The Future of us Automakers
When a family, like many families are today, feels the money crunch the first thing to look at is the spending. Cuts are made wherever possible while still maintaining some balance. The family as a whole pulls together and makes the needed sacrifices for survival. Why isn't this happening in the Big 3? Are the workers at these manufacturers willing to lose their jobs and the jobs of their peers because pride or perhaps a sense of entitlement prevents them from making necessary sacrifices? The Union contracts need to be revisited, revised, and renegotiated immediately. By no means am I saying that the workers should be dropped down to minimum wage, however, there is a lot of room to cut or suffer the ultimate demise of the company.
First I want to focus a little bit of our time considering the issues surrounding the proposed bail out of the auto industry. I don't want to discuss whether it is right or wrong to bail out yet another giant of industry but rather, I'd like to focus on what's not being discussed.
The belief for many years surrounding the American auto makers has been that they cannot compete against foreign competition because they were not producing cars that people wanted. Several years ago this was certainly the truth and it was a large part of the challenges that faced the auto makers. However, in more recent years they have responded with their full might and have turned around quality and appeal for their products. For the purpose of this message, let's think about the Ford Motor Company.
This year they produced 16 of the top safety rated vehicles. They were matched only by the perennial giant of safety, Volvo (whom also delivered 16 safe vehicles). This is a huge turnaround in a very short time period. Ford has also adapted to the needs and desires of the consumer as well. The recent partnership with Microsoft gave them the ability to offer the Sync system in their vehicles. This allows the driver hands free, voice activated control of their phone and sound system which includes MP3 player connectivity. Even the appearance of their cars and trucks have improved in recent years. The reintroduction of the classic styling of the Ford Mustang has driven sales (no pun intended) and rekindled an interest in the brand. So what are they missing?
Simply put, Ford has produced quality and desirable vehicles but they haven't been able to produce profitable vehicles. As in any business when looking to increase profit there are a few options. 1) Increase the cost to the consumer- not likely since they are already having difficulty selling cars. 2) Increase the volume of sales- also a challenge and difficult to bank on. 3) Review the overhead for the company- this must be the answer.
It is for this reason that I propose that the big 3 reevaluate the needs of the company and the costs it incurs to produce a vehicle. If they are not willing to challenge the union contracts then perhaps it is the unions that should take the first step and become the savior of the industry that has fed them these many years. After all, Unions only exist to benefit the members, right? What benefit comes to the members if they are out of a job and furthermore what benefit comes to the unions if they have nobody to pay them fees for the right to work?
