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Tuesday, November 25, 2008

Saving the Auto Industry - Part II - "The Big Wigs"

In a rather telling indicator of the second part of the discussion on "salvaging" the auto industry's giant, a member of the U.S. government - "on the floor" - when faced with the request by industry officials for additional funding to bolster the operation, rather pointedly asked who, among them, had flown "commercial" to attend the meeting. No one responded.

"Let the record show", he said, "none of the officials in attendance has indicated that they have flown commercial."

To their credit, two or three of the officials smiled in response. However, under the circumstances, the smiles were completely inappropriate and, at that point in the equation between seeking recognition from the populace which supports it, and asking them for their money without buying anything to show for it, it became almost a mockery of the very procedure.

I like to think helpfully.

I like to think that those officials, faced with the daunting task of holding so many futures in their hands, were unaccustomed to both begging, and recognizing that that was what they were doing. As a result, they did what is socially acceptable of "in control officials" in an exceedingly awkward situation: they tried to look like they WERE in control. Often, we do this by exhibiting a lightheartedness in a desperately difficult situation. It then becomes almost unreal, rather than potentially devastating, if a mistake is made.

It was painfully obvious that those smiles were an indicator of extreme awkwardness - and yet not one person indicated that they recognized the serious of the request - and the situation - by having provided the leadership of a simple thing like "flying commercial" - something government officials MUST do, as an accountability factor, every single day.

It was an indicator, simply put, of instant expectation, in behaviour, outlook, and expected result, and it was an immediate, serious, and honourable one. I am not sure how successful, or sobering, it was, sans the smug superiority the ires of the irascible executive would intantly have read into it, in a moment of extreme personal discomfort, but it was a very gentle shock to the "system" which requires such examples, and quickly, if we are, as a group, to bring a group of people to the brink of personal ruin, and back again.

Consider the following, ensuing realities, in tandem with working with "the line", if you will:

1. The requirement for all company officials in management to pay for their cars, like those on the floor. Certainly, there will be drastic, and immediate incentives for these purchases, but there will be no more "freebies". They are ambassadors for a necessity - from the salesman's perspective which they will support - not a draw on a currently overstretched system. Nothing in this life is free, and especially not during the implosion of the industry from which it is drawing blood on a constant basis, without replenishment.

2. A recognition that administration feeds the "outgoing" business of making sales. At this point, all bonuses should be cut, and all percentages given to the people "on the sales floor" - in this case, dealerships - in order to "move out" old stock, and move in new stock. If they do not sell, you do not have a reason to produce. This is a reality everyone seems to have forgotten. Even more so than the "creators" of the commodity, if you do not have a market, then you had better make one for yourselves again, even if it means "brutal shock sales" for a brief period of time. If you break even, you are still not "under". The danger is not underselling, and, thus, devaluing your commodity, on a permanent basis. This is called "market glut" and "flooding", and farmers know about it well, in a market which does not have the same standards, the same expectations, or the same costs. They fight back with a marketing board, and the odd subsidy. Perhaps it's time we treated our auto industry with the same considerate eye to import/export relationships, if we are serious about maintaining it as an entity. At this point, on the long road back, this is a huge step over constant, steady loss. It only goes up from here....

3. Recognize that this equation, this input/outpout relationship, and this priority, in the chain of production and replenishment, must be an ongoing one. You cannot continue to suck upon the teat that has no output. Eventually, the sustenance dries up. Seasonal imbalances are one thing: constant draw with no "busy time" means L O S S. Customer brand loyalty, although true for a time, will not endure if there is no integrity during a tough period, in product, service, and considerate cost management during a period of slump. They are telling you that they want something different. You are not listening. It is time you did - and fast. The recognition of "help and continuance" must bring with it a different way of doing business. Period.

4. Also recognize that allowing even a partial "Chapter 11" bankruptcy to occur will do nothing to fix the problems which exist at the top. They will only punish the line workers who will only pledge to seriously examine the "group pain" required if it begins at the top, and includes them, and their input for saving the industry, at every step. If you are not on the same team, and continue a pattern of adversarial blame, and ultimate target, during a near bankruptcy, they will NOT be on the same team, and any attempts to begin the painful idea of salary, wage reductions, job sharing, cost cutting, job layoff, and renewed input for streamlining, employee stock options, rotating and voluntary "time offs", and other drastic measures, will simply not be on the very large round table which is still possible, and could begin a new, and exciting era in an industry which takes a long, hard look at itself, shakes off its doldrums and its arrogance, and, like Madonna, successfully reinvents itself with an exciting, bold, mercurial, and always gutsy renewed sense OF its own possibilities. Use the ingenuity within, without hesitation. Use the bold and unexpected approaches. Woo the unreached, and lull the already won.

Your audience, and our chariots, await. Only the horses know what happens next...wink.