Automotive Industry: Detroit’s Cultural Change
Automotive Industry: Detroit's Cultural Change
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Once upon a time it was known as the world's traditional automotive powerhouse, but unfortunately 'Detroit' is no longer a symbol of power within the global automotive industry. Detroit's automotive industry has been forced upon a cultural change as a pure form of transformation, which was radical and fundamental. This cultural change involved changing the basic values, norms, and beliefs, in order to significantly improve performance. A mission that appeared impossibly daunting with numerous obstacles: collapse of market shares, overwhelming structural costs, profuse bleeding of cash.
The unusual suspect character that led the effort had no automotive or governmental experience. Steven Rattner left his Wall Street position, and straight into the largest restructuring attempt in American history. The scale and speed of the rescue raised many more questions, especially within the automotive circle. Rattner, who led the task force, believed passionately that the decision to intervene prevented a colossal economic collapse. Part of the suspicion was caused by the appointment of a 'non-car czar' to come to the rescue of a passionate industry.
"...poor state of the once imperial industry..."
In return the task forces were shocked, even beyond their low expectations, by the poor state of the once imperial industry. The imminent collapse of the vehicle manufacturers, and their respective supply chains, would have devastated an already fragile economy. The timing had been set by an arbitrary deadline for the plan implementation, and by coincidence, the major players would probably run out of money around the same time. Moving simultaneously down multiple paths, the team began meeting with all the interested parties: labour, lenders, legislators, and suppliers. Naively assuming that stakeholders were eager to see a rescue with a set of 'gives'; they were startled that each stakeholder meeting invariably included a set of 'wants' from the government.
"...as if the industry's salvation rested only on new technologies..."
Most companies needed gigantic reductions in their costs and liabilities. Many had way too many plants and workers for expected production volumes. With financial markets still largely frozen and no private capital available, there was no question that many would slid into bankruptcy, run out of cash, closed their doors, and liquidated. Peculiarly, among all this chaos, everyone seemed wildly over-excited about Hybrids and Electric Vehicles. As if the industry's salvation rested only on new technologies. Detroit should be applauded for the increased emphasis on new technologies, which were driven by both commercial considerations and public relations, but new technologies couldn't possibly have any meaningful impact on short and mid-term finances.
"...a successful recovery is still far from assured..."
Everyone was aware of Detroit's reputation for insular, slow-moving cultures. But even by that low standard most, outside of the industry, were shocked by the stunningly poor management that was found. The cultural deficiencies were equally stunning. Like any patient that undergoes major surgery, a successful recovery is still far from assured. Detroit seemed to believe that virtually all automotive problems could be blamed on a combination of financial crisis, oil prices, exchange rates, and the unions. While it maximized short-term profits, it conceded the automotive market of the future to outsiders. Initially Detroit sat back and enjoyed the show, but the instant the show followed a different path, it blamed others as a means of a comfortable solution. Later it starting looking in the mirror, and started changing its ways. Detroit can use this unique opportunity to look at things differently. An opportunity to turn traditional automotive thinking upside-down. Because when you simply blame others, you give up your power to change.
"...Detroit is no longer free falling..."
There is still plenty of blame to pass around, but Detroit is no longer free falling. The days of ignoring science and economics to pursue ideologically driven agendas are over. It's not often economics bring the automotive industry to its knees, but when it does happen recessions wonderfully concentrate the mind. For so many years Detroit's automotive industry evolved with more skill than vision, painstakingly pursuing incremental refinements on the way to a future where foreign cars, fueled with foreign oil, crossed crumbling innovation bridges. Detroit still has both start-up-business dynamism and in all the required technical capabilities. If Detroit has the new logic sketched right, the world is about to embark on one of the greatest adventures in automotive history. Other ambitious automotive industries, especially from the BRIC countries (Brazil, Russia, India and China) and established regions, will be watching and also quicken their pace. Even countries without an automotive industry may choose to start a new generation of cars. The next generation of cars coming out of Detroit have to be much more like computers with wheels, than cars with chips.
Whether it will also have the wisdom to build a society worth driving in - one built around people, not cars - remains a greater challenge.
