GM declared bankruptcy yesterday and the rush is on to explain what went wrong. Here are a few explanations I found, along with some possible solutions.
After 101 years, why GM failed, Peter Cohan, DailyFinance:
4. Failure to innovate. Since GM was focused on profiting from finance, it did not really care that much about building better vehicles. GM’s management failed to adapt GM to changes in customer needs, upstart competitors, and new technologies.
Seven reasons GM is headed to bankruptcy, Sharon Silke Carty, USA Today:
When GM realized how fast 1990s buyers were switching to trucks as personal transportation, it overreacted, pouring time and money into SUVs and pickups at the expense of car development. The result: As long ago as 2000, Wall Street was warning that GM could be overcommitted to trucks and wind up out of phase if the pendulum of buyer preference swung back to cars. Once consumer tastes began changing, the market was awash in new truck models, and profits were sapped by discounts needed to keep sales boiling.
Goodbye, GM, Michael Moore:
The products built in the factories of GM, Ford and Chrysler are some of the greatest weapons of mass destruction responsible for global warming and the melting of our polar icecaps. The things we call “cars” may have been fun to drive, but they are like a million daggers into the heart of Mother Nature. To continue to build them would only lead to the ruin of our species and much of the planet.
G.M.’s Road From Prosperity to Crisis, NY Times:
The company reached a deal with Saab to expand its European presence. Having an extensive brand lineup had been a primary strategy at G.M. since its creation in 1908. But this tactic eventually became costly, as brands overlapped and competed for business and money.
GM Reinvention, GM. Twitter, Flickr, Facebook, it’s all there. Oy.
Ten Vehicles That Bankrupted GM, Matt Hardigree, Jalopnik:
The Pontiac Aztec was one of the first major crossover vehicles brought to market in the U.S. [It was] combination of car-like handling and fuel economy with SUV-like space and aggressive appearance. The concept was a hit and now most automakers are shifting towards crossover. The Aztec was a massive failure. It was an attractive idea in an amazingly unattractive shell. It failed almost entirely based upon its appearance.
Who’s to Blame for GM’s Bankruptcy?, William J. Holstein, BusinessWeek:
GM simply was not ready to respond to Toyota Motor and other Japanese manufacturers when they began to gain serious ground in the early 1980s. Toyota, in particular, had developed a lean manufacturing system that was completely different from the mass-assembly-line techniques GM was still using, many decades after Henry Ford perfected them. GM’s fractured structure meant that each division had its own manufacturing processes, its own parts, its own engineering, and its own stamping plants.
How GM Lost Its Way, Paul Ingrassia, WSJ:
The picture of a heedless union and a feckless management says a lot about what went wrong at GM. There were many more mistakes, of course — look-alike cars, lapses in quality, misguided acquisitions, and betting on big SUVs just before gas prices soared. They were all born of a uniquely insular corporate culture.
The Quagmire Ahead, David Brooks, NY Times:
Over the last five decades, this company has progressively lost touch with car buyers, especially the educated car buyers who flock to European and Japanese brands. Over five decades, this company has tolerated labor practices that seem insane to outsiders. Over these decades, it has tolerated bureaucratic structures that repel top talent. It has evaded the relentless quality focus that has helped companies like Toyota prosper.
The End of the Affair, P.J. O’Rourke, WSJ:
We became sick and tired of our cars and even angry at them. Pointy-headed busybodies of the environmentalist, new urbanist, utopian communitarian ilk blamed the victim. They claimed the car had forced us to live in widely scattered settlements in the great wasteland of big-box stores and the Olive Garden. If we would all just get on our Schwinns or hop a trolley, they said, America could become an archipelago of cozy gulags on the Portland, Ore., model with everyone nestled together in the most sustainably carbon-neutral, diverse and ecologically unimpactful way.
Why GM failed, Jack Lessenberry, Detroit Metro Times:
What’s wrong, in a nutshell, is that it is a narrow, insular culture. Those who make it to the top of the heap, like Rick Wagoner, tend to be white Anglo-Saxon Protestant males who have worked at the same company their entire career, and have come up with the same set of buddies. Sort of like the Delta Tau Delta fraternity Wagoner joined when he was in business school.
Update: The WSJ’s Photo Journal blog has photos and brief stories of a number of people affected by GM’s bankruptcy. Gary Thomas, a mechanic from Kingston, TN, put about $800,000 in GM bonds.
“I thought I was doing the right thing. I wasn’t investing in stocks. GM was a solid company. … The bonds were my entire nest egg. I’m not a whiner and I don’t want special treatment. What really ticks me off is that it seems like we are getting less than everyone else and we deserve to be treated equally. I’m just trying to figure out a way to make it to 65 so I can start drawing my social security.”
Update: After Many Stumbles, the Fall of a Giant, Micheline Maynard, NY Times:
The company did have vast numbers of loyal buyers, but G.M. lost them through a series of strategic and cultural missteps starting in the 1960s. It bungled efforts in the 1980s to cut costs by sharing the underpinnings of its cars across different brands, blurring their distinctiveness. G.M. gave in to union demands in 1990 and created a program that paid workers even when plants were not running, forcing it to build cars and trucks it could not sell without big incentives.
Update: Salutary lessons from the downfall of a carmaker, John Kay, Financial Times:
The factors that had once been the company’s strengths were now weaknesses. Mass production and piece-rate incentives created a workforce with little pride in the quality of the product. The cadre of professional managers became a complacent, inward-looking bureaucracy. The diversified corporation became a collection of competing baronies.
From a couple of years ago, The Risk Pool, Malcolm Gladwell, The New Yorker:
Surely, if you are losing money on every car you sell, as G.M. is, cutting car prices still further in order to boost sales doesn’t make any sense. It’s like the old Borsht-belt joke about the haberdasher who lost money on every hat he made but figured he’d make up the difference on volume. The economically rational thing for G.M. to do would be to restructure, and sell fewer cars at a higher profit margin — and that’s what G.M. tried to do this summer, announcing plans to shutter plants and buy out the contracts of thirty-five thousand workers. But buyouts, which turn active workers into pensioners, only worsen the company’s dependency ratio. Last year, G.M. covered the costs of its four hundred and fifty-three thousand retirees and their dependents with the revenue from 4.5 million cars and trucks. How is G.M. better off covering the costs of four hundred and eighty-eighty thousand dependents with the revenue from, say, 4.2 million cars and trucks?
NASCAR helped GM down its path of self-destruction, Viv Bernstein, True/Slant:
How ironic, given NASCAR’s role in helping the auto industry race down its path of self-destruction. Major auto companies used NASCAR for years to push cars and trucks with poor fuel economy numbers. The sport, in some ways, came to symbolize America’s embrace of consumption. Consider that NASCAR didn’t even switch to unleaded gasoline until 2007. And even today, the racecars and trucks that auto companies are marketing through NASCAR are among the least fuel efficient, from the Dodge Charger to the Chevrolet Silverado.
(thx, fargo & coates)
In a car crash involving a modern vehicle, everything happens before the occupant is even aware of the collision.
1 ms - The car’s door pressure sensor detects a pressure wave.
5 ms - Car’s crash computer checks for insignificant crash events, such as a shopping trolley impact or incidental contact. It is still working out the severity of the crash. Door intrusion structure begins to absorb energy.
20 ms - Door and B-pillar begin to push on front seat. Airbag begins to push occupant’s chest away from the impact.
70 ms - Airbag continues to deflate. Occupant moves back towards middle of car.
Engineers classify crash as “complete”.
150-300 ms - Occupant becomes aware of collision.
(via gulfstream)
Have you ever noticed that the rear side window on a BMW has a small design element that hooks back toward the front of the car?
Rather than having the rear side window extend all the way down as might be expected, it angles back toward the front of the car.
Yeah, me either, but apparently all BMWs have it. It’s called the Hofmeister Kink, so named for the Director of Design at BMW who oversaw the style tweak, Wilhelm Hofmeister. Other carmakers have copied the Kink to make certain models appear luxury. (via spronblog)
From The Last Traffic Jam in The Atlantic.
Unless we exercise foresight and devise growth-limits policies for the auto industry, events will thrust us into a crisis that will lead to a substantial erosion of our domestic oil supply as well as the independence it provides us with, and a level of petroleum imports that could cost as much as $20 to $30 billion per year. (This in turn would produce a staggering balance-of-payments problem for the United States, and give the Middle Eastern suppliers a dangerous leverage over our transportation system as well.) Moreover, we would still be depleting our remaining oil reserves at an unacceptable rate, and scrambling for petroleum substitutes, with enormous potential damage to the environment.
And:
In short, common sense dictates that we begin a transition to policies designed to avoid an energy impasse that could cripple out transportation system and imperil our economy. We must set growth limits that will allow the automobile and oil industries to maintain economic stability while conserving our resources and preserving our environment. Of course, such a reorientation will require statesmanship as well as public pressure. It will not happen unless corporate self-interest yields to a responsible outlook that serves the broader interests of the nation as a whole. Above all, this shift requires a thorough redirection of the aims of these two industries.
Believe it or not, those words appeared in the magazine in 1972. These views would have seemed out-of-date and old fashioned just a year or two ago but now all those chickens are coming home to roost.
Replacing a car that gets horrible gas mileage with one that gets good gas mileage is preferable to replacing a car that gets good gas mileage with one that gets excellent gas mileage. To that end, kottke.org contributor Cliff Kuang says to the car companies: forget about 100-mpg cars and focus on small, achievable increases in MPG ratings.
My concern is a rhetorical one: What happens when advancements in cars are eternally linked — through marketing and special prizes — with big innovations, rather than tangible results right now? Fuel efficiency gets its urgency sapped: Someone’s working on it, with results TBD. Wait and see.
The average U.S. citizen completely ignores the regularity with which the automobile kills him, maims him, embroils him with the law and provides mobile shelter for rakes intent on seducing his daughters. He takes it into his garage as fondly as an Arab leading a prize mare into his tent. He woos it with Simoniz, Prestone, Ethyl and rich lubricants — and goes broke trading it in on something flashier an hour after he has made the last payment on the old one.
By last week, this peculiar state of mind had not only sucked thousands of American oil wells dry, stripped the rubber groves of Malaya, produced the world’s most inhuman industry and its most recalcitrant labor union, but had filled U.S. streets with so many automobiles that it was almost impossible to drive one. In some big cities, vast traffic jams never really got untangled from dawn to midnight; the bray of horns, the stink of exhaust fumes, and the crunch of crumpling metal eddied up from them as insistently as the vaporous roar of Niagara.
That’s from Time magazine in 1947. (thx, david)
Truckliness is next to Godliness.
Sen. Jim King, R-Jacksonville, said he had a set [of Truck Nutz] on one of his vehicles, which he described as “all pimped out.” They are no more than “an expression of truckliness,” he said, although he’d acceded to his wife’s request to take them off.
“I find it shocking we’d tell people with metallic testicles on their bumpers that this is a violation,” said Sen. Steve Geller, D-Hallandale. “There’s got to be better things for us to spend time debating.”
(via clusterflock)
Erik Spiekermann on FE-Mittelschrift, the typeface used for German license plates.
The official typeface for our license plates is now called FE-Mittelschrift, with FE meaning it is Fälschungs-Erschwert, i.e. difficult to forge. Apparently car thieves, terrorists and notorious law-breakers had been exploiting DIN’s geometric construction principle and turning E into F or 3 into 8 etc by simply using a bit of black tape or white paint.
Here are all the alphanumeric characters:
Note the tamper-resistant differences between the 6 (no notch) and 9 (notched), the E & F, the I & 1, the O & zero, the P & R, and so on.
A pair of well-to-do auto enthusiasts named Alex Roy and Dave Maher set the unofficial record for crossing the US by car: 31 hours, 4 minutes, faster than the old record of 32 hours, 7 minutes.
According to Yates and his fellow Cannonballers, trying to beat that record today is pointless. Their argument goes something like this: Cannonball records were set back when the free-wheelin’ ’70s hooked up with the greed-is-good ’80s for fat lines of cocaine and unprotected sex. But these, brother, are Patriot Act days - executive-privilege end times in which no rogue deed goes untracked, no E-ZPass unlogged, no roaming cell phone unmonitored by perihelion satellite. Big Brother is definitely watching. Big Speed, the old Cannonballers say, is a quaint, 20th-century idea, like pay phones or print magazines.
Roy was inspired to take up fast driving by the short film C’était un Rendez-vous, where Claude Lelouch races through Paris at breakneck speeds to meet his sweetheart in Montmartre. Here’s the route they took, another piece on the record in the NY Times, and a book by Roy on his exploits. This is the sort of thing that is really, really cool up until the moment Roy’s tricked out BMW makes contact with a family minivan at 120mph…and then, not so much.
Update: Here’s a video of the pair zooming along on the freeway. Comment on YouTube:
Those guys look like they’re doing about 90-95… BFD. You see that all the time going up and down I-5 and I-95.. I once was doing about 90 down I-95 and got passed by a HOUSE on a flatbed truck. (yawn)
A 13-step guide for buying a car while controlling the sale and the price.
It works only if you truly are willing to walk away…and then refuse to bend when they try to put you off or change the terms. Stay civil, do not let any emotion in. You are on a mission, Marine!
Fantastic advice. My dad is a skilled car buyer and on one particular occasion, spend two grueling hours dinkering with a used car saleman over a junky but good-running truck. He walked out at least twice and kept escalating up to the manager before getting the price down from $2300 to around $400.
A 1993 New Yorker story by John Seabook called The Flash of Genius is being made into a movie starring Greg Kinnear. The story revolves around Bob Kearns, the inventor of the intermittent windshield wiper and his struggle to get the US auto industry to pay him for infringing on his patent. “There’s no question that Dr. Kearns’ wiper circuit was interesting. He had a three-brush motor, with dynamic brake and intermittent on one speed only — his system was a concatenation of a lot of different ideas. But we figured there was just no way in the world it was patentable. An electronic timing device was an obvious thing to try next. How can you patent something that is in the natural evolution of technology?”
BTW, the phrase “flash of genius” refers to a test of patentability enacted in 1941 saying that the act of invention had to be a “flash of creative genius” on the part of the inventor and not the result of tinkering. That standard was replaced in 1952 by the non-obviousness test.
Predictions for the year 2000 made in The Ladies Home Journal in 1900. Two of the really interesting predicitons: “Cities, therefore, will be free from all noises.” and “Automobiles will be cheaper than horses are today. Farmers will own automobile hay-wagons, automobile truck-wagons, plows, harrows and hay-rakes. A one-pound motor in one of these vehicles will do the work of a pair of horses or more. Children will ride in automobile sleighs in winter. Automobiles will have been substituted for every horse vehicle now known. There will be, as already exist today, automobile hearses, automobile police patrols, automobile ambulances, automobile street sweepers. The horse in harness will be as scarce, if, indeed, not even scarcer, then as the yoked ox is today.” (via long now blog)
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