Fordzilla vs. Japan

My first car was a 1960 Chevy (bought in 1969) and then after that I never bought another American car – until 2005 when I bought a Ford Escape. After that it's been foreign cars again. But if I were going to buy today it would be a Ford Fusion Hybrid. I think it's the best mid-size car (and best hybrid) on the market. I'm really proud of Ford these days because it's beating the competition the only way that counts – it's building better cars for the money. That's the American way everyone – build a better mousetrap and the world will beat a path to your door.

Please don't take this the wrong way. I consider myself as a true-blue patriotic kind of guy. During the early 80's when I started my first tech company, I had fond memories from my teen years of weekends cruising around in my best friend's Dad's Lincoln Continental (you remember the ones with those big, classic suicide doors?) and just loving that big American car. So naturally, when our CFO asked me what kind of car my company would lease for me, I said a brand-new Lincoln Continental!

Well, within months, the beautiful real-wood paneling highlights started to bubble and buckle, much to my dismay. Several attempts at having it replaced at the dealer with new wood resulted in the same problem. After several months of that, the dealership resolved the problem based on Ford's recommendation and solution: They replaced the real wood with... a vinyl fake wood! It wasn't until the 3-year lease was long over that Ford actually sent me a recall notification saying something to the effect that it had just come to their attention that the wood paneling was bubbling and buckling! At that point, I swore I would not buy an American car again until the American auto worker gave me the same respect I had given them in buying their product. It was almost 20 years before I finally decided to get a new Ford minivan (which turned out to be well-made) and I've been driving American cars and vans once again.

So as much as you may want to blame the Japanese car manufacturers in general - and Toyota in particular - Detroit did NOT fail because of the Japanese companies. Detroit did it all by itself to itself. For years, the Big Three arrogantly punched out poor products and foisted them on an unassuming public, slowly losing their loyalty one customer at a time. No doubt, Japanese quality and gas mileage also made a difference.

Naturally, our protectionists in Congress decided to play the loyalist game by raising protectionist duties and tariffs on foreign (read Japanese) autos during the 80's.

So what did the Japanese do? They went ahead and set up factories in the States, choosing southern states where right-to-work trumped Union concessions. Quality started off as good as Japanese-manufactured cars, ensuring a smooth transition into the American market. GM and Chrysler continued on their path of arrogant self-destruction, still believing that they had a God-given entitlement to the American car buyer. Fortunately for Ford, they moved the Ford family out of management and put in Alan Mulally, a professional corporate guy formerly from Boeing. Mulally brought his experience and common sense to running a leaner and more agile manufacturing business. And that's how Ford managed to dodge that bullet that took out the other Big 2 when this recent recession finally exposed the men behind the curtain.

However, what I sure don't want to see is any more arrogance out of Detroit gloating over Toyota's current misfortunes. That may have been some lucky timing for the American car industry at best and another bad mark for the American car worker at worst. Think about it this way: Could a majority of those bad cars have come out of those American factories that we had them build here in the 80's to employ American workers? Why would that not be a particularly big surprise to most of us if it were true?

I guess I'm saying that this is surely not a particularly good - or smart - time to be gloating about Toyota's current woes. It may only be temporary and tomorrow it may well be Ford's turn. I don't think I'd be betting against Toyota just yet. This is as good a time as any to keep our heads down and stay focused on continuing to deliver a great product. And I'm not a Toyota fan by any means - just a pragmatic American consumer looking for the best product that my hard-earned dollars can afford.

Well the thing is this is not a Japan vs. US competition any more. Toyota, Honda, etc. have thousands of employees and factories in the US. It is not US worker against US worker. Yes, some profits and workers are Japanese, some are Chinese. But that is now on both sides. Some US automaker cars have 80% or more foreign made parts and some "Japanese" cars of 60% US parts and were made in a US factory. Some US cars are put together in Mexico or Canada. So really this is just US vs. Japan on the surface. We do not want either to lose, it's global now. What we do want is more countries moving operations and factories here to generate more jobs and parts here. Profits will then be spread out all over, everyone wins. But if all parts and factories go elsewhere, we lose.

Ford's success is only temporary. The UAW will kill any chance of a recovery as soon as they realize the company is making money. The union leaders will brainwash the workforce into thinking that they're being screwed by the hand that feeds them and they will strike for unreasonable wages and bloated benefits that will once again put Ford right back where GM and Chrysler are right now. The US Auto industry is doomed to fail unless and until the UAW is broken and tossed on the junk heap of history.

Thomas -

Great article. I really enjoyed it. I actually referenced it in one of the blog posts I wrote on behalf of a dealership that I help with their e-marketing tactics. If you want to check out the post, you can find it here: http://bit.ly/adXBz2

If not, that's cool too. I simply wanted to let you know that I enjoyed the post and look forward to reading your future posts.

Best,

Ryan Taft
Catalyst Marketers
http://www.CatalystMarketers.com

Remember this story being told just a few years ago?

A Japanese company (Toyota) and an American company (General Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team composed of senior management was formed to investigate and recommend appropriate action. Their conclusion: The Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rower. The new change initiative also included plans for getting new paddles, canoes and other equipment, plus extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the senior executives as bonuses and the next year’s racing team was outsourced to India.

Sadly, The End.

Sad, but oh so true! Here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can’t make money paying American wages. Toyota has spent the last thirty years building more than a
dozen plants inside the US. The last quarter’s results: Toyota makes 4 billion in profits while Ford racked up 9 billion in losses. Ford executives are still scratching their heads.