Comment by Rudi Leuschner
May 25, 2005
Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows that it must outrun the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.
(An African proverb – in Thomas Friedman, The World is Flat)
Lansing was one of the Gazelles that woke up one day and found out that it was slower that the fastest lion. And to me this seems like something typical for GM. They really didn’t make very many good decisions in the last years. The problem with Fiat is just one example. Their bond rating also got downgraded, which makes them officially “junk”, as it was announced in the Wall Street Journal. Their products also have not shown that they are on the cutting edge: no retro styling, no hybrids, boring design, ancient technology…and the list goes on and on…
Another example is GM Europe, who had huge problems with their manufacturing at their European brand Opel. They wanted to lay-off a lot of workers and move most of the production into cheaper Eastern Europe. We saw one of the biggest and fiercest labor fights Germany had seen in a long time. It is safe to say that GM lost that showdown. Of course examples like that don’t help GM become a more competitive carmaker because if you tie heavy weights to the legs of the gazelle, the lion is going to have way better chances. Even the union leaders agree that in order to limit strikes, they have to “learn” how to collaborate better with management. Compared to other countries, particularly in Europe, Germany didn’t have that many problems with strikes. It could be because German workers already got so much and companies were already much more competitive due to the miracle economy. But another explanation could also be that German management is more effective at “managing” their unions, who by the way have more power than unions in any other country I have seen, because they are represented in the board of directors due to “Mitbestimmung” (codetermination).
It seems like most of today’s management doesn’t seem to understand that for a union, a strike is not a good thing. Having said that, from a neutral position, it seems that the way both parties come to the negotiation table, they don’t really want a compromise that is good for both parties; all they are really after is to get their objectives through and not make too many concessions. The workers feel like they are getting less and less, but are expected to do more and more. Management feels like their hands are tied because the company is held back through union contracts. The truth is that if a company fails, everyone has lost. They got killed by the lion.
Picking up on what Dr. Rogers means with “structure drives behavior”, the Japanese carmakers are in a very good situation right now. They think very much in the long term. They want to make their given technology as reliable and long-lasting as possible, while still having a very competitive price. For comparison, the German carmakers are always on the cutting edge. They are pushing innovation after innovation, even at the expense of reliability. BMW took a very big risk with their controversial styling and technology; I-drive and Chris Bangle come to mind here. Mercedes Benz has pushed the limits on electronic assistance and horsepower; I would have thought that the 612 HP on an AMG S65 should be reserved for a sports car and not a luxury sedan. And finally GM is still stuck in their past technologies, not taking many risks, while offering a product that is good enough for most people. They have a quite strong brand loyalty going for them. At least their quality seems to have become better as they take the second place in JD Powers initial quality rating behind Toyota.
The future is very hard to predict at this point in time. Fossil fuels are diminishing and thus getting more expensive. As for right now, every carmaker is trying to offer cars that sip fuel instead of chucking it. There are new technologies on the way, such as electro-gas hybrids, clean Diesel, and of course hydrogen. As time progresses, carmakers have to speed up and become more and more flexible in order to keep up with the fast pace. I am a little concerned that some won’t be able to be that fast or they run in the wrong direction. The changes that we might see in the next 20 years, could be more dramatic than the changes in the past 100 years. Nobody can afford to take a break any more because any break could be the final break.