The auto lobby is pushing hard for a federal bail out right now. As much as I support American manufacturing, I think a federal bail out for GM, Ford and Chrysler would be a tragic mistake.
In the first place, I don’t support the idea that the government should prop up failing industries, as painful as that might be. If we did, the textile mills in Lowell, MA would still be humming away, even though those products are made more productively in the Third World. My hometown of Pittsburgh, PA would still be clouded with toxic gases from the J&L coke ovens that lined the Parkway East. And so on. We have adapted and found our place in the global economic order. Pittsburgh is booming with Internet and automation spin-offs from Carnegie Mellon University. Lowell, MA buzzes with nano manufacturing and other research spawned at UMass Lowell.
I also don’t support propping up badly managed industries. As any tool builder or injection molder operating in North America knows, the auto industry has been very badly run. I discussed the supply chain aspect of this at length in my first co-written book, Straight to the Bottom Line. In a chapter called “A Tale of Two Spenders”, I looked at a seminal moment in Detroit when Auto OEMs had the choice of following the collaborative product development process espoused by Chrysler’s Tom Stallkamp or the head-knocking approach of GM’s Jose Ignacio Lopez de Arriortua. The supplier-busting approach evolved into reverse auctions, which automated the supplier-be-damned approach in Detroit.
And recently I blogged about the inappropriate priorities in Detroit today, where CEOs emphasize engineering aimed at expensive frills and luxury cars. Management should be telling engineers to put more emphasis on fuel-efficient, durable cars that use as many environmentally friendly materials as possible.
I thought I was in the wilderness on this until I read a very powerful column in yesterday’s Wall Street Journal by former Detroit Bureau Chief Paul Ingrassia: “Detroit Auto Makers Need More than a Bailout.”
It’s time for a fresh start with new management at the helm. There is a place for American-owned auto producers. A big place. And employment will start growing again. We need to clean out the bad management in Detroit just as much as we need higher-quality management on Wall Street.