Rejoinder to the Auto Bailout (Part 2)
When I wrote about the US auto bailout sometime ago it raised some eyebrows. Some bloggers could not understand how a former diplomat and a current missionary like me had a command of the auto industry.
As I have explained it, I was lucky to log 14 years of my career after college with Toyota in the Philippines; the first two while servicing the advertising needs of the brand and the last twelve years helping run one of the top Toyota dealerships in Manila. The experience enabled me to be sent not only to Japan, but to Thailand, Malaysia, Indonesia, Singapore, and even California to train in various facets of automotives from technical mechanics, design dynamics, and high pressure sales and market development.
That greatly enhanced my sensitivity to management styles from both the perspectives of the east and the west that makes me say that the Americans will have to change many of their paradigms when competing especially with the Japanese auto makers.
For instance, General Motors has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. Paradoxically, Toyota has spent the last thirty years building more than a dozen plants inside the US. This last quarter shows Toyota making 4 billion in profits while GM racked up 9 billion in losses.
The US senators of course blame the unions and other American pundits will spend years scratching their bald heads trying to figure out what has gone wrong but perhaps to shorten their research, they can start with this anecdote:
Two car companies, one Japanese another American, decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. But on the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for their crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was .......
The findings: the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.
Of course General Motors has learned a lot about their Asian counterpart Toyota. It now rolls out Toyota’s Matrix and Fortuner as the Pontiac Vibes and the GMAC Acadia. Ford Explorer has decided to abandon its truck mentality by converting leaf spring rear suspensions to fully independent versions - thus prevent frequent turnturtle and savings a lot of customer lives that it used to blame on a “defect” in Firestone products.
But Chrysler is recalcitrant. After virtually dominating the passenger van market with two outstanding Dodge Caravan model changes, it proceeded to its third upgrade abandoning its bulgy side looks not only dropping the wide wheel base but converting it to a boxy look. Worse, it totally dropped the delta design of its rear stop lights, to one that looks like those deep rectangles of Chevy vans. I would not be surprised if the sale of its other derivatives, the Plymouth Voyager and Chrysler Town and Country share a substantial sales drop. They have just lost their identity edge, not to mention the various electrical recalls that have plagued all its products for the past four years.
It’s all a question of valuable positioning that Chrysler has lost, not to mention its 8-cylinder mini Jeep models that flooded its dealer lots while the pump rose to the $4 level.
Now that President Bush has already approved the American auto bailout after the Senate threw it out of the window, we can only surmise what next canoe race Detroit will lose to Nagoya.
*******************************************************************
Ado Paglinawan is a former press officer of the Philippine Embassy in Washington DC who occasionally contributes to the Philippines Daily Inquirer. He writes for various email groups and blogs under the pseudonym "mymaestro888". Ado has best served overseas Filipinos as a resource person providing inside information and backgrounders about the celebrated fertilizer scam that rocked the Philippine Agriculture Department and the Presidency since 2004.
As I have explained it, I was lucky to log 14 years of my career after college with Toyota in the Philippines; the first two while servicing the advertising needs of the brand and the last twelve years helping run one of the top Toyota dealerships in Manila. The experience enabled me to be sent not only to Japan, but to Thailand, Malaysia, Indonesia, Singapore, and even California to train in various facets of automotives from technical mechanics, design dynamics, and high pressure sales and market development.
That greatly enhanced my sensitivity to management styles from both the perspectives of the east and the west that makes me say that the Americans will have to change many of their paradigms when competing especially with the Japanese auto makers.
For instance, General Motors has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. Paradoxically, Toyota has spent the last thirty years building more than a dozen plants inside the US. This last quarter shows Toyota making 4 billion in profits while GM racked up 9 billion in losses.
The US senators of course blame the unions and other American pundits will spend years scratching their bald heads trying to figure out what has gone wrong but perhaps to shorten their research, they can start with this anecdote:
Two car companies, one Japanese another American, decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. But on the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for their crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was .......
The findings: the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.
Of course General Motors has learned a lot about their Asian counterpart Toyota. It now rolls out Toyota’s Matrix and Fortuner as the Pontiac Vibes and the GMAC Acadia. Ford Explorer has decided to abandon its truck mentality by converting leaf spring rear suspensions to fully independent versions - thus prevent frequent turnturtle and savings a lot of customer lives that it used to blame on a “defect” in Firestone products.
But Chrysler is recalcitrant. After virtually dominating the passenger van market with two outstanding Dodge Caravan model changes, it proceeded to its third upgrade abandoning its bulgy side looks not only dropping the wide wheel base but converting it to a boxy look. Worse, it totally dropped the delta design of its rear stop lights, to one that looks like those deep rectangles of Chevy vans. I would not be surprised if the sale of its other derivatives, the Plymouth Voyager and Chrysler Town and Country share a substantial sales drop. They have just lost their identity edge, not to mention the various electrical recalls that have plagued all its products for the past four years.
It’s all a question of valuable positioning that Chrysler has lost, not to mention its 8-cylinder mini Jeep models that flooded its dealer lots while the pump rose to the $4 level.
Now that President Bush has already approved the American auto bailout after the Senate threw it out of the window, we can only surmise what next canoe race Detroit will lose to Nagoya.
*******************************************************************
Ado Paglinawan is a former press officer of the Philippine Embassy in Washington DC who occasionally contributes to the Philippines Daily Inquirer. He writes for various email groups and blogs under the pseudonym "mymaestro888". Ado has best served overseas Filipinos as a resource person providing inside information and backgrounders about the celebrated fertilizer scam that rocked the Philippine Agriculture Department and the Presidency since 2004.
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