible cost per unit. So, i'm pretty up on the history of it, as well.
The Professor

[kwassa]

31. Total Quality Management,

was the philosophy

[geek tragedy]

35. The Japanese model wasn't sustainable.

Folks don't seem to remember the giant economic problems Japan had after the 1980's.

Of course, 99% of the planet would kill to have Japan's problems.

[idlisambar]

36. Actually the model is still working pretty well

as demonstrated by their record current account surplus last year, Japan's industry is still more than competitive; this compared to the U.S.'s disasterous trade position.

Moreover many tenets of the basic model have been adopted and adapted to great success by most of Japan's neighbors.

[Lydia Leftcoast]

38. Yes, the current issue of the American Prospect has an article about

how the alleged "decline of Japan" has been greatly overstated.

They've gone through some tough shake-outs, but they're still innovating like crazy, and their income distribution is still one of the most equal in the world.

If you go to Japan today (I was there most recently in 9/04), it does NOT look like a nation in decline.

Another advantage that they have is that their government is actually anticipating and trying to figure out ways to deal with problems such as the aging of their society and global warming.

[KlatooBNikto]

9. By learning to live simply, the top managements at Japanese corp.s

earn the trust of the workers who then perform to the best of their ability knowing that if the corporation stays healthy they will be taken care of. No one is skimming the profits off the top like our greedy CEOs.This provides ample capital for long term developments like hybrid cars.That attitude of foregoing today's luxuries for tomorrow's benefits used to be a Yankee virtue.Where did it go?

[hatrack]

30. It's not just executive compensation, either

Most of the top executives at Toyota, Honda & Nissan (as well as many other manufacturers) spent many years as engineers. They know a great deal about the details, the systems and the process of designing and building automobiles. They are NOT bean-counters and the American concept of "interchangeable managers" doesn't really exist in the Japanese auto sector.

[SoCalDem]

43. There was a time in America, when bosses lived in the same

communities as their employees.They may have had a bigger house & newer car, but their kids went to the same schools, and most bosses were able to do most of the jobs of the employees. They were actually looked UP to. Some European countries actually have formulas that determine a boss' salary...based on the regular employees' wages..looked UP to.

Our CEOs and super-bosses have turned themselves into demi-gods who are somehow "above it all"..and their employees are little more than drones doing the 'heavy lifting'..

That's why they can, so casually, just outsource the jobs of their 'workers'.. they do not know them or respect them, so it doesn't even bother them a bit when they just eliminate them.

Payroll used to be just another expense in doing business..employees were an asset..now they are seen as a liability to be 'disposed of' at every opportunity.

[LeftHander]

10. Indeed....greed...

As other car makers were seeing the oil dry up in the future U.S. automakers and the media along with the fat bank accounts from the 90's figured retooling car plants to make SUVs was the "American" way to go. They used fear and crash statistics to enable the SUV to become the poster child of American automaking. Funny thing is how at the same time the SUV was gaining ground speed limits increased throughout the country adding to the twisted sence of "safety" a SUV provides.

Society has lost it's mind. The TV has fed America with lies and has projected it's image of culture on America. TV culture will ultimately be the ruin of our economy because a consumer based economy is an illusion at best.

[Squeech]

16. Management science: threat or menace?

Another dangerous aspect of the American business model is how much of it depends on managing competition-- eliminating it, if possible.

At the same time the American auto companies were gearing up to satisfy the consumers of the '50s with huge, flashy gas guzzling boats, they were also colluding with the oil companies and the tire companies to put local bus and trolley companies out of business, so residents of the lovely new suburbs would have no choice but to drive.

This is still the way they think. They're obsessed with market share, and couldn't care less about building a decent product.

[kwassa]

17. I think your thesis overreaches

Hybrids are of course the smart way to go, but Toyota took a major gamble on new technology. There was a pent-up demand for this technology that no one anticipated, including Toyota, which was slow to increase production of the Prius.

It is all about what sells. It is always about what sells. Until very recently, big SUVS were all the rage, the bigger, the better, and Ford and GM were making great money on them. The markup on a Ford Excursion was $15,000 profit beyond cost. The Japanese also make huge SUVs, too. Look at the Nissan Armada, or the Toyota Landcruiser.

It is simply a change in customer demand that could not necessarily be predicted. The US car companies are weak in the small car marketplace, where it is much harder to make a profit, and costs, including labor and benefits, are very much part of the consideration.

The Japanese are culturally different in their business as well as the rest of their society. It gives them advantages as well as disadvantages. If you want to see a real mess, look at food production distribution in Japan. Or, collusion in the banking world. The Japanese were all the rage in the late 80s, early 90s, but guess what? They have been in a recession for most of the last decade, and no one talks about them anymore as being the rage anymore.

[midnight armadillo]

27. The big difference wrt SUVs

Ford, GM, and Chrysler bet the farm on their SUV and truck sales due to their higher profit margins and use of old tech (which meant minimal investment). They proceeded to neglect the car market, assuming that the SUV gravy train would never end. They've been also-rans in the car markets for years and years.

The Japanese (and now Korean) companies sought to be competitive in every market segment, or to dominate a niche (i.e. Subaru w/ AWD, Hyundai on the low end). This way they're well positioned to adjust to changing marketplace tastes. GM et.al still act as if they dominate the market and that consumers will just have to buy whatever they make. It's a failure of imagination on their part, and the US workers will pay the price for it.

[kwassa]

28. I don't entirely agree

The US companies have never been able to break the Japanese and European stranglehold on small cars, where they both developed expertise before the Americans and held onto it. Certain lines of both GM and Ford and Chryler have been successful, while the overall line of vehicles from each is less so. The American companies have also dominated the large pickup truck market, which the Japanese are now going after.

Subaru is not a low-end car anymore, it is pricey for a small car, with fairly mediocre milage due to AWD. Hyundai, Kia, Mazda, and Toyota have successful small, inexpensive vehicles. The Ford Focus has been quite successful, too, in that segment.

The Japanese have really ramped up the competition in the sedan market, although Ford had the very successful Tauras line until it began to look old. This is where the Americans have really lost it.

I think the American companies will have diminished share, but some of the products they make are still very good. I think that they definitely get the message, but are continually playing catchup.

[kmla]

37. Well said. And the reason we haven't broken the dominance?

Cheap gas. Who wants to drive a car the size of a Mini Cooper, when everyone else is driving a huge behemoth? With gas in the States @ $1.90 a gallon (which is CHEAP compared to the rest of the world's prices), there really is not much of an incentive for a consumer to go smaller and more efficient.

And if American car companies could design and produce these cars at twice the pace they do now, they still would only sell the same amount of small cars - comsumers in the US just don't want that many small cars - not when it isn't that much more money to drive a bigger, roomier, and more luxurious vehicle that is safer as well.

Just my $.02.

Thanks for takin' the time to read it.

[suziedemocrat]

18. Bravo!!! Well Said!! n/t

[spindoctor]

19. harakiri

I agree that US companies would probably perform better if CEO's were bound by honor to commit ritual suicide every time the company is forced to downsize.

HAI!

[liberalpress]

20. Actually...

I have an appointment at a local Ford dealer today to test-drive their Escape Hybrid. .. an SUV that gets over 30MPG. Ford is at least giving it a shot... GM doesn't see the need for a hybrid

[Lannes]

21. Be careful

The regular ford escape has had 5 recalls (At least)

[lectrobyte]

23. Yes, they had some early teething problems, but give Ford

credit for trying. Recalls are not necessarily a sign of low quality etc. as all manufacturers seem to have them. My 10+ year old Volvo just got recalled for potential gas tank leaks, and this is at least the 5th recall on this car, but it's still been a great car that I'd keep for another 10 years if it holds together.

[Greyskye]

44. Have you considered...

...(if you aren't committed to buying American) the Toyota Highlander Hybrid SUV? Ford is licensing the Toyota technology, but because of that may end up slightly behind the tech curve. The one head-to-head review that I saw felt that the Toyota was a better vehicle.

[suziedemocrat]

25. I think there are SOME good American companies. But they tend to be small

The huge Airlines haven't made money in years. They blame it on 9/11 - but I think it's because they making flying as close to a living hell as they possibly can. Jet Blue rewrote the Airline book - and they are doing great. Yet for years on CNBC I've seen the big airline CEOs dismiss Jet Blue.

Apple continues to innovate. I read an article where Steve Jobs said the problem is that someone with a great idea might start a company. At first the company is totally focused on the product. If they are successful, the company might not have any competition - or the competition is playing catch-up. Soon the company rides the original idea to great success and in come the "vultures". The original team slowly is replaced by "salesmen." The salesmen don't care about making great products - they care about marketing, sales, and making lots of money. Because the company had such a head start on the competition, the focus on sales works for a while. But, without more innovation, the competition catches up and may even pass the original company. It is hard for them to recover because they have restructured the company away from innovation. As the company's products become more inferior to the competition, the company nosedives.

I have many relatives in sales and it seems the job of a salesperson is to sell you what the company wants you to buy. They may have too much inventory of a particular car. They may have a house that won't move. They may have stock or bonds that the company buyer bought and now they need to unload them before the company goes bankrupt. (http://home.earthlink.net/~cevent/11-9-04_h&r_block_unit_accused_fraud_enron_bonds.html) Whatever. They pay salespeople to get rid of product. They don't pay salespeople to help the customer find the perfect car/house/investment for their needs. That is not considered sales.

[geek tragedy]

34. Uh, this isn't the 1980's.

Japan's economic model has been shown to have serious, serious problems and was unsustainable.

GM is also pursuing an even more long-term approach--hydrogen cell technology that will see its biggest market in China.

It's also worth noting that US corporations are able to compete on a worldwide basis with anyone. Now, do specific US industries have troubles? Of course, but for one example I'd rather invest in a US bank than in a Japanese one.

[Lydia Leftcoast]

40. See my post #38

And I'll add to it by saying that many of Japan's economic problems came about AFTER they were pressured into adopting American business practices, such as getting rid of lifetime employment and allowing American big box stores to come in and kill off local retailers, and after their currency was artificially pushed up to unsustainable heights (80 yen to the dollar), making their exports too expensive.

The bank problems were due to lax government regulation. The banks kept two sets of books to cover up problems caused by the collapse of the real estate bubble, which left many of their outstanding loans uncollectible, and they bribed the Ministry of Finance inspectors to look only at the fake books. But they outsmarted themselves when the situation got so bad that even fake bookkeeping couldn't hide it.

The banks have undergone restructuring and a lot of consolidation (confusing to someone returning after an absence), and the situation seems to be stabilizing.

By the way, Citibank got in trouble in Japan for its less than savory business practices, so I wouldn't generalize.

[patcox2]

39. Our corporations invented absolutely everything.

Different cultures. We are apparently better at innovation, they at fine-tuning and efficiency.

We invented absolutely every major technological breakthrough that the japanese now sell to us.

There's some sort of lesson in their somewhere.

Like maybe that a country that places a very high value on individualism and individual rights is more likely to produce the mavericks and dreamers who can innovate.

But its also likely to have a selfish workforce which simply will not, for cultural reasons, commit themselves to a corporate cause the way the japanese workforce does, and this means we are less efficient in production.

just maybe.

[Lydia Leftcoast]

41. There's a different kind of imagination that sees practical applications

The VCR was invented by RCA, but the top execs looked at it and said, "That's nice, but who's going to want one of those?"

The Japanese took the basic invention, which was the size of a suitcase and could record only 1/2 hour of tape. They were somehow aware of a fact that the RCA execs missed, namely that before VCRs, people used to set up audio tape recorders to record their favorite soap operas while they were at work. They made the VCR smaller and with more recording capacity and were soon selling it all over the world.

The transistor was invented in America, but it was the Japanese who ended the era when radios ran on vacuum tubes and were more like furniture than something you could take to the backyard.

Americans tend to invent things and let it go at that. The Japanese excel at figuring out what bells and whistles are needed to make a product really popular.

Every visitor to Tokyo should spend a couple of hours in the neighborhood known as Akihabara. It's several square blocks of stores devoted to everything that runs on electricity. See what's going to be sold in the U.S. in a year or two. (I remember seeing digital video cameras there before they were available in the U.S.)

[patcox2]

42. Know the story of Xerox PARC?

Talk about an invention going unappreciated. Xerox invented Windows, they had a GUI 10 years before Apple.

I worked at a law firm that actually had the Xerox system, it was amazing. Best part was the monitors. They were elongated vertically, the proportions of a piece of paper, you had a full page of text on the screen at a time, no scrolling. Scrolling sucks.

[Lydia Leftcoast]

45. For a while, Apple, at least, had so-called "portrait monitors"

available, but it discontinued them. I'm not sure why.

[NuttyFluffers]

46. yes, this was summarized quite fast in class.

Innovation: america=leaps, japan=gradation. leaps are great, comes from minds liberated to make connections from seemingly disparate things, but erratic. gradation is great, comes from applied and structured analysis, from highly structured cultures fixed on concrete realities, steady, but slow.

and the previous post analysis about world view, cultural factors perhaps showing a complimentary nature is very good. unfortunately extending this complementary analogy into management culture tends to fail - if only models could so easily corelate.

america had an excellent management culture in several periods of our history, but we've also had deeply corrupt and destructive management culture in other periods as well, such as now, the 1980s, 1930s, & 1890s. it really points to another world-view dynamic going on in america, namely the dichotomic strain we seem to see present most clearly in modern political discourse. a strong streak of founding father-esque sensibility and extreme progressivity, alongside puritanical/criminal opportunists desiring extreme power grab through reactionary politics. america is a fascinating schizophrenic duality, but sadly this tension creates such suffering.