It is kinda sad that the industry in USA is now so dependent on the tax payer largesse. It is sadder still to note that the congress is completely clueless as to the right way of deploying the tax payer capital. We, the private citizens, should expect and demand more from our elected representatives.

Bailing out Autos

The democratic congress is pushing to bailout GM and other autos. Many talking heads and pundits are calling for a bailout for the car companies as a way of saving jobs. Am I the only person around who thinks this is a singularly bad idea?

The Real Problem

I have spent my pre-entrepreunarial  career working at and strategic consulting for auto companies (all three of the big three). It is not true that these companies do not know that they need to restructure, and that they need to bring out better designs at prices that are attractive to the consumers. It is not true that these companies are not aware of their dwindling market share, or their antiquated production systems, or the quality problems in their vehicles. They have been trying their best to address these issues in the last 10 years with varying degrees of success.

But their hands are tied.

Case in point: GM is unable to shift production to Mexico. GM is unable to shift procurement of certain parts from Delphi to another vendor despite a Delphi part costing more, technologically behind, and of bad quality. Infact, even when GM agrees to continue to buy from Delphi, they are unable to implement a design change in the parts

Or the fact that Ford was required to hire back any Visteon employee who was laid off

Or the fact that some of the best ideas in these companies are shot down because it affects the relationship with the unions, or that some executive somewhere overrides a change in vendors because he knows the incombent vendor on a personal level

Or the fact that  many many employees have gotten used to 2 hour lunch breaks and frankly the management cannot do anything about it and that most of these hourly employees are being paid 3-4 times the minimum wage for what is essentially unskilled or semi-skilled jobs

Or the fact that there is an alarmingly large turnover rate amongst the engineers and designers, some of the brightest and best hires, due to the fact that they constantly see their best ideas shot down meaning Ford has to constantly relearn how to eliminate squeaks and rattles (folks, this is not rocket science)

Or the stifling bureaucracy

Or the mindless narrow focus on cutting material costs at all cost resulting in the consumers getting turned off when they look at the cheap plastic that pretends to be the dashboard

Ladies and Gentlemen, the problems of the big 3 boil down to two things:

1.