Notes from Jan 7th FACS "What Drives Detroit" Conference

[CaMIRO]

Notes from today's FACS "What Drives Detroit" Conference

A few clips:

Held at the Detroit Free Press' offices in Detroit, Michigan, this is one of several traditional pre-auto-show seminars that discuss the year gone by, and the challenges in the decade ahead.

"No motor vehicle firm has ever declared bankruptcy, post-World War II, on any continent," began Dr. McAlinden, in reference to the somewhat disingenuous speculation surrounding General Motors. Rather than elect Chapter 11, thus losing the confidence of their customers, they have liquidated (Chapter 7) or been bought out, he recounted, noting the cases of Packard; Studebaker; AMC, and Nissan.

"Do you think Toyota could hold a 25.8% share of the American market?" Dr. McAlinden asked attendees, referencing GM's current position. In such a competitive industry, and in a country where the two fastest growing sectors since 1970 have been government and leisure/ hospitality, none of us did. Some of us might have disagreed with the corollary, but there it was: "GM has got to shrink, to grow," McAlinden concluded. Meanwhile, Toyota wants 15% of every market it plays in, and it is growing.

We do have confidence in GM's ability to differentiate its brands, going forward, under the experienced hand of Vice Chairman Robert A. Lutz, currently seeking to help GM use its portfolio to fragment its attack in a fragmented market, while harnessing GM's collective global powers to unify the strategy. In fairness, Dr. McAlinden lacked the time to delve into what effect a manufacturer's portfolio of brands, and its branding strategies, might have upon its ability to hold market share.

It is worthy of note that Dr. McAlinden did not spare the import manufacturers. A Delphi strike, he expressed, but shut down not only General Motors, but "much of Honda and Toyota's North American operations" (we have yet to see the general media point this out). Moreover, he noted that the Harbour Report, which measures productivity, is incomplete in that Honda; Nissan, and Toyota do not report statistics on their newest plants until they are up to speed. Toyota leaves out Princeton, Indiana, for instance; Honda, its Lincoln, Alabama plant.

Dr. McAlinden also recounted that American Honda currently has just 1,700 retirees, with 100 retiring at every month. Off the record, American Honda - which has considerably more retirees than Toyota in this country - has expressed dismay at the cost of their health care. One can only imagine General Motors' burden.

... it is often hard to make a business case for new technology, beyond the often rabidly enthusiastic early-adopters, in an emerging field that is far from a standardized goal. "Building them is not the issue. Selling them is the issue," suggested Francois Castaing in 1994 (then vice-president of Chrysler vehicle engineering), as he announced plans for an Electric Powered Interurban Commuter minivan. Castaing's statement remained true five years later, in 1999, when GM's electric EV-1 - one of the most innovative cars of recent times - demonstrated that aerodynamics and materials were important to vehicles featuring alternative propulsion. The electric EV-1 was created partly in response to legislative efforts in California, which were dropped before the vehicle's launch when the legislative body realized that no market existed for it. GM went to market, and took the loss.

More than perhaps any other car, the EV-1 illustrates the disconnect between the automakers and those seeking to mandate their efforts to market. Perhaps it is incumbent upon researchers such as Mader, who might on occasion function as intermediaries between research and legislated implementation, to ease the manufacturers' understandable skepticism.

[01cavalier]

This all makes good sense to me, especially the part about the EV1, it was a great car, I lived in Phoenix at the time this car was put on the market. GM got lots of good press from it, and there were supposedly lots of people wanting one. Driving around though, it was quite rare to see one. The only places I can really remember seeing one is at a dealer in Tempe, and at Arizona Mills mall, they had at least one driving around used for their security staff. As far as GM shrinking before they can grow again, that is inevitable. Back off some and regroup.

[ghughes]

"... it is often hard to make a business case for new technology, beyond the often rabidly enthusiastic early-adopters, in an emerging field that is far from a standardized goal. " - Well why dont we just have our government fund the industrial projects - much as Japan did to create the hybrid battery technology in the early 90's- Oh no, thats corporate welfare!!!

[GapingOrifice]

iirc, doesn't the DOE and/or other agencies subsidizing fuel cell research and ethanol, etc?