I am reading Bob Lutz's latest book..."Car Guys vs. Bean Counters: The Battle for the Soul of America." For car guys and business people, the book is a candid assessment of what happened to the once mighty General Motors...from the perspective of a high ranking insider.Lutz shares his insights about what went wrong with the American automobile industry based on his nearly five decades in leadership positions with GM, Ford and Chrysler. I know some of his comments will resonate with a few of my TEC members who sell products to the auto industry.
For example, Lutz states the operations component of the automobile business has been "thoroughly optimized" and doesn't vary much from one company to the next. He believes all car companies accomplish manufacturing and supply chain management reasonably well, with no significant competitive advantage accruing to the one who can beat the snot out of suppliers more effectively.
Lutz does toss around plenty of blame for the failure of the American automobile industry. Legacy costs. The UAW. Government imposed fuel efficiency standards. Japanese transplants in lower wage, non-union southern states with young, healthy workers. He takes personal credit for significantly improving product development during his return engagement with GM. The Chevrolet Volt is at the top of his personal innovations list. It is his book, after all.
Lutz reserves most of his ire, however, for two main culprits. First, he takes on the really smart MBAs and finance people whose mission it was to maintain orderly processes at all costs and see "how much they could cut before the customer started to complain." Second, he cites a culture of "corporate infallibility and self-worship" that discouraged honest disagreement. The really smart MBAs and finance people had the data. No need to create any unnecessary friction. Go along. Get along.
Lutz blamed the final decision to seek a government bail out and then Chapter 11 bankruptcy protection on their GMAC finance unit and the unforeseen doubling of gas prices in 2008. Oddly, the same screw up that took down the M&I Bank, was largely responsible for GM's eventual demise. GMAC was making so much money through its residential mortgage unit in the sub prime housing market that they just couldn't quit. Then, the really smart MBAs and finance people didn't plan for the run up in gas prices. GM was left with big cars and bigger trucks and a five billion dollar quarterly drain on cash.
All corporations have a culture. The title of Lutz's book implies the Bean Counters caused the demise of the American automobile industry. The dysfunctional culture created over many decades and many CEOs and other insiders certainly contributed mightily to the devastation.
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