Packard Plant

Recently, Jason Linkins featured an article by Thomas Morton that ridiculed the standard Decadent Detroit journalist’s tour that always includes a photograph of the closed Packard plant on East Grand Boulevard. The deluxe, VIP version of the standard tourist itinerary is the one followed by Ralph Nader and Ross Perot, the one that includes a few private conversations with "real natives" that leave them experts on the state of the automotive industry.

Stale as it gets, the Packard plant does, in fact, symbolize everything that was once good about the automotive industry and much that’s bad about the city.

The building, designed in 1905 by Alfred Kahn, was the first to use reinforced concrete. His early factories were several floors high, and strong enough to support the weight of vehicle production and assembly. After the perfection of distributed electric systems, Kahn built the first modern glass and concrete, one-story plant for Dodge in Warren in 1937.

He innovated in materials, construction techniques, and design. More important, Kahn didn’t retire after making one contribution or simply cash in on his contacts with commissions for private estates, but continued to experiment with industrial architecture. However desolate, his Packard plant still stands after more than a hundred years, and until recently, it could have been renovated.

Although Packard Motor Car Company, then part of Studebaker, closed in 1956, the final destruction of the building is recent. In 1960, the compound was converted into an industrial park that degenerated into a half-vacant warren of small businesses, while the neighborhood, near an interstate, became increasingly more dangerous. Young people used it for raves and paint ball fights.

In the late 1990's, the state held title to much of the adjoining property from unpaid taxes. In 1997, Detroit’s mayor, Dennis Archer, or his cronies, thought they saw an opportunity to convert the land into an Empowerment Zone with tax breaks, and began foreclosure proceedings for the million plus dollars owed the city in back taxes.

The next year, the state’s Department of Community Health was asked to evaluate the hazards at the 35-acre brown field. It determined the worst problems were asbestos, lead paint, bird droppings, tires and bales of plastic waste, costly to remediate, but not serious.

While the unnamed owners were fighting for title in court, the city evicted the tenants of Motor City Industrial Park, erected a protective fence, and posted guards.

Two years ago, the state supreme court ruled the owners had paid just enough of their taxes to retain ownership. The sitting mayor, Kwame Kilpatrick, removed the city’s guards, and vandals moved in with welding torches to strip out steel beams. The fire department is called several times a month, but now limits its efforts to protecting the area, because the buildings have become too dangerous.

The names of the new owners aren’t published, but are known to include Romel Casab, a bottom feeding land speculator, and are suspected to include Dominic Cristini, a convicted drug dealer. When the netherworld moves in, a site is doomed. In the years when Archer was mayor, my hometown was discovering one of its abandoned industrial sites had been systematically used for illegal chemical dumping and qualified as a superfund site.

The stand-off between rivals with different visions for creating personal wealth that negate each other and result in nothing is one enduring city trait the Packard Plant symbolizes. After 50 years, no one has even been able to tear it down as a public health nuisance, not even when Detroit was using urban development funds after the riots to reduce most of the city’s landscape to barren rubble.

However, the magazine story that prompted Morton’s outrage hasn’t been without its benefits. Earlier this month, Senate majority leader Harry Reid used it to justify giving four states special consideration in the evolving health care bill. He said "The cover of Time magazine shows a dilapidated city, dilapidated streets, the debris covering the road and windows knocked out of abandoned buildings. It looks like a ghost town" and then made sure his home state of Nevada was the one that got the Medicaid break.

Notes:
Cruz, John. "Welcome to Mt. Palmer: A look Inside Detroit’s Most Dangerous Neighborhood," posted on his cruzweb.net site.

Guthrie, Doug. "City Loses Site Fight: State Court Denies Detroit's Packard Title Bid," The Detroit News, 2 February 2007.

Linkins, Jason. "Getting The Detroit Story Right," Huffington Post, 29 September 2009.

McGraw, Bill. "Historic Auto Plant Shows Signs of Life," Detroit Free Press, 27 April 2008.

Michigan Department of Community Health. "Health Consultation, Packard Plant, Detroit, Wayne County, Michigan," 23 March 1998, posted on United States Agency for Toxic Substances and Disease Registry website.

Shepardson, David. "Senate's Top Democrat Pushes Bill to Aid Michigan," The Detroit News, 1 October 2009.

Detroit Flight

People like to blame the decline of Detroit on the movement of Blacks from the south during and after World War II. However, Ford and Dodge had left for Highland Park and Hamtramack before World War I when the state’s Black population was 17,115 and less than a third, 5,741, lived in Detroit. In 1910, Blacks constituted only 1.2% of the city’s population and probably a number worked as servants and menials.

Ford’s move from Mack Avenue to Piquette and Beaubien in 1904 can be explained as the need for a larger tract of land to build the Model T, but it’s hard to believe he couldn’t find something available inside the city when he needed to expand in 1910. It’s also hard to understand why Highland Park and Hamtramack resisted annexation so strongly once Ford and Dodge had relocated unless large tax payers did not want to be part of the city.

There may be two sides to the flight from the city: the things Ford desired and the desires of men who controlled city politics

We know Dearborn and the area around River Rouge were not known for their open democracy in the 1930's when Harry Bennett ran Ford’s security or after the war when Orville Hubbard was mayor. For that matter, we also know Flint’s mayor, Harold Bradshaw, and his police chief, James Wills, were more responsive to Buick’s demands for union busting in 1936 than was appropriate for civic officials.

However, an unwillingness to provide or tolerate paramilitary corporate security were probably not important in 1910. Longer standing conflicts between Detroit area investors and local entrepreneurs may have been more important.

In the 1860's, Eber Ward was experimenting with the Bessemer process at a steel plant in Wyandotte. When he wanted to expand operations, his Detroit investors refused. He moved to Chicago, and his plant there eventually became a founding part of United States Steel.

In the same years, a local butcher, George Hammond, bought the patents for refrigerated rail cars. He too relocated his operations to the outskirts of Chicago in northern Indiana. Later, when cattle from the Great Plains were available, that move would have been logical, but in the 1860's animals still came from places like Ohio.

Detroit lost the steel, meat and some of railcar businesses because of a dysfunctional investor culture in the city. The same kinds of problems plagued Henry Ford. Similar problems may explain why General Motors and Chrysler avoided the area, or why the small companies that remained in the city failed to grow even when they had good product ideas.

I don’t know what was going on when rival automotive speculators were betting against Ford and Durant, but I suspect it drew on long standing cultural traditions that were more important to creating the distaste people held for the city than the later demographic changes.

Notes:
Metzger, Kurt and Jason Booza. "African Americans in the United States, Michigan and Metropolitan Detroit," Wayne State University Center for Urban Studies, 2002.

Detroit City vs City of Detroit

This past summer Martha Reeves, then on the Detroit city council, showed her ignorance of her constituency when she complained that Jay Leno shouldn’t be putting on a benefit performance for Detroit auto workers in Auburn Hills. Everyone knows the city and the automotive industry aren’t the same. They just happen to share the same name.

In the early days, manufacturing was crowded along the Detroit River and the rail tracks that paralleled it near the narrows where traffic could cross into Canada. But, Henry Ford, a farm boy from Greenfield Township, never worked in the city’s industrial core. His first plant was on Mack Avenue, his second on Piquette, and his third in Highland Park, just beyond the city.

Ford soon began buying farm land to the west of Detroit, where he built his estate and his biggest factory complex on the River Rouge. For a while his son, Edsel, lived in Indian Village, but by 1921 he’d moved northeast of the city to Lake Saint Claire in Macomb County.

The Dodge brothers, Horace and John, came from western Michigan. They began building engines for Ford at a plant in Hamtramack, before they left to form their own company. When they died in 1920, the company was taken over by New York investors, who later reorganized it as Chrysler. Until 1992, the company headquarters was in Highland Park.

To this day, neither Highland Park nor Hamtramack is politically part of Detroit, even though both have long been surrounded by the city.

General Motors was never even close to Detroit. William Durant was a successful carriage builder in Flint, who took over management of David Buick’s company. When he had trouble with General Motors’ bankers, he organized Chevrolet in the same city. Michael Moore is absolutely correct to use Flint, not Detroit, as the symbol for the decline of GM.

Despite the centrifugal movement of the major automotive companies away from Detroit, the city was long the center for small companies and suppliers. Starting near the river, Richard Wright says the Commercial Company built cars on Franklin, while Hudson Motor, Hupmobile and Ransome Olds all began on Jefferson.

Reliance Automobile Company was on East Fort Street and Packard on East Grand Boulevard at Mount Eliot. Lozier was near Ford on Mack Avenue. The Everitt-Metzger-Flanders Company and Wayne Automobile Company were both on Piquette.

In the other direction, along Michigan Avenue and the New York Central tracks that go west to Chicago, the Rickenbacker Motor Company was on Michigan while both C. H. Blomstrom Motor Car Company and Cadillac Assembly were at Michigan and Clark Street.

As the automotive industry spread away from the city, it became a social network of designers and engineers, customers and suppliers who loved the mechanics of cars and the manufacturing process. After World War II, Ford middle managers may have moved to Dearborn Heights while GM executives may have gravitated toward Bloomfield Hills and engineers followed the Tech Center to Warren, north of Detroit in Macomb County, but they all were aware of one another.

That’s why today, when dealers can’t sell cars, it’s not just the city of Detroit that’s suffering, but every node in the network. The last large employer in my hometown, a hundred miles away, made parts for Visteon until the troubled Ford supplier canceled the contract and moved production to Mexico in 2002. The last small employer in Cameron made automotive fasteners. The process was fully automated, but it still was forced to move its operations to China a few years back to keep its contracts.

For lack of something better, it’s the cultural web of individuals, institutions and communities that people mean when they use Detroit as the label for the automotive industry, not the 138.8 square miles of urban real estate then represented by Reeves.

Notes: Reeves was not re-elected in August, partly because of this remark.

Wright, Richard A. "Once Teeming with Auto Plants, Detroit Now Home to Only a Few Nameplates," The Detroit News, 16 January 2000.

Cash for Clunkers

Despite people’s worst expectations, the government program to give people up to $4,500 to trade in their old cars for more fuel efficient ones spurred automobile sales, especially when dealers added their existing sales incentives.

Cash for Clunkers didn’t immediately restart any assembly lines, but it did clear the stockpiled inventory that has to be removed before manufacturing can resume. Now marketing specialists are studying the sales results for clues to forecast future demand that should reopen the lines.

Many of the program participants were loyal Detroit supporters upon whom the industry depends. The Department of Transportation listed the top ten swapped vehicles, and all the cars and trucks came from Chrysler, Ford and GM. Since the department didn’t give a percentage breakdown, like they did for new cars, it’s difficult to know from the published lists how many Japanese vehicles were brought in or how much these trade-ins reflected the relative popularity of what must have been durable cars and trucks made ten years ago when Detroit held a greater market share.

In general, the program began well for Detroit with these special buyers. At the end of the first week, 47% bought vehicles made by GM, Ford or Chrysler, a number slightly above the three companies’ market share that hovers between 44 and 45%.

However, as more people took advantage of the government’s offer, Detroit lost its preeminence. By August 14, the big three only accounted for 42% of the new car sales, and by the end of the program the number was down to 38.6%.

In the first two weeks, the Ford Focus was the top car, with the Dodge Caliber in eighth place and Chevy’s Cobalt in tenth. Two weeks passed, and Focus fell to third place behind Toyota’s Corolla and Honda’s Civic, while Chrysler and GM disappeared. By the end, the Focus was fourth behind Toyota’s Camry, but the Ford Escape had crept into tenth place.

While Bill Ford could feel vindicated that the changes he’d introduced in the past few years were finally being rewarded, General Motors could console itself the old strategy was still valid: that it had so many models in the market, that even though no one did well enough to make the top ten, the range of choices meant it still outsold their competitors.

At the end of two weeks, it had the largest market share, 18.7%, compared with Toyota’s 17.9%. However, the general drift of the market also affected them: by August 14, Toyota outsold them 18.9% to 17.6%, and by end Toyota was up to 19.4% while GM stayed at 17.6%. In 2008, before they went to Congress for money, GM’s share was 19.1%.

Ever since GM had problems with the Corvair in the 1960's, it has retrenched into the strategy that trucks and luxury cars were its core business. Unfortunately, the government’s sales numbers show people are no longer as interested in trucks. The nature of the program may have skewed the statistics by favoring people who had outgrown their pickups, perhaps because, at their stage in life, they no longer needed to haul things for their house and yard, and now needed a different type of vehicle for a changing family.

Still GM should be worried that at the end of the second week of the program, August 5, 83% of the participants brought in trucks, but only 40% bought new, more fuel-efficient ones. By the end of the program, August 26, the numbers remained essentially unchanged: 84% brought in trucks and 41% drove away with new ones. The cars it eschewed were the market.

Instead, GM’s chief sales analyst, Michael C. DiGiovanni, picked through the data and discovered strong interest in the Camaro muscle car and Equinox SUV. Over at Ford, the vice president for sales and marketing, Ken Czubay, saw hope for the F-series pickup trucks when sales rose for the first time since October of 2006.

These men seem to still hope the interest in fuel efficient automobiles is a passing flirtation, perhaps one encouraged by a matchmaker, but that people will return again and rescue their behemoths from becoming mere niche vehicles. Detroit is nothing if not consistent in its drive towards obsolescence.

Notes:
August 3. David Shepardson, "Big Three Sell 47 Percent of 'Cash for Clunkers' Sales; Ford Focus Top-seller," The Detroit News.

August 15. David Shepardson, "Japanese Sales Climb in 'Clunkers' Program; GM, Ford Slip Behind Toyota in Vehicles Sold," The Detroit News.

August 26. Department of Transportation press release 133-09, "Cash for Clunkers Wraps up with Nearly 700,000 Car Sales and Increased Fuel Efficiency, U.S. Transportation Secretary LaHood Declares Program ‘Wildly Successful’."

September 1. Bill Vlasic and Nick Bunkley, "Clunker Program Spurred August Sales," The New York Times.

A Tale of Two Drunks

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.

George Romney and Robert MacNamara

General Motors has entered a new phase, and Detroit pundits are wondering how old veterans of the wars like Fritz Henderson and Bob Lutz can change its hidebound culture. When I recall the recent obituaries for two former automotive company heads, George Romney and Robert MacNamara, I realize the cultural problems have been there since World War II and are more characteristic of institutions in general than GM in particular.

Automobile companies have always grappled with the tension between creative engineers who design and produce new models and bureaucrats responsible for ensuring their creativity doesn’t lead to bankruptcy. Romney was the one who foresaw the market for small, inexpensive cars when American Motors introduced the Rambler in 1955.

On July 23, 1967, when the Detroit riots erupted, he was governor of Michigan with aspirations to be president. When it took the president, Lyndon Johnson, a day to find a way to send the military to the city without forcing the state to declare a state of insurrection, Romney suspected politics was more important than legality or civil welfare.

That experience with the failure of an institution to react to a serious crisis probably contributed to his growing concerns with the war in Viet Nam. Five weeks later, on August 31, he told a Detroit television interviewer that, when he had visited the war zone in 1965, the generals had misled him, and admitted he no longer accepted the necessity for fighting communism in southeastern Asia.

His political career was over. Those who believed in the war attacked him as personally unfit because he said he’d been brainwashed. Those who opposed the war attacked him for placing the realization of cultural failure beyond his normal experience by ridiculing him for his pipeline to God.

MacNamara rose through the bureaucratic side of Ford where he was always the brilliant implementer of other people’s ideas. Tex Thornton’s the one who told Ford’s grandson, Henry II, he needed to modernize the organization in 1945. MacNamara’s immediate predecessor, Arjay Miller, is the one who went on to spread the gospel of modern management at Stanford after he was fired by Ford.

MacNamara considers his biggest achievement at Ford to have been opposing the Edsel from conception, and finally killing it in 1959. When he realized he was headed for the same kinds of confrontations that led to Miller’s dismissal, he put his resume in the mail and moved on to the defense department.

MacNamara probably understood less about the dynamics of the military than he did the way engineers operate, but he also believed all he needed to do was apply the administrative procedures he’d been taught. Like the engineers at Ford, the generals would handle the rest.
When he began to doubt the success of the efforts in Viet Nam and realized in November of 1967 that he couldn’t influence Johnson he didn’t risk a public confession like Romney. Instead, he put his resume in the mail and moved on to the World Bank.

Again, he saw his job as applying the procedures of others, in this case those of the Chicago School of Economics. When he was judged by the consequences of his actions for the poor of South America, he dismissed his critics as uninformed, and continued the policies prudence and his peers told him were correct.

It’s their lives after Viet Nam that reveal how each man responds to events that threaten all a culture gives him, his world view and self-esteem. Romney became head of HUD during the period Detroit was razed after the riots. He probably didn’t develop the policies that left blocks of vacant land and forced people to move from the city, precipitating more white flight. Still, when you drive through the areas that were once Detroit’s most vital Black neighborhoods, it looks like he permitted revenge by again not questioning the reports of others. He then retired to devote his time to the Mormon church.

MacNamara spent his later years trying to justify his actions in Viet Nam, never, ever recognizing there was any possible link between his actions and the lives of people in Asia or South America. He admitted he couldn’t discern the moral difference between burning people in Tokyo in World War II, and killing them in Viet Nam in the 1960's, not to condemn both, but to justify them.

The difference between the men, I think, is that Romney was comfortable around the creative people at American Motors, while MacNamara was suspicious at Ford. When Romney realized everything he’d been taught was leading to catastrophe, he had the courage to speak out, as a creative person might. When he was punished, he retreated to the familiar. MacNamara always look for the best way to minimize the disaster for himself as a careerist would and never ventured beyond the familiar.

It wasn’t simply that one was altruistic and the other narcissistic. More fundamentally, Romney had the ability to occasionally see familiar things anew. He may have initially been embittered by the reactions of others, but he had enough confidence to know he could find a new life. MacNamara may have been bright, but he never was able to distance himself enough to fully understand the depth of the cultural challenges he faced, and so died genuinely puzzled why he was still so reviled when his intentions had been so culturally accepted

The fundamental difference between the two that determined who could change and who could not was that the one had more imagination, more comfort with creativity than the other, and ultimately less fear of the consequences of crisis, confrontation and change.

Robert MacNamara - Part 1

Robert MacNamara, former head of Ford Motor, died July 6th, the same day the Detroit papers reported a judge in New York had agreed to General Motor’s accelerated bankruptcy plan.

The juxtaposition of the two stories reminded me of the last time the two were news. On July 23, 1967, a vice squad team raided the after-hours United Community League for Civic Action in Detroit and discovered it filled with people celebrating the return of two men from Viet Nam. They arrested 82, and five days of raw, undefined anger ensued.

George Romney, retired head of American Motors, was Michigan’s governor and he called in the National Guard. The next day, Lyndon Johnson sent army paratroopers from forces under the control of then Secretary of Defense MacNamara.

At the time, racism was identified as the underlying cause, and there was plenty of evidence to support that conclusion. However, I’ve always thought two other trends crossed that night at the corner of Twelfth and Clairmount.

The United States had always been a manufacturing country without enough labor. Engineers looked for ways to increase productivity with better machine tools, at the same time medicine made it possible for men to retire later. The two forces meant that, not only was the economy not producing as many new jobs, but it was opening existing opportunities at a slower rate.

At the same time corporations continued their efforts to reduce labor, baby boomers began entering the job market. The first wave, those born in 1944 and 1945 would have started looking for those shrinking jobs around 1962. If all the economy had to deal with was the miracle child born towards the end of the war, it might eventually have been able to absorb the surge.

But, couples didn’t stop with one or two children. In my neighborhood, probably a third of families had three and four. That increase would have been hitting the employment offices by 1967. Whenever scarcity is temporarily replaced with a surplus, men feel free to exercise secondary reasons in hiring. Latent bigotry resurfaced when men jockied for the remaining jobs.

The draft was one factor that delayed an awareness of the changing nature of the labor market. At that time, all young men were required to register, and many volunteered for two years in peace-time Germany or Korea. Those who were returning in July, 1967, were the ones who had enlisted just after Johnson had officially started the Viet Nam war escalation on January 31,
1965, but before the nature of that change was known. By 1967, opposition to MacNamara’s draft was increasing, and many were criticizing college deferments as unfair taxes on the poor.

We’ve spent a great deal of time and energy since 1967 trying to deal with problems of prejudice and manning the military, but no time wondering how a nation can survive with more people than it can employ. Even now, some still think that because General Motors and the other auto makers have eliminated so many union jobs, all they have to do is sell more cars, and the drag on the economy will disappear. They still refuse to recognize that going from a world of labor scarcity to one of superfluous people is a major cultural change.

Point of No Return

I recently read J. P. Marquand’s Point of No Return. The thwarted tale of Charles Gray, a small town boy from a family just below the elite who became engaged to the daughter of that elite, was predictable for anyone who’s lived in such a town. The matter-of-fact style borrowed from Middletown only underlined the familiarity.

While I was reading about Clyde, Massachusetts, General Motors was filing bankruptcy papers in New York, raising once again questions about why its culture chose failure when confronted with serious challenges to its survival.

Marquand’s 1949 novel suggests that GM had not just marketed to the Clydes of the country, but had absorbed the small town social structure with its rigid hierarchy that dictated Cadillac would always be better than Chevy, and both were ordained to always be better than any other division in the company and all better than any possible competitor.

Like Laurence Lovell, a father who would refuse his daughter’s suitor because he and Gray’s father had once disagreed, GM executives believed they could ignore upstarts like Pontiac and Saturn where new ideas actually existed that challenged their world view that the best product was the one with the greatest profit margin. The company felt vindicated when they chased away John DeLorean and Roger Smith, fought off Ralph Nader and Ross Perot, battled Walter Reuther and Roger Penske to a draw, in the same way Lovell was happy when young Gray abandoned any hopes for his daughter, Jessica.

The cultural insularity was partly the product of the company decision to use its own training school, General Motors Institute. The corporation came to prefer men who came up through an organization as rigid as that of the bank described by Marquand where the talented could not be promoted if they’d attended the wrong prep school, joined the wrong fraternity at the wrong college, married the wrong woman, or joined the wrong golf club. Once Gray’s co-worker, Roger Blakesley, was perceived to entertain inappropriate ambitions, he was asked to resign.

Small towns have been dying for a long time because entrepreneurs simply no longer are willing to put up with slights like those Lovell cast on Francis Stanley, the man who bought the local brass works and not only employed most of the men in town, but brought in talented men from outside like the engineer Elbridge Sterne. Sterne married Gray’s sister, Dorothea, and took the relics of her family back to Kansas when he was offered a better job after her father died.

It wasn’t just southern towns willing to lure foreign companies with tax incentives and promises of labor that could be pacified without unions that threatened the economic existence of small towns. Every small company that located in a more open-minded area, where achievement was more important than ascribed status, represented a lost opportunity.

In the end, Jessica Lovell found no one suitable to marry and had to settle for the only single man left from her generation, one who had endured the town, forever conscious of conforming to the rules for advancement. Her now much older father continued to call her fiancé Charles years after he had vanquished that threat. The new man simply remained invisible.

The people who are most angry with GM right now are the dealers in the small Clydes across the country who now are being cut off for not being urban enough. They recognize the irony of being left behind by a company that would prefer to remain more provincial than they.

Design - Part 2 - Logos

We all read about General Motor’s declining market share. I got curious about how statistics that influence Wall Street stock traders translated into the real world. After all, if a large part of the market is rental companies and the well-to-do who trade cars every year, then the market may represent only a fraction of the vehicles on the road.

I started counting the number of cars that passed me in traffic that were made by GM, Ford or Chrysler. What surprised me was not the results, about evenly divided between the Big Three and the others, but the difficulty of determining who made which vehicle.

I confess I’ve never been much interested in what cars look like, and could never play children’s identification games. I could easily be the prototype for those playful stories written about what a Martian or 22nd century archaeologist would think.

Still, when I started to look, I was struck by how true it is that most cars look alike, that many station wagons (SUVs) look alike, that most pickup trucks look alike, even how similar are sports cars. Only VW’s and Jeeps are still recognizable, and only some of those.

I turned to reading the car name or logo, and discovered another problem. Most names on cars assume the watcher already knows who makes what, is an informed consumer. The logos are hard to find, and most are interchangeable. It took several days to determine some weren’t fancy hood latches, and longer to learn which logos and models went with which manufacturers.

Ford’s blue oval is the most recognizable: the colored shape is instantly recognizable and it’s usually placed on the right side by the rear taillight where a driver is most likely to be looking in traffic. Most of the others are chrome designs in hollow circles under the center brake lights. One doesn’t have time in traffic to distinguish internals of common shapes when detail blurs at more than a car length.

Apparently everyone is selling understated elegance. Only older cars and trucks have names that are large enough to read at any safe driving distance. The logos for both Chevrolet and Ford have been shrunk. The one for Oldsmobile has been so modernized, I had to decode it to connect it with its maker.

After a while, I started speculating on how many logos were really the same. If I turned the Oldsmobile rocket slightly, I had an Accura; if I turned it some more I had a Lexus. How does one tell the Oldsmobile logo from the ruptured duck of Lake Central air lines, what would a Rorschach test make of it? This is not the kind of speculation designers should be inviting in traffic.

At the time I was pondering the failure of automotive designers to create unique, identifiable vehicles, GM was selling its mortgage finance division, GMAC. The photographs I saw of the executives showed them wearing identical grey suits and yellow or red ties. Similar photographs of Ford executives announcing plant closings in January of this year, 2006, showed them in similar grey suits, with nondescript ties.

The only difference between the executives: GM grey was more bluish, Ford grey more brown. The GM ties stood out more than the Ford ones, but, by calling attention to themselves, exaggerated the impression they were somehow not right.

The message they delivered, like the logos, was not the one intended. They were supposed to personify power and elegance, a united management team. They didn’t want to show the diversity that appears in work place meetings, where some wear suits, some sport coats. Most wear white shirts, some wear blue. The majority wear ties, some bolos. Jerry York appears in a turtleneck.

Instead, they were like the automobiles and logos they market. They demonstrated they could not show distinguishing individual traits within the range of what was defined as acceptable.

One could go a step farther, and note that the men in the GM photograph had similar builds, similar hairstyles, were of the same general age. At Ford, three of the men on stage had similar characteristics, and were little different than the GM executives. Indeed, there’s nothing that distinguishes Bill Ford from Rick Wagoner to the uninitiated.

Ford had five men on stage, and the other two were physically different. The finance man, Don Leclair, was silver haired and slightly built. Jim Padilla, Ford’s president, was a big man who dwarfed those around him. His bones were big, his shoulders were wide, his skull was large. He’s the only one who came up through the plant floor, and the only one whose body language in a New York Times photograph signaled his disapproval of what he was hearing.

Padilla’s the first to be removed. David Cole tells us, he "helped management reconnect with Ford’s people in the plants and with Ford’s dealers after the chaos of early 2001." Now that the company is closing the plants he salvaged, the company needs someone who will "not get consumed himself in what will be a very difficult process."

Bill Ford is going to use a committee, not someone described as a "fiery" engineer from a Detroit Mexican-Irish family.

Automobiles are about style and performance. Logos and demeanor in public forums distill style into potent symbols. These suggest companies haunted by Henry Ford’s antisemitism and William Durant’s flamboyance, the failure of Edsel and GM models not remembered, companies who’ve spent too many years defining themselves as what they are not.

Now it’s time to define who they are, and they fear strong individuals, who are the only ones who’ve ever made a difference. Instead, they bury themselves in consensus. No doubt public relations advisors submit logos to focus groups to identify anything that might put off some customer. Likewise, experts no doubt suggest how men should dress, based on research like that of James Molloy on how people respond to clothing.

Committees may avoid failure, conformity may reassure Wall Street; they don’t guarantee success and they obviously don’t sell cars.

Sources:
Cole, David. Quoted by Tom Walsh, "Ford president Jim Padilla to retire," Detroit Free Press,
6 April 2006.

Ford plant closing photographs, Fabrizio Costantini, The New York Times, 24 January 2006, and The Detroit News, 24 January 2006.

GMAC sale photograph, Rebecca Cook, Reuters, The Detroit News, 3 April 2006.

Molloy, John T. Dress for Success, 1975.

York, Jerry. Photograph, Jeff Kowalski, Bloomberg News, The New York Times, 29 March 2006.

Gambling - Part 1 - Racing

Racing is controlled chaos; Detroit automakers are mature organizations that banished anarchy decades ago.

They maintain an ambiguous, older brother relationship with racing. It needs the publicity it generates, but doesn’t want to be too near anything quite so disreputable. Marketing men support racing teams, but hope desirable customers for luxury vehicles won’t notice.

They may accept Bunky Knudsen’s adage that they can sell an older man a young man’s car and can’t sell a young man an old man’s car, but they still lust for predictable sales to those with steady incomes, the bigger the better.

GM would rather publicize the Corvette as the pace car for the Indianapolis 500, than announce a Chevrolet driver won the NASCAR championship in 2005.

Pace cars are much more predictable. The company knows the car will perform, and will still look good for photographers when it’s done. Executives can go farther and bring it, or its clone, to track parties and let well-heeled supporters look under the hood, kick the wheels, even take rides. Race teams are much more protective of their vehicles.

But more, it’s harder to predict who will win a race, and the car crossing the line may no longer be a good advertisement for high performance road safety. Since 1970, GM has supplied the pace car to Indianapolis 31 times; Chrysler has had three vehicles, and Ford two. In contrast, GM vehicles won the NASCAR championship 26 times; Ford and Chrysler each five times.

Racing’s contribution to the automotive industry is more than publicity and brand loyalty. In the early days, before the Model T made automobiles affordable, racing was a way to attract the interest of the wealthy. Indeed, when Henry Ford needed backers in 1901, he raced against Alexander Winton at Grosse Pointe. The next year, he used bicycle racer Barney Oldfield, and started haunting race meetings.

Ford got more than money from racing. The man who designed his assembly lines, Charles Sorensen, was a woodworker who worked with a bicycle racer in 1902.

In Florida in 1905, Ford scavenged a piece from a wrecked French vehicle because he wanted to know why European cars were lighter and stronger. According to Robert Lacy, he had the part analyzed and discovered it was a vanadium alloy. He located a company in Canton, Ohio, to produce the metal for him, then organized his own steel company.

Despite pressure on auto makers to distance themselves from juvenile delinquents and dragsters in the 1950s, racing continued to provide the industry with experimental materials, innovative styles, and new manufacturing methods.

When Ed Cole was asked to produce a cheaper vehicle with newer, lighter weight materials, he introduced the Corvette. It didn’t sell well until he hired Zora Arkus-Duntov to improve performance for the 1956 race at Daytona. Arkus-Duntov had worked with race teams in Europe and liked to say he had driven race cars himself.

After Corvettes and Chevrolet engines took over racing, Ford upgraded the Mustang, and like Ed Cole, reached out to a former driver for ideas. However, Carroll Shelby wanted a contractual relationship, did not become an employee. When he retired from racing, he had developed his own sports car, the Cobra, and retained ownership of his ideas, set boundaries on his influence at Ford.

Racing and the Big Three diverged with the gasoline shortages of the 1970s and the need for lighter, stronger materials and safer vehicles. Solutions for the track, like carbon fiber parts that disintegrate on impact, were no longer transferable to the highway.

Since, designers for Formula One and Indy cars, with their exposed axles, have pursued aerodynamic shapes beyond anything that can be adopted for a family vehicle. NASCAR requires vehicles maintain the shape of street vehicles, but the materials and assembly deviate widely. Neither can provide new styling ideas for Detroit.

New materials, experimental engines are still transferable, but both are more expensive than the car makers think they can invest for performance cars geared to young men.

The most important thing the industry got from racing was an attitude towards risk taking. Despite ruminations that fans go to the track to watch crashes, drivers and their teams do not go out each weekend courting death. They know it’s a possibility, but they use ingenuity to reduce the risk. It’s that ingenuity in the face of impossible odds the automobile industry has lost.

When the Fiero developed handling problems in the 1980s, GM had no managers like Ed Cole to keep the car alive and hire men to solve them. Indeed, it had been frightened by the legal costs of Cole’s other introduction, the Corvair. While it may have sent a Fiero to Indy in 1984, the 1983 pace car was a Buick Rivera, and the 1985 one an Olds Calais.

When SUVs developed handling problems, Jacques Nasser looked for someone to blame, didn’t look to see if Ford had anyone who could find solutions. GM sent an Oldsmobile SUV to Indy in 2001, then reverted to Corvette pace cars.

The companies’ attitudes toward racing are a consequence of their inability to experiment. They’ve reduced racing to something predictable, a marketing ploy to reach certain customers. When it comes to genuine risk, they prefer wall street consultants to help them fend off attacks by a different breed of gamblers, men like Kirk Kerkorian and Steve Miller, Carl Icahn, and Wilbur Ross, who bet a system, not a game. They don’t care if they win a specific race so long as they accumulate enough points to win the championship. Racers never settle for just the money; they want the car that wins.

Sources:
Lacy, Robert. Ford, The Men and the Machine, 1986.

Failure - Part 1 - Superstition

How can a company continue to fail and still survive?

In the 1980s, Roger Smith said General Motors’ problems included long gestation times to bring new vehicles to market. In addition to engineering delays, plants were not designed for quick retooling.

Today, we’re told GM has problems with long lead times and its plants can’t switch from one model to another. Indeed, the chairman, Rick Wagoner, didn’t even know eight flexible plants existed when he announced it was a new priority.

Smith opened a plant in Fremont, California, with Toyota to learn better manufacturing processes. Micheline Maynard reports that no one from GM attended a plant walk through with Toyota executives to celebrate the 20th anniversary of the joint venture, although some did show for the public ceremony.

When Chrysler was bankrupt, Lee Iacocca said one problem was benefits, and wanted to transfer the cost of health care to the federal government, like its rivals in Japan and Europe. No one listened. Today the answer is manage automobile prices by eliminating medical insurance, but don’t try to manage medical costs.

Observers like Daniel Arst claim GM’s problems 20 years ago were its union contracts, and that it’s still too compliant. Union members complain the UAW’s not assertive enough. When Chrysler was bankrupt, the union demanded a place on the board. The adversarial model was more familiar, but has reached a crisis with suppliers who superintend labor by sending productive work to other countries.

When Ford and GM first noticed the Japanese were doing things differently, they experimented with some of their methods. R. P. Coe, a Ford worker in Indianapolis, claims

The Company quit investing in the workers, who drove business success through employee involvement programs. These programs saved Ford millions and led to many cost reductions and help improve manufacturing processes.

How can so many smart people fail to learn?

Back when I was an undergraduate taking courses in education, I was told people who learned things easily also relearned easily, but those who had problems learning something had an even harder time relearning.

Financial and engineering curricula both have sequences of challenging courses. Some schools deliberately increase the difficulty to weed out students and enhance their reputations. Those students who survive will either be very good, or those who may become too committed to what was so difficult to master.

From the first hiring freezes in the 1970s, many have feared for their jobs. In periods when there were more applicants than jobs, those who were hired felt lucky. Each time companies announced layoffs, those who survived felt lucky to stay.

Luck is not predictable, and does not produce rationale behavior. Gamblers like John DeLorean may respond with bravado. Most are more conservative and respond to the unpredictable with superstitious behavior that stresses repeating what worked before. When rituals fail, men look for what they did wrong, analyze how they deviated from the past.

Nothing has worked because no one committed to any solution long enough for it to work. Coe complains Ford abandoned Japanese employee relations, Maynard reports GM abandoned manufacturing innovation, Arst tells us companies and the UAW abandoned non-traditional agreements, shareholders claim managers abandoned a commitment to cost containment.

When one listens to people discussing today’s problems at GM, one hears the same things one heard 30 years ago. One could be excused for thinking the problems are still the same. Instead, I suspect the problems today are the direct consequences of 30 years of reaction, and that constant retrenchment has created its own view of the possible.

Superstition does not encourage permanent change; it promises quick techniques for perpetuating what worked in the past, and reinforces the view the past was a golden age that needs to be restored. Men who’ve come through rigorous training programs may be even more likely to hold to what first worked.

It would seem as soon as something worked, and things improved, people didn’t just feel safe reverting to what they did before, but felt compelled to return to the previous mode as evidence of success. When problems resurface, they never reconsider the last thing tried, but look for a new charm. Today’s solutions, sending as much work overseas as possible, are as much ritual as measured response, but with more severe consequences than 30 years of insecurity.

Sources
Arst, Daniel. “Hand in Hand, Over the Precipice, The New York Times, 2 April 2006.

Coe, R. P. “Ford Mood,” Detroit News, 27 January 2006.

Maynard, Micheline. “At G.M.’s Helm Or Going Under?,” The New York Times, 29 March 2006.

Design - Part 1 - Engineers

Mustang, Corvette, Muscle Car. What’s the last car you remmber from Detroit?

Who’s the last creator you remember? How about, Lee Iacocca, Ed Cole, John DeLorean? Afficionados, Detroiters prefer men like Harley Earl and Bunky Knudsen.

Who’s the last CEO you recognize from one of the Big Three car makers? Alfred P. Sloan, Robert McNamara? Business historians will name others like Roger Smith and Arjay Miller.

Who mattered most to you when you bought your first car? Which do you associate with failed enterprises?

As car dealer Hoot McInerey said, when asked about the latest reorganization at Ford, "If you've got the right product in the right market, any fool can be a hero."

But why hasn’t General Motors or Ford been able to produce a vehicle consumers want?

Ed Cole was lead engineer for Corvette in 1953 when he was 44; he became president of General Motors when he was 58, in 1967, and retired at 65.

He was the one of the last engineers to rise so far. Since, production men have had their careers stymied.

Lee Iacocca was behind the introduction of the Mustang in 1964 when he was 40. He became president of Ford in 1970, at 46, and was fired by Henry Ford II eight years later.

John DeLorean developed the Pontiac GTO in 1964 when he was 41. He aborted his promotion path when he divorced a second time and began dating celebrities. He left General Motors when he was 48.

Today, the top men and lone woman at Ford and GM are in their 40s or 50s, but their experience is in finance and international operations. Almost none mention time in a plant on their resumes. None are associated with a single product innovation, but several are credited with salvaging operations by downsizing.

The talent of several generations rose in the 1960s and left in the 1970s. What was happening in the 1950's when the young men were coming of age who would be in their 40s then? What’s happened in the 1970s that stopped those men from getting new projects? What suppressed the culture of mechanical innovation and design since?

When I was growing up, sons of storekeepers and professionals did not consider engineering. It was the route to upward mobility for children of plant workers. Then, in the Nixon years, the aerospace industry laid off highly paid engineers. Parents who valued education for concrete, pragmatic reasons began to question the wisdom of their ancestors.

The oil embargo by OPEC and quality problems publicized by Ralph Nader should have been challenges, not insurmountable crises. The reaction of automotive executives was panic, the first of the hiring freezes and layoffs. Kids began to see their parents’ jobs threatened, and saw accountants were more valued than engineers.

When GM transferred its data processing functions to EDS in 1984, engineers feared they would be next. Teenagers either saw their fathers lose their jobs, or saw cousins and older brothers have problems finding berths out of college. No doubt, parents advised their children to consider other fields.

The number of engineering students in the United States peaked in 1983 in the United States with 441,000 baby boomers, and fell to 361,000 in 1999, according to Ed Cohen. Using rough calculations that multiply the percent of the population between the ages of 5 and 19 by the total population, it appears the actual decline was from .78% of available young people to .67%.

Statistics on engineering enrollments are tricky, because they combine disciplines. ASEE reports nearly a third of the 394,148 students in 2003 were in computers and electrical engineering. If we only count a third of those as traditional engineers, then the current total falls to 306,107 students, or .52% of the available young people.

A quarter percent decline in engineering students nationally seems statistically insignificant, but the percentage of truly creative men in any generation is even smaller, and they may be the ones who first considered computer science or business administration.

The more critical problem is the thirty year dearth of jobs. ASEE tell us the state of Michigan had 22,865 undergraduate engineering students in 2003. Two years later, Michael Ellis reports GM employs 22,000 engineers world-wide, and is planning to transfer more work to Brazil and eliminate more positions at its Tech Center in Warren.

Students know they have to leave. Michigan ranks 4th in the number of engineering students but 37th in the percent of residents with bachelor’s degrees. Even immigrants know there’s no future. GM says it is transferring engineering work because it can pay lower wages and admits it’s recruiting Indian nationals at Wayne State, hoping to lure them back to Bangalore.

How long can an industry deny opportunity to those critical to its success before it finally discourages too many? How long before the ambitious and creative are gone, leaving plodders to fill the slots? GM and Ford can still recruit engineers, but they can’t produce exciting cars.

It may be the only culture GM and Ford have been able to change is the one they need to survive, the one that produces men who might create the next generation of muscle cars. Once the formative environment is gone, it’s almost impossible to recreate. Detroit may become the equal of the places it sends work, Brazil and BangalPrismore.

Sources:

American Society for Engineering Education. "State of Engineering,"
Prism 13 (2) October 2003 on internet.

Cohen, Ed. " Enrollment Trends: Too many students are choosing the same academic paths. What's a college to do?," Notre Dame Magazine Winter 2005-2006 on internet.

Evans, Michael. "Engineers' work goes overseas, GM says," Detroit Free Press, 6 April 2006.

George, Mary Anne. "Michigan’s College Graduate Rank Sinks to 37th in Nation," Detroit Free Press 29 March 2005.

McInerey, Martin. Quoted by Tom Walsh, "New team to drive F"ord," Detroit Free Press, 7 April 2006.

Corporate Culture - Part 2 - Line Tales

"Ten Dilbert Managers" is currently making the rounds of email and internet graffiti. It’s a list of memorable quotations submitted for an unnamed magazine’s contest. Some are funny, some trite, and one from Delco Corporation is too painful to be anything but true.

Doing it right is no excuse for not meeting the schedule.

I happen to receive the email the same day The New York Times business section was running another article on the disintegration of General Motors. The quotation illustrates how widely the conflicts of central institutions percolate through their spheres of influence, and how difficult it is for companies and the managers it fosters to genuinely change.

Shared ideas sometimes pass to companies like Delco, a machine tool maker in Akron, when people migrate from one company to another. They may also diffuse through consultants who move from company to company, much like peddlers of the past who carried city ways to the countryside.

Often the most common mechanism for cultural integration is not personal experience or formal training, but stories retold in bars and over lunch. At work, I would hear them when the person directing a meeting would shift his position, signaling an informal break. Like many corporate folktales, their rendering depends on the story telling ability of the narrator and the recognition by the audience that the themes are important.

In the days before Ralph Nader and Unsafe at Any Speed, the sanctification of keeping the line running was the source of tales passed well beyond Detroit. I heard them from a salesman who sold material handling products to GM for the company where my father worked in the early 1960s. We didn’t consider ourselves an automotive town, and were more than 100 miles away, but we heard the stories.

Accountants had calculated the cost of stopping the assembly line, and no man’s job was worth halting production for poor quality, lack of parts or preventive maintenance. Anecdotes featured the ingenuity of men who saved the day. One tale I remember concerned how GM considered building an air fleet to deliver out-of-stock parts. Of course, the Japanese attacked the root problem with a new inventory system, and new relations with their suppliers.

One reason Nader and, later, Ross Perot could make their points so easily is they could draw on the local narrative tradition, and rebroadcast it to a national audience.

I had a friend who was having problems with her Oldsmobile in the 1980s. The dealer had her sign away her future litigation rights in return for one free repair. She later discovered her problems were known and came from line substitution. The dealer may have outsmarted her, may even have turned her into a tale he could retell, but I imagine she never bought another Oldsmobile.

Parenthetically, no one will ever buy a new Oldsmobile again. GM abandoned the brand as unsalvageable in 2004.

When I worked in a GM plant in the 1980s, it had new employee classes in quality management. The first day the instructor told us, if we learned nothing more, remember GIRTFT stood for "get it right the first time."

We were also told, in Japanese plants, anyone could stop work if there were problems, could actually stop the line. This was power that was tested, perhaps abused, but freedom, none the less, to upend hierarchy, to stand up to absurdity.

Still, twenty years later, a manager for an automotive supplier’s supplier, who can’t have been more than a child, may not even have been born, when line stories were evolving, is still trying to reconcile two competing messages within a failing industry: the mantra that caused the problem, and the koan that was the solution.

Delco’s home page repeats the quality training I had:

Our products are produced using the highest quality standard recognized by our industrial community to ensure your job is done right - the first time!

But elsewhere the company tells us it is known for "offering quicker turn-around time in mold building production and for operating with greater production and cost efficiency."

No wonder the quoted manager sounds confused. The sad thing is he is right: quality and production should not be incompatible. If things are done right, a schedule can be met.

When folktales deal with production, it is quality that’s the problem. For preproduction projects like Delco it could be the schedule that’s wrong, that wasn’t right the first time, or, more likely, wasn’t adjusted when problems occurred in earlier phases, leading to undue pressures for later phases to make up lost time and the impossibility of doing things right in half the time.

I had another friend who was working for a engineering subcontractor in the 1980s on a project to build a new plant. He said that at one meeting, every subcontractor in the room knew the schedule could not be met, but not one would say anything because they knew that whoever said the obvious would get the blame. Instead, each filed private minutes with his team leader reporting the true status of the project. There was no freedom to stop the line: everyone had to wait until GM said there was a problem.

We’re still waiting, because our freedom to stop the line, to stop buying does not oblige managers to pay attention. The retold anecdotes, polished into memorats, were the only way powerless workers and consumers could protest. Folklore does not arise in a vacuum. When motifs coalesce into a common narrative, anyone who respects local folk traditions knows something’s changed, knows there are serious troubles.

Culture Consultans - Part 3 - History

Cultures often have origin myths. Such narratives existed in the two companies I worked, where consultants convinced managers they could eliminate self-destructive behavior. No single story was retold, refashioned into folk art, but shared history existed as a common font of experience that could be referred to with truncated parables and mottos.

In Detroit, one absorbs legendary names and motifs growing up. At the other place, the company retold its key story during its first attempt to address safety and security problems. Indeed during those early days of organization-wide video training, it was the only transmission that was slowed by too many viewers. By the time the culture consultants arrived, many had refreshed their memories, and some used the legend as a mantle to cloak their obstreperousness.

Creation myths do not exist everywhere. In most places I’ve work, people don’t even know the name of the founder, and the most typical narrative is bureaucratic gossip. In Detroit, the legends are recognized by their first names: Michael Moore filmed Roger and Me; Harry Bennett wrote We Never Called Him Henry, a furrier advertised with imagined conversations between Roger and Ross, then Roger and Roger. The caste organization used only last names.

Cultures are rarely homogenous. Most contain competing elements which may be channeled through social structures like clans who alternate power, like the summer people and winter people. Folk narratives often recall past incidents of conflict that disturbed the equilibrium before suggesting ideal solutions.

In Detroit, internal stresses are most clearly seen with Henry Ford. When he first succeeded, his investors criticized him because they believed automobiles would only exist as luxury vehicles. When Ford wouldn’t compromise, they changed to Henry Leland and formed Cadillac Automobile Company in 1902 with the belief the best way to operate was high profits on few sales. William Durant absorbed them into General Motors which he organized to sell different styles to different markets. When he proved too flamboyant, the banks took over.

Ford reorganized and introduced the Model T in 1908. After a few years, his partners, John and Horace Dodge, rebelled because they believed Ford sacrificed quality to quantity. When they died from prohibition alcohol, bankers absorbed their company into what became Chrysler.

Ford reorganized and avoided banks.

When Roger Smith became head of General Motors in 1980, it had a long organizational tradition of selecting the chairman from financial men, the president from production men. Lee Iacocca could never do more at Ford because the family held the top spot. His success at Chrysler violated this industry wide compromise between cost and quality, but was prompted by the only crisis financial men understand, bankruptcy.

Smith faced the same challenges and tried, at least with Saturn and Fiero, to shift the balance towards quality and inexpensive products. His greatest opposition came from those descended from Leland who believed the best strategy was expensive vehicles like Cadillacs and pick-up trucks with low production costs.

Smith’s replacement, like Iacocca, violated the stasis between the groups. Robert Stemple was the first man to rise to chairman from production. He was widely seen in the ranks as the last, best chance to turn things around. When he was forced out in 1992, the company pursued the low cost, high priced strategy with SUVs that haven’t survived market saturation, safety problems, and high operating costs anymore than American vehicles did during the oil embargo of the 1970s.

The collective history at my last employer evolved during a period of heightened national security. Most tales goes back to early conflicts between the military, seen as dampening parasites, and technocrats who saw themselves as creative overachievers.

The conflict between the moieties receded when national priorities changed. The subcontractor where I worked continued to hire retired military men, but they were ones who had learned the way to promotion was to do what was expected. They were seen as harmless tokens, since the customer was happy to pay us to relieve it of the need to hire them to appease a critical constituency.

The equipoise was disturbed when reporters made safety and security problems sound intractable. Suddenly the customer’s customer saw a military man as the only solution. It was a time when corporations were recruiting generals and admirals for top spots to exploit their contacts for contracts. By coincidence, our subcontract brought in a military refugee as our business manager.

Unlike previous military retirees, the new men were ones who believed their role was to give orders, and take action when they were disobeyed. Their first response was mass meetings where they could abuse us as a group, and make implied threats to shape up or ship out. Since any military man is available because he is not going to rise any higher in the Pentagon, the men were ones who knew how to give orders but not how to develop strategies to be obeyed.

Their actions awakened dormant emotions. In some cases, among children who had grown up in abusive environments, the response was instinctive. Among others, it recalled the cultural conflicts of the early years.

The military men couldn’t deal with civilians who simply did not share their institutional history. At out customers shop, it was the military man who was replaced, but not without more threats by our customer’s customer that it had to change or worse would come its way.

In our layer of their caste world, we were the ones delegated to act out their drama for them, and so our military manager is one of the few men brought in by the subcontractor who has survived. The contractor isn’t concerned that he has made mistakes; perhaps, to reinforce its superiority, he’s supposed to. It cares less that he has fired or forced so many out; as an organization we are its inferior, and anyone within our institution is, by definition, subordinate to the counterpart in the parent organization, and expendable to its function.

Indeed many were probably glad he removed so many. During the interregnum when no one was running parts of the subcontract, people who had talent and experience rose, and became counterparts to people at the customer’s who would never mix with the social groups they represented. They were as disruptive to the tribal structure as Lee Iacocca and Robert Stemple, and their removal reinstated the prelapsarian balance.

The result in both Detroit and where I last worked is a heightened sense that dualistic vertical organizations have bifurcated into the masses who know there are problems and leaders who have no idea how to solve them. Estrangement strains the institutions, but not the historically inherited analysis of the situations. The contours of the cultures are clear in the crises that won’t go away.

Culture Consultants - Part 2 - Sociology

Culture has become an easy explanation for organizational problems that seem impervious to correction. Unfortunately, consultants assume, because anthropologists seek commonalities that characterize cultures, that different cultures will respond to the same influences in the same ways. They argue an approach proven in one company will work in another.

The two places I worked where culture consultants were hired had serious safety incidents while I was employed. Their responses were very different. At GM, three men wore safety harnesses to work on a roof on a weekend. One slipped over the edge; his weight pulled over a second man. The third managed to save himself, but the others died.

When I came in Monday morning, the news left a collective sense of being kicked in the gut. It created one of those cracks in time when, for a brief moment, people relieve their anxieties about dangers of the job by talking about previous accidents. No doubt, investigations were done, but those of us who had no direct involvement heard no more. It wasn’t covered up, so much as handled by the appropriate people.

At the last place I worked, an electrician drilled into conduit protecting live wires and survives in a vegetative state. People heard the news with the same detachment they exhibited when they heard the name of the person killed in the morning commute. It was personal: if one knew the man or his family, the response was sympathetic; if not, it was simply news.

A few weeks later, my supervisor told me we were in trouble because our customer’s customer was angry at being embarrassed by questions about the electrocution. When that was followed by other serious incidents, our customer had all its employees and subcontractors watch videos by the accident investigation teams.

Embarrassment is a social response, not an empathetic one. At the GM plant, everyone immediately sensed the horror of the accident, but was not involved in the investigation. At the other place, few were touched by the accident, but management involved us all in its aftermath. The first was a spontaneous shared cultural emotion, the other an imposed social experience.

GM plants hired consultants to address quality problems because it was suddenly less competitive; the other hired them to change the safety culture to counter bad publicity. GM is a conformist environment. No new car ever made it from the drawing board to the showroom without many people working together over time. In my last job, our customer succeeded on the work of talented individuals who had team support, but each team member was biding his or her time until he or she could lead his or her own team to make his or her own contribution.

Problems in the one place were seen as having group solutions; when men groused privately, men on the line blamed engineers, who blamed bean counters, who blamed the next group, and so on up the organization, until the unions were blamed. At the other place, the problem would always be traced to a single individual who needed to be punished. Any patterns in problems were dismissed as coincidence.

The GM plants hired trainers to help small groups think differently about something employees recognized as critical. At the latter place, managers brought in consultants to change the ways individuals behave to solve problems many saw as peripheral to the company’s purpose.

At GM, quality training for salaried employees took a few hours on several days. At the other, all salaried employees sat through three consecutive days of safety management. The one accommodated attendees who still had regular work to do. The other preempted work. Many had to return to their desks and put in unpaid overtime to keep critical work flowing. Resentment existed before the first word was spoken.

The safety consultants took the words "shared beliefs" as their gospel text, and suggested the way to deal with the culture problem was to break down barriers between groups by bringing us together in classes that deliberately mixed us with our customers, secretaries with managers. Much of time was spent in small-group, team building sessions whose only purpose seemed to be to stretch a thin presentation. They compounded their error when they included a video by a man who caused a refinery fire when he didn’t follow procedures.

Their solutions failed the common sense test. They suggested procedures for governing dangerous employees’ behavior, so it would be safe to work with them. Everyone who’d ever worked with such men had a simpler answer: keep them off my job. Customers would tell us people we could never send to their area again, and, no doubt, ways were found within the unions to isolate those seen as accidents waiting to happen.

GM is highly stratified, but its along class lines. It’s been decades since a man rose from the shop floor to the fourteenth, and many think people at the top are increasing isolated from the realities of the market. Still, it’s possible for the son of a union man to rise within the organization, to make a big jump in two generations.

My last employer had a caste structure. No one ever rose from a skilled trades job to a high administrative one; few children rose into the ranks of technocrats. Each layer drew its members from different schools, different communities. The only mobility was from the trades to low level clerical or technician’s jobs, or from high level technocrats to higher level administrators.

The consultants’ root problem was confusing anthropologists with sociologists, who would have identified groups then targeted training for them, thereby flattering their importance. Once the training was done with the wrong methods to solve the wrong problem, there was no way management could salvage the situation except to change its approach. Instead, it confused ego with effectiveness, and asserted it had to be right.

When security problems were perceived as analogous to safety ones, its only answer was to raise the stakes by bringing someone in with the directive to make it happen or else. That man left a meeting where he’d been humiliated by questions about security to hold a video conference for our customers and us. He berated us for an hour, but offered no analysis of our problems and proposed no solutions. When people complained about the style, his supporters said our expectations for common courtesy were part of the culture that had to be changed.

When our customer’s managers conflated two kinds of problems, the one critical to the survival of the organization, the other important but tangential, they doomed everyone, themselves and their employees, to perpetuating responses that didn’t work - more training met more resistence, resulting in more distrust and more frustration.

When new people come in with assignments to reform an organization, people want to know if they’re serious. GM asked "can he walk the walk?" At the more individualistic place, people waited to see if anyone was fired. Earlier, when a new man came into our subcontract and offered an open door, he got an earful, and responded he wasn’t just going to fire people. No one bothered him again.

When the customer did fire people, complaints increased because department heads were held responsible, not individual miscreants. When men actually went to jail, they were dismissed as rare bad apples, not genuinely representative of the organization. Then the man who instituted the removals was himself removed, because his tactics had further embarrassed his customer.

We were back where we started, with problems without solutions, but saddled with people vindicated by resistence to change. Within its closed world, our customer is like GM when it removed Robert Stemple in 1992, and like GM then it has an increasingly unhappy customer who will find other ways

Culture Consultants - Part 1 - Psychology

Consultants use the word culture to market their services. When I worked at General Motors in the 1980s, problems existed with quality and competitiveness; where I last worked, safety and security were impediments to survival. In both places, consultants convinced managers the problem was workers’ attitudes that could be altered with training. In both places, they failed. And, in both places, there were genuine problems that needed to be addressed that could, indeed, be traced to attitudes.

The problem with the proposed solution is that attitudes are as much psychological phenomena as anthropological ones. If we looked at Chernobyl, we would see safety problems that transcended the cultures of the United States and Soviet Russia, and might conclude the difficulty of following detailed instructions was something inherent in human nature. But, if we looked at Japan, we would see quality problems eliminated by social organization, and deduce culture moderated the influence of innate psychological responses.

When I was in school, our simple definition of culture was "shared patterns of human behavior and belief that were learned." Once analysts framed problems as anthropological ones, solutions followed from the word "learned." If consultants had framed them in psychological terms, they would have had to deal with motives or incentives. That is a far more complex problem to solve, and consultants who tried it years ago failed.

Before workers are going to accept they are the ones who need to adapt, they need to be convinced there’s a problem. It helps if they can believe in the proposed solution. We know from the disappearance of societies in the Easter Islands and Greenland that even in the severest crises, people may not recognize the need or human capacity for change, and will die to maintain cultural and personal consistency.

In the two GM plants where I worked in the 1980s, people did adapt Japanese ideas both because they feared their plants would close and because they knew who was more successful at selling cars. Their biggest problem was perpetuating their innovations. Over time, they had to accept workers from other lines who had not been part of the original experiment because they weren’t as amenable to correction but had seniority to bid when jobs opened.

The more serious problem was young managers. Those who came from other locations had no incentive to conform with unique demands of the plants. The formula for promotion was set outside, and meeting the plants’ requirements might hinder future advancement. Indeed, if a place did close, their only hope was applying to another, now suspicious corporate office.

In both places, many came to see demands for improvement coming from higher level managers who couldn’t sway their immediate subordinates and thus lost credibility. The question became "he can talk the talk, but can he walk the walk?"

It’s not enough to hire consultants. If a CEO wants divergence, he has to promote a plausible alternative. That’s not the same as sending top executives to some resort to wordsmith a mission statement. Indeed, if a company head knows what he wants, he doesn’t need anyone to tell him.

In 1980, Roger Smith had a vision for General Motors: compensate for problems from unpredictable customers and employees with automation; replace recalcitrant managers and workers with a new company, Saturn; reduce administrative costs by merging five brand names, two manufacturing divisions, and other autonomous groups into three integrated organizations.

As long as Smith addressed problems that were cultural and had clearly defined solutions, he had support. So many wanted to tour his joint venture plant built with Toyota at Fremont, California, it had to limit the number of visitors. When he turned to corporate bureaucracy, he made people apprehensive. Corporate folk wisdom passed through xeroxed graffiti warned the old and cunning would triumph over the young and talented.

Once his demonstration plant in Hamtramack disrupted a local community and he proposed transferring employees to EDS in 1984, the cultural problem became increasingly personal. The threat of economic loss, be it to an engineer or a Detroit area resident, no longer seemed worth the sacrifice after management bungled the introduction of the first car in years to excite customers, the 1984 Fiero.

Smith’s solutions became all stick and no carrot. When individuals’ psychological allegiance with established ways became stronger than with proffered change, GM lost the opportunity to modify its behavior. The other common piece of xeroxed graffiti in those years compared any new project to mating elephants, something that provoked a great deal of stomping and roaring and took many months to produce a small result long after the instigating male had disappeared.

When leaders who promote messianic change fail, those who reject the need for transformation become more entrenched. When Roger Smith retired in 1990, General Motors soon removed Robert Stemple, the man he’d named as his replacement, and sold almost everything he’d introduced.

Now, more than a decade later, the company faces potential bankruptcy, and top managers still think they can ignore suggestions from outsiders. Their best answer is to make investors happy by lowering costs by cutting production, but to satisfy themselves they continue what they’ve been doing in the remaining operations.

Those who recognize there are problems may feel doomed like Norsemen and Easter Islanders abandoned to a fate dictated by those who support the status quo and wonder what it will take to make people with power aware more is required when it’s never their jobs or benefits that are eliminated. Change is still all punishment and no reward.