Credit Where Credit Is Due

Why is the US auto industry heading into the tank? Last time, Doron Levin analyzed the UAW's role ("above-market wages and lavish benefits were great while they lasted, but have come to an end. Trying to hold on to them to the bitter end will only cause companies to fail and lead to massive job losses."). This time, it's management's turn. Bloomberg (02.15.06):

"(T)he auto industry's white-collar bosses decided they would never be able to change the adversarial relationship with the UAW. So they took the occasional strike and evened the score, or so they thought, by compensating themselves generously, larding the bureaucracy with too many subordinates, and creating a class system of titles, benefits and perks, complete with jets, drivers and dining rooms. What this profligacy cost in monetary terms will never be known; the size of the lost opportunity has been immense. While Toyota Motor Corp. was demonstrating how to squeeze every drop of waste from operations and recycle cash for the customer's benefit, GM at times seemed to be lighting its cigars with $100 bills." GM Management Gets Lion's Share of Blame, Not UAW

" The popular and economical 1982 Honda Accord and 1984 Toyota Camry were direct challenges to Detroit's family sedans and should have been a clarion call to top executives. And if not the Camry and Accord, then certainly the 1990 Lexus LS 400 demonstrated that America's love affair with Cadillac was threatened." "Instead, GM, Ford and Chrysler executives argued that they were losing customers because consumer perceptions chronically 'lagged' the reality that they had responded and their models were improving." "Every automaker has duds, like GM's Pontiac Aztek. But how to explain GM's puzzling failure to create a strong entry in the U.S. minivan market? Or Ford's confused and dilatory approach to luxury cars, resulting in the decline of the once-proud Lincoln brand? Clearly, the UAW shouldn't take the rap for vehicles that don't sell." Doron also notes an almost reflexive tendency of the top execs to blame "unfair trade practices,...currency manipulations by the Bank of Japan, misguided federal regulation, the UAW, the need for tort reform -- everything except the root cause: executive dereliction of duty to manage the auto companies for the long-term benefit of the customers, shareholders, workers and the U.S. economy." "With few exceptions Detroit's leaders have been finance whizzes and company lifers, trained to prettify bad results and reject wisdom from outsiders." The execs "didn't get the job done when it comes to spotting important trends and crafting a response." And since the late 60s, they've shown an uncanny ability to consistently misunderestimate.