This email was sent to us by a Ford employee, who wishes to remain anonymous: "Ford is a great place to work because of the people and resources. You won't find a more technically competent, innovative, and well-equipped organization. Unfortunately, the public won't see the majority of our work because of the poor management and product planning we're all so accustomed to. I know from my former job at a supplier that GM and Chrysler are no different: limitless engineering capability held back by cost-cutting and incompetent management. I think Detroit's best bet is a mutiny of the engineers and designers. We'd storm the Glass House (RenCen, CTC), tie-up the suits, and start doing what we do best: cranking out awesome cars that the public wants." [TTAC is happy to provide space for any official Ford rep rebuttal.]
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Fire everyone except Mulally?
But, really, this is the problem with all of the big three. I was in a program where I helped to build a customized Cobalt SS for GM to display at this years Autorama. In that, I managed to meet many members of GM’s product development team, and I found that these people are competent, outside of the box thinkers who really know what they are doing and know how to build and engineer a good car.
From that, I found that it is only the executives to blame for GM not having a competitive product line.
Except for certain folks (Donald Peterson’s team and the Pre-Diamler Chrysler of the early 1990s) this has been Detroit’s problem for decades.
And I say: put the Harley Earls and Henry Fords of the world in the limelight.
I agree with Runfromcheney. This is hardly news. Detroit did not get into this pickle with poor engineering skills and lack of automotive flair. They got there due to clueless management. They evidence is obvious.
Cost-cutting to an illogical conclusion.
Cars being approved because they are cheap and profitable, not because they mean something to the brand or will improve brand image. (i.e re-badging)
Putting the thumbscrews on suppliers.
People making silly decisions because their careers are more important than the company’s future.
Managers backing or rubbishing a technology they know nothing about (i.e backing of ethanol and the initial rubbishing of hybrids)
Managers leaping into action when something of their’s is at stake (i.e bankrupcty proof pensions)
But it is nice to hear that Ford does have something going for it, in that, they can crank out a nice car when it suits them (i.e Ford Focus Cabriolet. Well, that was actually done my Pinifarina….)
Amen. Having worked on the product side (in Finance) with one of the big 3 this is absolutely correct. I was outside the norm as I realized you had to spend money to make money. The bean counter types worried about every nickel and dime and never thought about the end product.
Having also worked for a Japanese OEM, they will not do something to save a penny. The change must make sense and not impact the end product.
We have seen this for now going on 30 years and the big 3 still don’t get it. (Lutz has made a difference, my wife purchased a GMC Acadia and the interior design and fit/finish is lightyears ahead of the Envoy we turned in.)
I have worked at GM and the problem is the same at Ford.
In my previous job I had a couple of co-workers who previously had had long careers at Ford. The 3 of us always discussed cars and when the discussion was about the manufacturers, their opinion about Ford and it’s troubles was EXACTLY the same as stated in this news post.
As Katie rightly puts it though, this is obvious, which makes it even more mind-boggling that nobody did (or is doing) something about it. Well, management wouldn’t do it, as this is one of the points, but the shareholders should have done something long ago.
I’ve been harping on the point for years that the MBAs are killing American businesses … and it is still true.
C’mon, that can’t be the whole email?
Peter Drucker has pointed out that organizational hardening of the arteries is endemic to aging corporations. Indeed, most don’t last past 40 years. So you might argue that the Not So Big 2.8 are going through a natural process of aging and death.
It is entirely appropriate to hold individual auto execs accountable for their actions. However, if you want to create lasting change in Detroit it is going to take more than a managerial housecleaning. Those of us who are old enough have seen decades of press reports about how a new management team is radically reshaping the structure and culture of their organization. At a superficial level that did turn out to be true — the Not So Big 2.8 pump out somewhat better cars than they did in the early 1970s.
However, one factor that isn’t discussed nearly enough is what might be termed the “change back mechanism.” For every action there is a reaction, and large corporations are loaded with people who will exercise their modicum of power to change things back to the way they used to be.
The biggest change back in the 1990s was the rise of big SUVs. If you look at the industry from a broad historical perspective, Detroit’s aggressive embrace of SUVs makes perfect sense. The Big Three have always believed that the secret to success is building bigger, more powerful cars. SUVs filled that bill, with the added bonus of short-circuiting tough CAFE standards for cars and (at least for a while) offering a bigger profit margin because they were simpler to design than a comparably priced car.
It’s easy in hindsight to criticize Detroit for its single-miinded fixation on SUVs, but that behavior is little different from past fads, such as the tailfinned monsters of the late 1950s, or the muscle cars of the 1960s, or the opera-windowed barges of the 1970s. GM was usually the leader of these fads because this is what its corporate culture knew best. (That’s also why GM’s small cars have generally been less competitive than Ford’s or Chrysler’s.)
I think that the root of Detroit’s problems can be traced back to the 1950s, when a federal government didn’t adequately enforce anti-trust laws. The result was that within a remarkably short amount of time a handful independent automakers were pushed out of existence. I don’t think it is any accident that product innovation dropped off considerably after the consolidation of the industry — and only began to return when the imports gained a foothold in the late 1950s.
Way back in the mid-1950s George Romney, head of then struggling American Motors, called for new anti-trust laws that broke up automakers once they reached a certain size. (The senior Romney was much more the maverick than his poll-tested son.) The idea never went anywhere, but it cuts to the heart of what the poster discusses: Detroit has lots of talented, committed rank-and-file workers whose innovative efforts have been stymied by decades of bad management.
I would suggest that it is easier to reform a poorly managed company when it is smaller. For example, right now Nissan is a far better run company than GM, yet it is quite a bit smaller. So maybe the best thing that could happen to GM (and perhaps Ford) would be that they were dismembered.
“The bean counter types worried about every nickel and dime and never thought about the end product.”
Typical left brain thinking, which most numbers people tend to do, very strong on detail but ignore/can’t grasp the overall picture.
“I know from my former job at a supplier that GM and Chrysler are no different: limitless engineering capability held back by cost-cutting and incompetent management.”
While there’s some truth to that, with higher costs, exec’s decisions were not totally irrational. The example from ten years ago: Why compete with imported cars when consumer taste, fuel prices, and tariffs made making excellent trucks extremely profitable?
Yes, long term problems were kicked down the road. But given the social & political element in many of those problems (corporate culture, labor, state dealer laws), why NOT punt?
“… why NOT punt? ”
Because you are getting paid massive amounts of money to do a job. So, do the job well! The job of an executive is to look after both the short term and the long-term health and well-being of the enterprise and it’s stake holders.
Many US executives seem to think that their job is to extract the maximum wealth from the enterprise and into their own bank accounts as they can get away with. Period.
Didn’t we cover this very same topic a long, long time ago?
I tried to explain this as a turning point that took place actually some time during the 60’s.
It was during that time when the engineers, the car lovers and dreamers, stopped running the companies and the MBAs took over.
They stopped designing cars for the love of it, and they began producing cars for the margins.
The shareholder and the return on investment became the goal…NOT THE CAR.
Today, you gotta hand it to Toyota.
When Ford was using its cash to buy up other brands, Toyota was developing a new type of procurement and manufacturing…I believe called “just in time”.
And they invested in a new technology nobody else wanted to…hybrids.
And, they were willing to suffer the initial losses and stayed with their idea.
Again, not to start another nasty email train…but kill all the lawyers, and the MBAs!!!
For the decades I was in automotive, I’d never met an engineer/tech who wanted a substandard design/build.
However, I saw lots of engineers over-ruled by purchasing, and forced to water down specs in order to meet an arbitrary budgets, and design freezes which denied obviously needed changes that emerged during testing (ex. Ultradrive).
The substandard, forced product launches led to post production revisions, sometimes TSBs or worse.
So called badge engineering is really badge marketeering. MBA’s are often spoken of with scourn.
Because of this experience, many engineers dissuade their kids from following their parents career. I see no way to remedy this with the current regimes.
Notice how big and how well run the best companies are. Most are vastly smaller, Honda, Nissan, BMW and are run by the engineers, not the marketers or MBAs. Only Toyota is that large but an engineer is very close to the top, I wager.
Ford may, but it’s a long shot, get the management bypass it so desperately needs but GM is far, far too corpulent to survive the needed operation. Only a phoenix like rise from the ashes will benefit GM.
Notice how big and how well run the best companies are. Most are vastly smaller, Honda, Nissan, BMW and are run by the engineers, not the marketers or MBAs. Only Toyota is that large but an engineer is very close to the top, I wager.
Nissan is run by accountants, Toyota by manufacturing/operations people. The difference is that they’re accountable and disciplined. GM’s management’s problem is that they have zero accountability: not to their customers, their board, their employees or their shareholders. None. Lose accountability, and everything else will quickly go to hell.
Engineers aren’t gods, and they’re just as likely to fall into the accountability trap as accountants or MBAs: they will, if uncontrolled and unaccountable, run a company into the ground through arrogance and inability to focus. It’s a different madness (you get cooler stuff) but it’s still a downward slide.
Want to see engineers run amok? Have a look at Volkswagen and Mercedes.
dimwit…
And put Mazda in there with these well run companies.
It is one of the few where you can see the top brass right there at the test track.
Driving.
Racing.
I think they enjoy the cars as much as the designers!
Here is an example.
This link explains how a small company like Mazda got its top people involved with the speed3 development.
Its just the way it should be!
http://www.sportcompactcarweb.com/mazda/0610_sccp_mazda_mazdaspeed3/index.html
psarhjinian
Well, dunno about Nissan’s accountants.
But manufacturing and opperations sounds like close cooperation with engineering.
But really, discilpin is essencial.
Everybody.
Enjoy an evening with this William Holden film that addresses exactly the subject we are talking about.
BUT the good guys win only in Holyweird.
In real life, they don’t…very often.
http://us.imdb.com/title/tt0046963/
The car GM diesel in the early 80’s was developed from a gasoline engine block. During that time they had a top of the line division that developed and sold Detroit Diesel Engines.
GM car divisions were told the engine could not take the internal combustion pressures of the diesel engine pressure combustion system. They said if it doesn’t work we will fix it on the road. By the way, your 6.2 is too good for the auto’s.
At the time Detroit Diesel held 90% of the truck engine market. Until, they put one of their SUITs in charge from the GM car VPs. They said get that new 92 engine out on the road. If it doesn’t work we will fix it on the road. Well the truckers started breaking down and the cows, veggy, eggs, chickens and time sheduling died with their faith in Detroit Diesel’s. The GM guy was promoted to another station no impact just Detroit Diesel sales market dropped from 90% to 5%. The car diesel engine for US was dead.
“Want to see engineers run amok? Have a look at Volkswagen and Mercedes.”
Perhaps, but both companies are far healthier than any of the Detroit based automakers. VW, in fact, is growing at a very strong clip and is quite profitable.
My sentiments exaclty. I’ve met some phenominal engineers in Detroit. I do agree with psarhjinian, there needs to be a balance. However, it is clear the balance in Detroit is titled completely off its axis toward short sighted bean counters. And I believe that engineering should be more equal than other disciplines in an automotive company. Still, you can see with vehicles like the CTS-V or the F-150 that when they focus American companies can design and build world class products.
Way back in the mid-1950s George Romney, head of then struggling American Motors, called for new anti-trust laws that broke up automakers once they reached a certain size.
This seems like it would have been very good for our auto industry. If GM had been broken up they wouldn’t now have 5 divisions all selling the same cars and we the customer would have variety from just the US manufacturers.
We didn’t get variety so we moved on to European then Asian cars.
The reason GM has 5 division selling the same cars/trucks/SUVs is because of their dealers all wanting the same “action”.
One of GM’s problems is their failure to control their dealers.
As someone with no experience in the Auto industry I doubt that the engineers are guilt free in the problems of Detroit.
How many of these engineers joined an automaker to work on Mustangs and Corvettes and when assigned to work on the Chev Aveo or equivalent did not really put in the blood sweat and tears needed to make a great product.
Engineers aren’t gods, and they’re just as likely to fall into the accountability trap as accountants or MBAs: they will, if uncontrolled and unaccountable, run a company into the ground through arrogance and inability to focus. It’s a different madness (you get cooler stuff) but it’s still a downward slide.
Thank you for making this point. Some of the posters here tend to drink a bit too much of the engineering Kool Aid and have an imbalanced view of what it takes to run a business.
The functional departments tend to have rivalries with each other. Just about everyone in our world would prefer to blame the other guy while assuming no personal responsibility, and engineers are no exception.
At their most extreme, accountants tend to be pennywise and pound foolish. The finance guys fixate on today’s margins, at the risk of tomorrow’s profits. The engineers would design products for themselves, regardless of whether anyone else would actually want or need them enough to pay for them. The marketers would suck out every dime possible for an ad campaign, in the belief that good promotion is a substitute for lousy product.
Left to their own devices, any one of these groups can destroy a company. General Motors has had the unique honor of almost being destroyed by an engineer run amuck, only to be outdone by teams of finance and engineering bureaucrats who followed them.
Blaming one group above the other falls into the trap of creating accountability. The issue isn’t with the education, it’s with the mentality that the company comes before the customer. Any company that puts its petty internal interests above those with the cash to buy their products is eventually going to fail.
Engineers are not the whole answer. Having a company in touch with the product and the marketplace is. The picture accompanying the article tells the whole story. A suit has actually gone into the factory and met an actual person doing manual labor, and it is such a big deal they have to take a picture of it. If the company cared about the product the engineers would have more say and the employees would be in touch with the making of the product. The company’s reason for being is to make money and they do that by selling products. Unfortunately the executives have gotten out of touch with the people actually building the product. I am an engineer and I work for a company that actual manufactures a product, i.e. we actually build things not just provide a service. More time is spent with diversity training, ethics training, computer training, new huge linked database training, time charging training, time charging retraining, time charging updates, totally new CAD system not compatible with anything in our solar system, let alone all of the previous CAD files, that they bought because it was much cheaper than the latest CAD program update that we have been using for 10 years, training, CAD retraining, managers meeting, training for effective managers meetings, and new telephone training. Then for about an hour a day we actually work on the actual product. We are not in touch with the product. The overhead costs are ridiculous. Most engineers in my group have never been in the shop and are in awe when they actually see the product we spend so much time and money on. I think all employees should have to walk through the manufacturing plant to get to their offices. We have to drive to the plant to see our product. We are off-site, since it is cheaper to rent across town. We’re out of touch.
John Horner :
And others…
Yes, of course we are exaggerating the engineer thing.
Nobody thinks JUST because you are an engineer you got a grip at all about business and products…ESPECIALLY German engineers.
These guys can overcomplicate anything.
I purchased a house from a German engineer and my family and I are still trying to figure out how he wired the house!
There’s a control box in the basement that has scared off many repairmen.
And there are good suits in today’s business and manufacturing.
But it’s the point we are trying to make about the focus of the US automakers these past 20 or 30 years.
But folks, we can’t have it both ways.
Today GM cut future development of their Solstice and Sky.
Nobody purchased them.
Who gets the blame here?
GM took the challenge we are demanding of them and THEY got stung once again!
These are real beauties.
They built them, but nobody came….
OK…I promise never to use that line again.
Agree with the article. I can give you a few examples.
Did you know that Chrysler was tooling up their own four cylinder turbodiesel engine in the late 90s? How great would it have been if they had the engine on hand today? The program was killed by Daimler after their merger.
Chrysler had a 3.5L 24-valve V6 version of their minivan ready to go for the 2001 model year. It was a much smoother package than their pushrod engines. The program was deemed to expense and was killed.
You know how the 3.5/3.9L GM pushrods are universally un-loved yet seem to permeate into every front-wheel-drive GM chassis? Well the original intent for those vehicles was that they were all to get GM’s nicest DOHC 24-valve 3.6L engine. The execs decided that the old 3.5/3.9L pushrod motors were cheaper and basically shelved the high-end motors for most applications.
All of these companies had variable valve timing projects in the works for decades, comparable to Honda’s VTEC or even BMW’s Valvetronic. They had electric car programs. Hydrogen powered cars. The primary difference here, compared to Honda or BMW, is that the execs always killed the high tech programs for budget reasons while Honda and BMW let them flourish
John Horner: VW, in fact, is growing at a very strong clip and is quite profitable.
I thought that VW was losing money in the U.S., even thought it imports Mexican-built cars for sale here. And it has been stumbling in Europe, too. Didn’t Porsche just buy a controlling interest in VW?
Blaming only the suits and calling the engineers to rescue will not solve the problem.
Just look what Engineers do to a car: see where BMW and Mercedes went with their 7 series and S-Class some time ago. Engineers were left to invent and implement anything nice they could think of. Windows automatically closing when you enter a tunnel, etc. Totally overengineered.
You need an excellent Management to lead and handle the Engineers. Limitless Engineering would lead to limitless desaster. Nothing better than the current situation.
Management of Ford and GM certainly has failed in managing their business right, and leading the engineers in the right way. But the giving the engineers limitless influence would the D2.8 drive towards bankruptcy the same.
Tireguy
There’s a term I really hate “over-engineer”. It’s a phrase suits use to rein engineers’ confidence in. Nobody ever uses the term “over manage”, do they? The 7-series and the S-Class is EXACTLY the reason why engineers should be allowed to go crazy for 2 reasons:
1. People who buy these cars, don’t compromise. In life, they have some flunky to do menial jobs for them. So their car should do the same. “You automatically close! I shouldn’t have to tell you!”
2. In the case of the S-Class, all this “over-engineering” (gags) is actually “showcasing”. The S-Class (at least in Europe) is a VERY important car. If ever you want to know what technology is going to be standard on other cars in about 10 years’ time, you look at the S-Class, because that’s where is all starts. It was the first to have ABS and airbags as standard, when other cars had to make do with the driver’s foot and the driver’s head! It’s a glimpse into the future.
Ideally, you’d want someone who’s got the technical ability of an engineer, the prudence of a suit and the panache of a marketer.
Good luck in that search!
Katie,
nevertheless, “Overengineering” takes place and can be quite harmful to Automanufacturers and other manufacturers. The S Class is certainly a showcase. But it is in some regards similar to the latest “Word” program: no one uses or even acknowledges the functionality. On the VW Golf, the engineers had introduced a rear axle which cost 500 Euro more per car – and nearly no one could notice.
You have to strike a balance. And sometimes value lies in making things less complicated. From discussion with a patent guy I learned that “Entfeinern” is deemed to be better than “Verfeinern”. Difficult to translate: Verfeinern makes things more delicate, better in detail. Entfeinern takes away the details and delicacy but ends up with parts which you can manufacture 100.000 times a day and which will last 10 years.
See Ferdinand Piech of VW: he was later blamed to have been too fixed on technology, loosing sight of the business. With GM or Ford, management may have not enough Car business sense. But without them engineers would quickly run the company bankrupt as well.
Dr. Lemming, you are absolutely correct vis a vis the independent automakers of the 1950’s. They were the ones who introduced radical new ideas (Packard invented air conditioning and torsion level suspension, Hudson brought about dropped floorpans, Nash revolutionized unit construction and interior climate control, Studebaker created the Hill Holder and beat Chevy to market with a low cost V8 by 4 years). The 2.8 became an oligarchy.