Why Should We Worry?

GM's attitude to entry of one Chinese Car...

GM Chair "How many models do they have?

Marketing VP: "Only one..."

GM Chair: "So why should we be worried?"

Marketing VP: "They have 50 million of them..."




We should have known better!

This might knock you off your pins if you haven’t been paying close attention,
But personal research and experience tell me that we are in for a fairly rough
ride if we don’t wake up soon… and predicated on a body of research,
the people who need to pay the most attention, don’t listen to other’s advice.

So, here we go…

No, I’m not talking about Iraq; I’m talking about the economic underpinning of this country.

Consider Ford. It is shutting down 14 manufacturing and other plants.
One fifth of the work force gone...

We should have known better!

GM cutting back drastically to stay in the game. Lost twenty five percent of its market share in the US!....

How can that be? This monolith of American industry cutting back? The sad truth is that GM never listened to its customers and now it’s paying the price!

Based on my experience with GM, I can vouch for that. My last American car broke down on me as I left the dealers. It was a powered up Buick with all the bells and whistles. I traded it in one year after everything had gone wrong including my power door that had to be removed 100 times at $85 bucks a shot and because my front end had been stolen.

While GM wasn’t paying attention, Toyota was hard at work becoming the world's largest car company...

Chrysler mainly owned by Daimler Benz is having trouble, too, remaining profitable! Try telling the Germans something…

One might guess that it doesn’t help to build gas guzzlers when gas costs over 2.40 a gallon.

What's going on here?

For too many years, America has gotten fat and lazy. The automotive culture in this country thought it knew all of the answers; it didn't need to do its homework.

Manufacturers laughed at the idea in the eighties that Japan was eyeing the American market. How can this manufacturers of junk ever compete with the mightiest superpower in the world? That’s what I heard when I first came back from Japan in the fifties all loaded down with Akai tape recorders, Sony twelve transistor radios, Canon cameras, Nikon lenses, some of the best stuff you could buy anywhere. At the time, I urged my friends in business to watch out: The Japanese were coming.

But would American industry listen? Hell no!

Are they listening now?

What do you think?

But GM is the archetype. The model of American bigness. The model of American arrogance. And if there is one industry fundamental to the survival of this country, it is GM.
That was the culture. When DeLorean wrote his book, he said that GM was totally isolated in its thinking and its culture and couldn’t change. And that It wouldn't listen to anybody's ideas but its own.

In the meantime, GM, Ford and Chrysler were turning out cars whose gear shifts fell off as soon as you left the dealer or the PCV valve was the wrong size or the springs were made for a different model necessitating many and frequent trips back to the dealer.

The Big Three's arrogance and disconnect became evident with Japan's automotive industry's rapid rise in America.

Although no one mentions it, the death of GM not only means the loss of assembly line workers, it has repercussions all over industry. I would estimate that for every GM job lost, there are an additional five jobs that will disappear through out industry. (The same formula that applied to the loss of Republic Aviation and Grumman on Long Island.)

So, with all of that we witness the Automotive Show:

Now, at the recent automotive show, China announced that it was going to compete with one entry. GM still didn't seem to get the message. To them, it was merely a question of communications.

China with its one entry didn’t make much of a splash; but watch my lips: The Chinese are coming and we’d better hold on to our backsides.
.
Why?

Because the Chinese do their homework. and they've targeted the US market. And they are more of a threat to the American market than the Japanese ever were.

From the Chinese we will learn a lot. We will discover that it is still possible to market a car here for under $10,000--something Detroit has not been able to do despite all it's claims. Moreover, Detroit has not listened to the people when they said that they wanted an alternative to gas-guzzlers; they failed to see the future and it was not paying to fill up a tank of a car that got ten miles to the gallon!

Will the Chinese represent a real threat?

Ask the Koreans. The Koreans, the largest ship builders in the world found out the Chinese were targeting ship building, you know what they did?. They got out! They switched to luxury yachts. Why? The Koreans are tough and they are smart. They know that you can't beat the Chinese when they want something and are willing to go after it.

Right now, therefore, it's only one simple car.

By 2009, the inside word is that there will be at least ten Chinese manufacturers aiming at the domestic car market.

Where do we go from here?

We hear the Chinese are now aiming at the airplane industry.

Hold on! How are they going to learn about airplanes?

Easy, Boeing is building a plant there....

What does that mean for American industry.

The answer is right in front of your face: If we don't shape up; if we don't recognize and respond to the threat, America will fast become a memory.

Without manufacturing, without Information age jobs, there is no future for America...
and by that time, it will be already too late!

This may be our the last warning shot across the bow…but is anybody doing anything about it?

Not from my vantage point.

Where are all those gurus when you need them most…

Probably investing in China as we speak.

Les Aaron