UpFront: Facts Are Crude Things
By Brian J. Hogan
So what's coming next in the North American automotive market? It's an easy bet that Toyota will continue to do well—what a power that company has become! They've proven that attention to process is the key to eliminating waste on the floor and in the front office.
And what about the great US OEMs? First of all, don't write them off. It's widely understood that the legacy costs they face are a burden that must be dealt with. Given the importance of the auto industry to US manufacturing, a solution to the legacy cost issue will be found; it may happen via the private sector, or by government intervention, but something will be done. As for the foul relations between the OEMs and their supply chain, that business model is broken and must be replaced—and everyone in the game knows it. What must happen will happen— whether slowly and painfully or quickly depends upon the OEMs' leadership.
Ford, GM, and Chrysler have always had many very talented people in their design and manufacturing groups. That well of talent can do many fine things, and can produce excellent cars at a competitive cost, when leadership empowers it. Economic challenges are forcing such empowerment.
It's about the facts. People in the North American auto market can choose from more than 300 models of automobiles. Loyalty to a brand is minimal, so a purchase is going to be based on perceived value to the individual. The product is critical to re-capturing lost market share, not the pitch.
Knowing that, the US OEMs are producing some pretty neat cars—the first, vital step in their recovery from the long slide in market share that they've experienced. There are two more areas where they must make progress:
First, they must find a way to convince skeptical buyers that their vehicles can match the quality of those made by the great Japanese manufacturers. Many younger people believe cars made by US OEMs are rubbish. This must change! Detroit, build good cars, and then tell the potential customer what you've done.
Second, do something about your distributors. Many persons, including this editor, view the car-buying process as a miserable experience. Entering a dealership can be like walking into a swamp. Instead of facts and clarity, one can encounter clumsy, irritating sales efforts. Also, I wonder how many OEM executives have tried to arrange for the repair of their personal automobiles at a dealership?
Build world-class cars, change perceptions, fix the dealers; these actions are difficult because they involve cultural change. But at the end of the day the fact is that they must be carried out successfully, or the US OEMs will not survive.
This article was first published in the September 2007 edition of Manufacturing Engineering magazine.