There's no G.M. In "Alliance"

[Ming]

There's no G.M. In "Alliance"
A Worst Case Scenario? Perhaps. But in any proposed Alliance GM needs to ensure that Product Engineering is much more than a one-way street.
Editorial by Ming
www.gminsidenews.com



It was many years ago, in a dimly lit Izakaya drinking house, that I sat down on a thin zabuton pillow and raised my glass in a toast with employees of Sony, Mitsubishi Heavy Industries, and Toyota. As usual, I was the only foreigner. I clearly remember this occasion because it was the day I decided I wasn't going to buy a Toyota. Not for a very long time, at least.

What had bothered me so much? Well, it seemed the two Toyota workers had felt the need to lecture me for a solid half-hour about the shoddy state of American cars, lazy American workers and their lack of a work ethic, and, ultimately, the superiority of Japanese engineering, manufacturing and motivation to succeed. All of these things, of course, would lead to the dominance of Japanese-engineered product in the long-run. In those days I was not particularly interested in cars, and only had my relatively trouble-free experience of driving a Chrysler New Yorker in my high-school days to go on. I nodded and took it.

I can't say I disagreed with everything they had to say. They had some points. But it was their sense of overwhelming pride, bordering on arrogance, that had bothered me the most. They were willing to paint a target on my chest and direct all of their derision at me for a good portion of the night, as an American representing everything wrong with the U.S. and everything right about Toyota.

Call me impulsive, but it was at that time that I resolved to strike their cars off of the list of those I might buy if I was ever to return to the U.S.A.

Fast forward to 2006. Among all of the talk of automotive "Alliances" between Nissan-Renault and GM, there is an ARTICLE stating that Toyota is looking at a "link up" with GM. BusinessWeek apparently quoted an unnamed Toyota executive as saying, "Toyota has no interest in seeing an alliance like this (between GM and Nissan-Renault) take place."

The magazine reported Saturday that Toyota "is considering its options and looking at different opportunities that they could propose to GM." It said Toyota executives have "war gamed" possible scenarios by which it could help GM with its turnaround.

If this sounds like it would be good for GM, I suggest that everyone step back and take a look at the recent link ups and deals between GM and Toyota. While many may be unsure of what a Nissan-Renault partnership might mean, talk of a Toyota-GM "alliance" should be looked at through the Prizm (pun intended) of GM and Toyota's recent product tie-ups.

And when it comes to GM and Toyota tie-ups, NUMMI is the most obvious. For those who aren't familiar with NUMMI and its history, this blurb comes from their web page:

"New United Motor Manufacturing, Inc.(NUMMI) is the pioneering joint venture of General Motors Corporation and Toyota Motor Corporation. Established in Fremont, California, in 1984, NUMMI helped change the automobile industry by introducing the Toyota Production System and a teamwork-based working environment to the United States." LINK

In the past NUMMI brought us the Toyota Corolla based Chevrolet Nova, GEO (and later Chevrolet) Prizm. Today, NUMMI produces the Corolla-based Pontiac Vibe, sister car of the Toyota Matrix, which Toyota sold as the Toyota Voltz in Japan.

From the mid 1990's to 2000 GM's Cavalier was sold as a Toyota in Japan. But before and since, it has been Toyota technology and engineering driving the products sold under their "joint" ventures.

Similarly, one can point to the Opel/Vauxhall Vivaro, based on the Renault Trafic, as an example of a GM and Renault tie-up that continues to this day. How much GM engineering went into that vehicle? My guess is very little, if any.



How about the Saturn VUE and its Honda engine? The rumor was, years ago, that Honda might use a GM V8 in its efforts to make a vehicle like the Ridgeline. Clearly that didn't pan out. Or perhaps it was some plan to use a GM diesel in Europe. But regardless, GM did end up using the Honda engine, taking jabs from automotive critics for its having to "rely" on Honda for a good engine in the VUE.

Notice anything about these GM alliances and tie-ups that is disturbing? Aside from partner Suzuki's shared use of GM components such as the 3.6L DOHC V6, most, if not all of these alliances seem to end up with GM as a junior partner in the engineering effort, at best. Especially when it comes to the long-established partnership with Toyota.

And this brings me back around to the original scene in the Izakaya in the heart of Tokyo. Toyota employees brimming with confidence that their technology would triumph in the end. I have no reason to think that Nissan engineers are any less proud of their technology (if not as arrogant), given their recent turnaround. Is Rick Wagoner going to unwittingly lead GM down a path where Detroit's halls of white collar engineers are thinned as their services are no longer required? After all, why further develop GM's I-4's and V-6's if Toyota or Nissan can supply their "superior" engines? Why develop a small car platform when GM could just use the Corolla's as it does with the Vibe?

And before we point to GM's class-leading large SUVs as being what the alliance partners would go after, look at the efforts Nissan and Toyota have both poured in to large pickups and SUVs of late. Do you honestly think that they would abandon their own engineered product to replace or supplement their product line with GM's trucks powered by "ancient" Pushrod technology?

Or the Corvette. Would Toyota seriously sell a car with a Chevy smallblock when it is touting its own high-tech path to power with cars such as the Lexus LS 600hL hybrid performance sedan? I think not. At best, only the clearly desireable platform would be borrowed, such as in the Cadillac XLR. The fact that the Corvette engine is an extraordinary powerplant is moot. Its clearly not Toyota engineered, and there's too much pride in Toyota engineering at that company, I think, to allow an "old tech" Chevy engine under the hood of a car adorned with a Toyota emblem, no matter how good it is. The Toyota Cavalier put the nail in that coffin.



Perhaps I shouldn't be basing my opinion of Toyota off of the opinions of two Japanese Toyota workers with a few beers in them in a small bar over a decade ago. But something tells me that when it comes to a potential GM-Toyota "Alliance", the end result will be tantamount to shipping the majority of GM's engineering off to Japan. Whether that takes 10 years or 20 isn't the point. Whether or not there's a car, engine, or platform here or there that is "engineered and designed in America" under such an alliance is beside the point. Its about where the heart of engineering operations take place. And in Toyota's case, I don't see them moving their engineering headquarters to Detroit any time soon.

And would Toyota "helping" GM mean building more cars like the Corolla-based Vibe / Matrix? Much the same could be said about a proposed Nissan-Renault merger, but I think Nissan-Renault would be a bit more open to running with GM product, given their weakness in some markets globally.

This leaves me with a question. What is it exactly that makes GM a company worthy of support from fans like me? If GM was selling Renaults, Nissans, and / or Toyotas with GM styled sheetmetal and badges (Like the Pontiac Vibe or Vauxhall Vivaro), how excited could I get about GM product? What loyalty could I have for a company that "ties up" with other auto companies and is almost always on the receiving end of product (at least in the public eye) and not the other way around?

The answer? I would have no loyalty for a company without its own strong base of engineering and confidence in its ability to produce class-leading product. The engineering could be spread across the globe between Holden, Opel, GM Daewoo, Isuzu and Detroit, but the ultimate broad-stroke decisions and directions for product engineering need to come from GM's corporate headquarters, not Japan or France, for a GM fan to retain pride in the brands of Chevrolet, Pontiac, etc. - assuming they even survive such an alliance. I would have no enthusiasm for a company that becomes an umbrella for brands that are filled with rebadged Toyotas or Nissans and Renaults, with cars that are repositories for engines and transmissions designed by someone else.

Without its own engineering leading the way or operating on an equal partnership basis where engineering is shared, not borrowed, GM becomes a bit player in an Alliance, swallowed up and forgotten --- a company with brands that would evoke nostalgia, and little more.

As a GM fan, no matter what path they choose, I can only hope that it is one where an emphasis on Engineering is as important as the bottom line. Because without a strong product contribution to an alliance, what was known as GM will fade from any alliance as quickly as it takes to replace GM engineered product with the proudly engineered product of its "partners".

I have confidence in GM's ability to rebound on its own if money and resources will permit. I can feel pride as a GM fan in their recent products. But I just don't trust Nissan-Renault or Toyota to see the same value that I do in GM product when they compare to their own, and their own egos are involved with deciding new product to come down the pipeline in an "Alliance".

[CrunkedRL]

I agree with most everything that was said. In order for GM to continue a viable product they need to have just as much input into the design engineering as any of their "partners". This will not however be accomplished through this new proposed merger between GM and Nissan-Renault. Instead them calling it a merger or alliance they should call it hostile takeover. Toyota and Nissan-Renault are two imperfect entities that have numerous flaws to go around. I believe Toyo Nissan-Renault engineers should have just as much pride in their products as Gm. But I don't feel their ideas should infringe upon GM's ideas of execution. GM's turn-arouund is going to take some time. They've already being taking some strides in getting newer products to market and cutting a third of their workforce which goes to show GM sees the need to take immediate action. Newer products and product development is coming down the line and with this I think GM has a very promising future.

[logansowner]

Originally Posted by Ming

I can't say I disagreed with everything they had to say. They had some points. But it was their sense of overwhelming pride, bordering on arrogance, that had bothered me the most.

how excited could I get about GM product? What loyalty could I have for a company that "ties up" with other auto companies and is almost always on the receiving end of product (at least in the public eye) and not the other way around?

The answer? I would have no loyalty for a company without its own strong base of engineering and confidence in its ability to produce class-leading product.

I liked the article as a whole, but these two parts kind of, well, seem hypocritical. I really think it is good for a company to be confident in itself, all of the car buying public siding with Toyota drives me nuts as most of them don't have a clue. And hence I really agree with this article, I am strongly of the impression that Toyota will end up winning if this happens, they will sap all of GM's engineering away, and be credited with it themselves, and a Toyota Corvette will get great praise for it's superior engineering while the Chevy it is a direct copy of will be labeled as crap because it is "American".

God forbid GM takes a Toyota and re badges it, it will be hard to say how the press will treat it, will they dare bash a precious Toyota, or will the GM badge obliviate it from the almighty Toyota and make it 100% GM crap? If not, I can assure you that any praise will be immediately and without hesitation followed by the reasoning for it's greatness being that it is a Toyota. Sort of like the Vue having the Honda engine. The engine/tranny is labeled as perfect but the rest of it...."Saturn everything else". This is of course more of a product of the press and not so much the fault of Toyota or GM. If it wern t for the biased press, I'd say a GM version of the Camry would be excellent for our market, and Toyota could benefit from the knowledge of how to actually build a real sports car.

All in all, in a perfect world, this would end up working to benefit both companies, but we don't live in a perfect world, we live in a "foreign is better world". So we all know Toyota will get more from this than GM will, product and press wise. And I'm still not sure I would want any help from Toyota in the first place.

I'm of the opinion that a merger with Toyota could be equated to an emergency blood transfusion from an AID's patient.

[awalbert88]

The ToyoGM merger wouldn't actually make any sense. But the fact that Toyota would even "wargame" for it means that someone, somewhere in the bowels of Toyota realizes that GM's turnaround is actually going to work. That's a hell of a strong vote of confidence.

[Butz]

What had bothered me so much? Well, it seemed the two Toyota workers had felt the need to lecture me for a solid half-hour about the shoddy state of Amercian cars, lazy American workers and their lack of a work ethic, and, ultimately, the superiority of Japanese engineering, manufacturing and motivation to succeed. All of these things, of course, would lead to the dominance of Japanese-engineered product in the long-run. In those days I was not particularly interested in cars, and only had my relatively trouble-free experience of driving a Chrysler New Yorker in my high-school days to go on. I nodded and took it.

I can't say I disagreed with everything they had to say. They had some points. But it was their sense of overwhelming pride, bordering on arrogance, that had bothered me the most. They were willing to paint a target on my chest and direct all of their derision at me for a good portion of the night, as an American representing everything wrong with the U.S. and everything right about Toyota.

Call me impulsive, but it was at that time that I resolved to strike their cars of the list of those I might buy if I was ever to return to the U.S.A

Wow we have similar reasons, I'm almost Japan-phile but not when it comes to cars.

I really enjoyed reading your commentry, very well put.

[63GrandSport001]

I have to agree, the fact that NIssan/Renualt and now Toyota is interested in GM is the biggest vote of confidence you can get.

The funny thing Is Rick has already effectively killed the deal with Nissan/Renualt when he said he will seriously look into the deal and said he will do it himself lol.

[mbukukanyau]

Simple point you made from your article is this, GM would get killed by this.. sort of HP Compaq deal... Compaq is all but dead now...
Another point that I deduce is this, GM is on the rebound.. others see value while reporters are just hyping the same old story they grew up with, without doing Due dilligence...
What I asked myself after reading your article is this, Why would these foreigners be rushing to take over GM if its in that bad of a shape? Is it becouse they know GM will is valuable on the rebound and there is a profit to be made?
GM is still the largest heavy industrial company in the world in terms of manufaturing global foot print.
Being CEO of GM is more a political position that your regular CEO job. An outsider would have trouble runnig it. the vastness of the business is mind boggling.
Think of it this way, amidst of all this hype and mess, GM is in the process of aquiring Con-Way Inc.'s stake in their joint venture which provides logistics services to GM's global supply chain...
Wgoner probably did not even spend two hours on this.. There are people to deal with this sort of stuff.. it will be quickly wrapped into GM and almost forgotten...
GMis also in the process of buying Hicomobil Sdn Bhd of Malaysia by october if all goes well...
Who knows how many other GM subs are out there doing similar deals... some of which are not even material to make it to the news...
Nissan/ Renault... toyota etc.. have no idea what they are getting into. GM is best run by insiders.

[free_energy0]

Its not a fact that the Corvette engine is "superior", just the opinion of a fan in a op-ed piece. Careful with the loaded terminology.

(Edit by Ming) - See my reply below

[61695]

Everytime this alliance nonsense comes up I can't help but remember the Fiat fiasco. Thanks but no thanks.

[goblue]

The only company right now GM should be looking at an alliance with is Honda - they have cash and little overlap with GM in terms of class leading vehicles.

[61695]

Originally Posted by goblue

The only company right now GM should be looking at an alliance with is Honda - they have cash and little overlap with GM in terms of class leading vehicles.

Why does GM need an alliance with anyone. Maybe if they concentrated on getting they're own house in order this wouldn't even be a question.

[01cavalier]

Originally Posted by goblue

The only company right now GM should be looking at an alliance with is Honda - they have cash and little overlap with GM in terms of class leading vehicles.

Though this would make more sense to me, what I would much rather see is GM back out of all of the current joint ventures and move forward on their own. GM's engineering for many years has been great, though held back. Like Lutz seems to believe, the company really needs to be focused on design and engineering. They don't really need the help.
Maybe these reports about Toyota having an interest in this could boost GM stock. At least Kerkorian will like that.

[61695]

Originally Posted by 01cavalier

Though this would make more sense to me, what I would much rather see is GM back out of all of the current joint ventures and move forward on their own. GM's engineering for many years has been great, though held back. Like Lutz seems to believe, the company really needs to be focused on design and engineering. They don't really need the help.
Maybe these reports about Toyota having an interest in this could boost GM stock. At least Kerkorian will like that.

What they need to do is fire half the accounting staff most of the management and hire more engineers. JMO

[ocmdog]

Excellent commentary, Ming. I agree wholeheartedly.

GM doesn't need any alliance/merger with anyone. Point blank.

[kenman923]

GM is capable of going it alone. It doesn't need Toyota, Renault/Nissan, or anyone else.