Chrysler and General Motors are out of bankruptcy, but their still behaving like two drunks just out of rehab. The one is repeating to himself the list of things he was told he needed to do to stay sober; the other is already eyeing his old hidey holes wondering how soon he can shake his handlers and relax with his old buddies.
Alisa Priddle reports the last of the top managers will leave Chrysler by year’s end and the new CEO, Sergio Marchionne, has been testing younger men from the lower executive ranks. GM still has Fritz Henderson at the top, aided by 77-year-old Bob Lutz, rewarding the next in line.
Now Chrysler workers are telling reporters they’re shocked they’re expected to change. They’ve been told the only thing they can take to their workstation is water. What do they expect?Cigarettes, snacks, cell phones? Just recently, two planes collided over the Hudson while someone in the control tower was on the phone on private business.
They’re surprised that when a car comes down the line with a quality defect, they’re supposed to stop work until the source of the problem is identified. When I was in Detroit in the early 1980's and Toyota was taking away their markets, people were surprised the Japanese would actually stop the line.
Priddle says that when Americans adopted the Japanese concepts, they changed that principal: cars were identified with problems and taken aside to repair after they were completed. They didn’t understand, not stopping the line was the reason people no longer were buying their cars.
For non-Detroiters, not stopping the line goes back to a time when cost accountants calculated the cost per minute of a downed assembly line and everyone understood they would be fired if they were the ones who caused that expense. Those responsible for what’s now called the supply chain covered themselves by ordering excess parts, so there would always be spares when a problem was found. People were hired to deal with storage problems.
When surplus inventory failed, substitute parts were used. I had a friend who worked as a secretary in Ann Arbor in the late 1970's who had an Oldsmobile with Chevy parts. When her car didn’t work right, the dealer forced her to sign away her rights to complain in exchange for fixing the problem. When the car still wasn’t right and she realized she’d been tricked by the dealer, she vowed to never buy a GM car again.
It’s not that the Japanese didn’t understand the cost of stopping the line. However, they didn’t have the land to waste storing excess inventory, so concentrated on supplier quality. When they stop a line, they identify the person or supplier responsible for the root cause. Their goal is to hold the right person accountable, not punish the one who recognizes a problem.
Over at GM, they’ve been promoting an electric battery powered Chevy Volt that could get 230 miles to a gallon of gas as the solution to their problems in late 2010. Only, Business Week reports, they’re already planning to shift the engine from Chevy to Cadillac. Lutz insists they do it even though the Treasury Department’s telling him it’s a bad idea. In fact, he used the bankruptcy organization to remove his internal critics.
Now, the attempt to sell Opel to the Russians without the proprietary technology is in trouble, and GM is thinking maybe they can force the German government to let them keep control after all. They can return to their old ways of surviving their failures: sell more expensive cars like Cadillacs that cost the same to produce as the cheaper priced Chevies; then when that doesn’t work, cover up the losses in the American market with sales from Europe. How they can keep their emerging market open in Russia after insulting Putin over Opel is a question they consider trivial.
A few weeks back the new chairman of GM’s board announced he had met the head of the UAW and some workers and discovered there was no cultural problem to change. Ed Whitacre
doesn’t understand, the cultural problem has never been about the workers, it’s always been about the managers who train those workers to keep the line running at all costs and let them bring anything to the workstation in exchange for filing no grievances that might cause a stoppage.
Meantime, Toyota recognizes it was wooed by GM in the 1980's and may have overindulged a few times, but not so often that it became addicted and changed its biochemistry. The same day Whitacre said there was no culture problem, Akio Toyoda was in Traverse City telling analysts we are "at a point where we must re-invent the automobile" and his company has to return to its original goal of providing affordable, quality vehicles.
Culture change takes time, and doesn’t always follow from severe crisis. Marchionne is seeing the differences at Fiat where no plant has yet achieved all the goals he set, and only three are close. At Chrysler, it’s a Mexican plant that seems to be leading the conversion, followed by one in Brampton, Ontario. The Americans, at all levels, are still having a hard time understanding, when a drunk changes his habits, life changes for the enablers in the family and the local liquor dealers. Change does mean them.
It’s too soon to know the results of government intervention, but at the moment, when both are competing with a sober Toyota, it seems Chrysler is still trying to stay dry, and GM is reminding us they really haven’t proven they have the will to change.
Notes:
Howes, Daniel. "Insiders at New GM Same as They Ever Were," The Detroit News, 24 July 2009.
Priddle, Alisa. "Fiat Takes Aim at Waste in Chrysler Plant Overhauls," The Detroit News, 24 August 2009.
_____. "Jim Press' Departure from Chrysler Will Mark End of Old Regime," The Detroit News, 22 August 2009.
Snell, Robert. "Whitacre: General Motors Will Roll out New Models Early," The Detroit News, 5 August 2009.
Tierney, Christine. "GM Board Sends Chief Opel Negotiator Back to Germany," The Detroit News, 25 August 2009.
_____. "Toyota President: We must Return to Core Principles," The Detroit News, 5 August 2009.
Welch, David. "At GM, Dreams of an Electric Cadillac," Business Week, 21 August 21, 2009.
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