Essay:Annotating an idiot

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This is an annotated op-ed from Forbes.com.[1] Annotations in bold.


As they search for the reasons why their country's iconic auto industry fell from grace and profitability, Americans are pointing fingers at CEOs, the auto union and the cars themselves.

But in the marketplace, reputation lags behind reality; and in the automobile marketplace, that lag is considerable. I have spent the past decade studying technological innovation and manufacturing at automakers in North America, Europe and Asia. As a result, I am convinced that five years ago the Big Three started producing vehicles that are among the best in the world. Yeah, probably. The problem is that the Asians were doing it 10+ years ago. Ultimately, it is one of proaction (Asian & European manufacturers) versus reaction (U.S. manufacturers).

That's why the next car I buy won't be a Honda (nyse: HMC - news - people ), Nissan (nasdaq: NSANY - news - people ), Porsche (other-otc: PSEPF.PK - news - people ) or Volkswagen (other-otc: VLKAF.PK - news - people )--all cars I've previously owned.

Instead, it will be a Chevrolet Cobalt SS. Regardless of whether there is a bailout or the industry is restructured, skeptical U.S. customers need to give American cars a chance. There is a lot at stake: millions of jobs, and the promise of clean air and energy independence held by electric cars and the new generation of hybrids. I am sympathetic to his final sentence, but he seems to base his choice on blind patriotism.

The decline of General Motors (nyse: GM - news - people ), Ford (nyse: F - news - people ) and Chrysler can be traced to three causes: poor fuel economy performance, quality and reliability problems and undesirable products. But on each issue the Big Three have learned from their mistakes and from the successes of their competitors. Fine, they learned from their mistakes. What the hell took 30 years to do it? How could they make so many mistakes when thay could see the successes of their competitors for so long?

U.S. car companies had it easy after World War II. Their customers had money, gas was cheap and Detroit had the American market to itself. People wanted heavy, powerful, luxurious cars that glided effortlessly over our new interstate highway system. And that's exactly what the Big Three gave them. This is very true and I give no fault to the Big Three.

A big bump in the road occurred in the '70s and early '80s when rising oil prices led many Americans to buy foreign cars. The reputation formed during this period stuck: American cars were gas-guzzlers and foreign cars were economical. Again, that 30 years ago thing.

Their pristine reputations notwithstanding, Asian and European manufacturers also introduced big SUVs during the last decade. When gasoline sells below two dollars a gallon, no auto company would ever decide to stop selling these highly profitable SUVs. Consumers, however, don't associate the little VW Beetle with the VW Touareg or the nifty Nissan Versa with the Nissan Titan. No such luck for GM, whose Hummer has become the symbol of fuel inefficiency. Here is where our Mr. Snow goes off the rails. If I remember correctly, gasoline was a little over $1/gallon when the Toyota Prius and Honda Insight came out. Where was GM, Ford, or Chrysler's hybrids? The Asian and European manufacturers introduced big SUVs at this time, but they never gave up on the long-term necessity of the hybrids? GM's treatment of the EV-1 electric car is the ultimate example of giving up.

It will come as no small surprise to most Americans, therefore, that U.S. auto manufacturers have since improved their cars' fuel economy and emissions performance. As in 'kicking and screaming'. GM, for instance, offers 20 models that get 30 miles per gallon--a statistic that puts them in good company with the likes of Toyota (nyse: TM - news - people ) and Honda. And they offer nine hybrid models, more than any other company. They sure do. Of course that is because they are simply bloated with vehicles that are different models because they have a one brand name or another.

A person who replaces her big Chevrolet Tahoe SUV with a Tahoe Hybrid saves more gasoline than one who trades in a Toyota Corolla for a Prius. In the past decade, American auto companies have made serious financial, manufacturing and engineering commitments--perhaps the most aggressive in the industry--to green technologies like fuel cells and plug-in electrics. This one angers me to no end. It is the paragraph that convinced me that this guy is an asshole and that anyone can apparently become an assistant professor at Harvard Business School. Sure you will save more with the Tahoe example over the Corolla/Prius. Why? Because the regular Tahoe is so horrible that it does take much for the Tahoe Hybrid to get a massive gasoline saving percentage. Why doesn't it work for the Corolla/Prius? Because the Corolla is already very good to the Prius' GREAT!

As for quality and reliability, Americans who first turned to Asian and European cars after the oil shocks found they didn't require much maintenance over hundreds of thousands of miles. To add insult to the injury, Honda, Toyota and others began manufacturing cars in the U.S. The sterling quality of these products proved American workers were not to blame for quality problems at GM, Ford and Chrysler. The fault lay with the U.S. car companies themselves. I don't know where the hell he's going with this. This article is called In Defense of American Cars, right? I think that he is supposed to be trying to convince me to buy and American car over an Asian or European brand, right?

But that was then. The Big Three worked long and hard to develop techniques modeled after the legendary Toyota Production System, with its emphasis on quality, worker input and lean, just-in-time manufacturing. It took awhile, but the turnaround in U.S. plants finally happened. I think that this also qualifies for the 30 years thing also.

According to independent organizations like J.D. Power, GM and Ford are among the industry leaders in quality. Right-o. As ice hockey fans from the days of the "Original Six" know, it's easy to be fifth overall in the league when there are only six teams. GM and Ford sales in Europe, Latin America and China are growing steadily. Consumers there see these American brands as paragons of quality and reliability.

I even worked at one of these U.S. auto companies for two years. During that time, no one in my family--including me--took advantage of my discount to buy one of my employer's cars. Even those of us who were willing to sacrifice a little on quality were quick to heed other concerns about performance and aesthetics. In short, we didn't want the cars. I, myself, used to work for DaimlerChrysler (when it was such). My family and I did use my discount. I can report to Mr. Snow that he and his family made the right choice.

It seemed like a lost cause, but it isn't anymore. The Big Three have been introducing many appealing models such as the Pontiac G6 (I should note that Speakerface drives a G6), the Ford Edge, the Cadillac CTS, the Dodge Magnum and that Chevy Cobalt I plan to buy. They're well designed, carefully built and thoroughly engineered; they satisfy even the most discerning car buffs. None of them suffers in comparison tests with the best the foreign competition has to offer. This seems like a classic case of 'too little, too late'.

True, the Big Three's CEOs took a grilling last week on Capitol Hill. And there's no question they should shoulder plenty of blame. The irony is that they have finally gotten their business right. I'm not so sure of that. And, either way, what took 30 years to do it?

"Buying American" is no longer just a patriotic slogan; it's a creed that makes good sense in every way. Now more than ever, the U.S. auto industry deserves the support of the U.S. consumer. Yeah, maybe. I, as you might suspect, would like to do it if only for the workers and their families. However, I have no intentions of giving up my Hyundai anytime soon.

Daniel Snow is an assistant professor at Harvard Business School, where he teaches operations strategy.

References[edit]

  1. http://www.forbes.com/opinions/2008/12/03/american-automakers-bailout-oped-cx_ds_1203snow.html In Defense of American Cars