Saving The Big Three

As I write this, something is happening that I would have thought as likely as hell freezing over: GM, Ford and Chrysler are verging on bankruptcy. The media have beaten this issue to death and have largely gotten it wrong. You, as a member of the aftermarket, are more important to the survival of the Detroit Three than you realize.

Massive government load guarantees have effectively politicized any turnaround plan and governments are under tremendous pressure to either make the industry work, or cut their losses and let the Big Three go under. And contrary to popular belief, what constituents think has a major impact on economic decisions, especially in a minority government. What those constituents think is often shaped by what the garage owner, service writer and tech tells them. Like it or not, you’re an industry expert in the public’s eye, so choose your words carefully when addressing the issue. Don’t be afraid to express your opinion to your MP, either.

I have a plan which I think could work. See if you agree.

To save the Detroit Three I would create a jointly-owned fourth company that manufactures the cars and light trucks under contract. All manufacturing assets would be transferred to the new company which would be free to bid on assembly of “foreign” makes as well. By consolidating production by vehicle type instead of brand huge economies of scale can be realized. A flex line that makes Chevy/GMC, Ford and Dodge ladder-frame pickups, for example, is relatively easy to build. The same goes for small unibody front-wheel-drive cars, or crossovers. Want to add real savings? Standardize the parts that don’t affect the brand identity of the vehicles. Everything from wheel bearings to window lift motors could be standardized without anyone but the technician noticing. The result would be bigger volumes for fewer part numbers and big savings all around. Keep the current dealer network, but make GM, Ford and Chrysler sales and marketing companies that contract assembly to any one of dozens of assembly plants using common components.

And what about the unions? I have no idea why the CAW/UAW is even an issue, since there’s no evidence that hourly wages are a factor (there’s no price advantage for Japanese over North American vehicles at the retail level, for example) but politically, they will get hammered anyway. If that is inevitable, add a preferred employee stock purchase plan to the new assembly company to trade equity for lost wages and give workers something to build a retirement around. This would cost nothing from a cash flow perspective but would let all workers share in the success of the new enterprise.

Do you have a better idea? Tell somebody. Hell, tell everybody who will listen, because the public simply don’t understand that a turnaround isn’t just a good idea, it’s very possible with some fresh ideas.

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The public simply don’t understand that a turnaround isn’t just a good idea; it’s very possible with some fresh ideas.