I was listening today to NPR cover the story of the strike at GM. The reporter was interviewing a number of rank and file union employees about the agreement and whether or not the union would ratify the agreement. What struck me about the interview was one individual who said that GM had to compete, that there were simply too many other companies providing too many choices of styles, colors, models and option. If GM didn't compete by offering exciting new products, then the consumer would go elsewhere.
All that made a lot of sense to me. Then, he said something that reflected the myopic nature of a market share leader. He went on to say that today is not like the 70s or 80s when there weren't great options other than US cars. I did a doubletake at that statement, having purchased in the mid-80s what was clearly the best car in the market at the time, the Toyota Camry. GM and the other automotive manufacturers in the US have misled their workers for years, and created a culture that blamed the consumer for not understanding how wonderful their cars were, when they weren't building cars with the same quality or styling as foreign competitors. The management and staff of GM, Ford and Chrysler read their own PR for years rather than listening to and reacting to customer demands. I'll give credit to Chrysler for the mini-van and to Ford for the SUV, but even with those introductions the concepts were quickly copied and improved upon by the Japanese. Note that both of those products were developed and introduced over 20 years ago. Thirty years ago GM had the lion's share of the market, but did little to create compelling products and allowed the Japanese and Korean manufacturers to beat them on quality, price and styling, to the point where GM now employs only 73,000 union members in the US, down from over 400,000 just 30 years ago.
What's interesting is that the strike is happening at just about the same time that the markets are all shifting. The most interesting automotive markets and the ones with the highest growth are not in North America, but in China and India. Will the Big Three and other car manufacturers have a shot at winning significant share in those markets, and if so, where will those cars be built? Additionally, the US and Europe will continue to focus on reducing emissions and seeking alternative fuels, so the traditional combustion engine will either get an update or other engine and drive trains will begin to replace the combustion engine. On top of all this, the US automotive sector looks weak, with Chrysler no longer part of Daimler and Ford still very weak from the downturn in the SUV based on rising gas prices.
What do these firms need to do? Innovate. Create some really compelling new products that offer something different. There's enough "me too" design and product on the market today - the US automakers should demonstrate some longer term disruptive thinking in terms of models, brands, designs, fits and finishes. Second, focus on productivity. Drive the costs out of the products through all stages of development - design, manufacturing, marketing and distribution.
The automotive industry is one of the last major manufacturers that has not been outsourced in the US. Detroit and the Big Three need to demonstrate why this manufacturing belongs on shore and give US consumers reasons to demand a home-grown auto industry, otherwise car manufacturing will become another lost legacy in the US.