The car industry in an alternate universe

[nancylebov]

I was contemplating whether we need some way of making big hierarchical organizations more flexible, and I ended up wondering why, considering that everyone knew for decades that the Big Three were doing a bad job of making cars that Americans want to buy, no one took a crack at being Big Four.

Was it simply more capital than anyone could raise? Lack of imagination? It was easier to invest in Toyota? Legal and/or quasi-legal barriers?

Comments

[redaxe.livejournal.com]

Don't know why nobody has ever tried to do it. I suspect some of all of your suggestions.

I do know that I was taught that an organization tends to become rigid after it reaches a certain number of levels between the bottom (factory labor) and the top (CEO) of its hierarchy; that number has been variously cited as between eight and ten. While I won't assert a particular number, it's pretty clear that if I was taught accurately, one of the things GM, or Ford, or even Daimler-Chrysler could do would be to thin the ranks of middle management and consolidate responsibilities. (As it happens, one of the major points made at the recent speech on the subject at GM was "too many", though I didn't note whether that meant vertically as well as horizontally in the organization.) I doubt they'll actually do it, but it'd be a good starting or key point in any re-org.

[avram]

I don't know what time scale you're thinking of, but looking through Wikipedia's list of defunct US car makers, I see a few:

Bricklin, a sports-car maker started up my a millionaire in 1974, went out of business two years later because they couldn't make cars fast enough to make the business profitable.

Citicar (1974-1983) made electric cars. I can't tell why they went out of business, but I'm guessing it was because their cars could only go about 40 miles on a charge.

Twentieth Century Motor Car Corp seems to have had a lively history, involving a car designer undergoing sex-change who ripped off the stockholders and jumped bail, and seems to still be at large.

AMC was acquired by Chrysler.

Anyway, probably a combination of all the factors you mention. Also, buying a new car is a pretty major expense for most Americans; that leads to conservatism in the purchasing decision.

Anyway, I suspect there's no reliable way of making big hierarchical organizations more flexible. If there was, centralized economies would actually work.

[avram]

Anyway, I use the word "anyway" too much.

[autopope.livejournal.com]

Toyota is the fourth big. And there are messrs. Honda, Mitsubishi, Hyundai, Volkswagen et al waiting in the wings if they falter. And Tata, come to think of it.

The auto industry is global, and the USA is actually a bit of a backwater, with demand focussed on sluggish, unmaneuverable behemoths. It's hard-ish for foreign mega-manufacturers to push in, other than as niche vendors -- BMW, Volvo (now owned by Ford), VW, and so on -- because tastes differ at the bottom end; but by the same token, GM, Ford, Chrysler are very different outside the USA and are having to fight hard to maintain market share.

I mentioned VW? VW-Audi are huge outside North America, with a sprawling empire of sub-brands. (Lambourghini is their rocket-propelled supercar marque -- they also own Skoda :) Fiat are huge, too (they've got Ferarri, as a hobby brand). There are folks you never hear of in the US, like SEAT (from Spain).

[whc.livejournal.com]

>like SEAT (from Spain)

Also part of VW

[metahacker.livejournal.com]

Within the US, I always assumed the answer was dirty pool. It made every sense for the Big Three to keep their detente, by locking up suppliers of parts, shipping, legislation, the requirements to pass vehicle inspections, etc., etc. Ford, Sloan, et al. were notorious for being excellent businessmen, and that sort of mind is very good at figuring out quasi-legal barriers to erect for newcomers.

Key word here is "assume".

[dsgood.livejournal.com]

Rather than making big hierarchical organizations more flexible, it might be simpler to replace them with collections of smaller ones.

[supergee.livejournal.com]

Preston Tucker's head on a pike (metaphorically).

[bradhicks.livejournal.com]

The problem they all had was expanding their dealer base. Virtually every new-car dealer in America is locked into an exclusive contract with one of the Big Three. Dan Bricklin sued over that, but went bankrupt before the issue could be settled I think. (I test-drove a Bricklin once, as a kid. Amazing car.)

So yeah, it took literally global amounts of capital to come into this country with enough money to buy land for and build dealerships for every non-big-3 manufacturer who came in.

Tesslarossa

[(Anonymous)]

Tesslarossa, if I spelled it correctly, got some publicity a few months ago. I don't know what its status is now, but it could be moving in that direction, especially if oil stays high and battery technology continues to improve. It has a long way to go, of course.

David Bellamy

Re: Tesslarossa

[unix-vicky.livejournal.com]

Are you thinking of Tesla Motors (http://en.wikipedia.org/wiki/Tesla_Motors)? Their one (so far) model is the "Tesla Roadster".

Perhaps you were confusing it with the Ferrari Testarossa (http://en.wikipedia.org/wiki/Ferrari_Testarossa), or as we used to call it, the "Testosterossa" (as in what men who drove it were compensating for...).

Re: Tesslarossa

[(Anonymous)]

Yes, Tesla Motors was indeed what I was thinking of. I think someone spelled it the way I did in an email some time back. The product looks as though it has possibilities, at least to me.

David Bellamy

[(Anonymous)]

Surely you mean Malcolm, not Dan.