You Know Chrysler is Toast Because

http://blogmaverick.com/2008/12/22/

by fallentimes • 18 years ago

28 31 18 years ago

mattjaynes• 18 years ago

lol, the cartoon at the end is the best part. Pretty harsh analysis - but spot on given how clueless Detroit is.

"For those in Detroit who have never operated a lemonade stand, or any other business, the way profits are generated is by making products at a price people want to buy them for, and then producing them, with all costs allocated, for less than you are selling them for. It’s not apparent that this is a principle that Detroit understands."

bbgm• 18 years ago

Apparently they've never read their Drucker, or have conveniently chosen to forget.

newt0311• 18 years ago

Unfortunately, Detroit happens to be in the company of Washington as well as most labor unions and several influential interest groups. It's a disaster in progress.

fallentimes3• 18 years ago

A nice change of pace given patio11's comments from earlier today:

"I work in the Nagoya, the Town Toyota Built, though not for Toyota. (Well, to the extent that anyone in Nagoya can be said not to work for Toyota.)

The great thing about Japanese corporate discipline: when GM has a tough year, GM blames the year. No way we could have predicted spiraling gas prices, a down economy, and increased foreign competition. When Toyota has a tough year, Toyota blames Toyota. You can bet that somewhere in the bowels of that megacorp is a team of economists reevaluating their currency hedging strategy, while another team is working 16 hour days coming up with a car that captures the imagination of the American consumer but is priced to move as compared to the Prius.

Keep doing this whole "Learn from failure and overcome it" thing for a few decades and you end up the biggest car company in the world and make the competition look like sniveling amateurs."

http://news.ycombinator.com/item?id=406545

patio11• 18 years ago

Funny -- my intuition of Japanese business etiquette, which is not always correct, suggests that the Chryster CEO if anything under-groveled with the $100,000 ad in the New York Times.

It is a large expenditure to show feelings. Japan is really big on that (as are most cultures, truth be known, but the forms are different).

If it were a Japanese CEO, I predict they would have taken a page out of the politicians' book: go to a busy train station, during the morning rush hour. Stand on a footstool. And shout the following for an hour:

"I am the president of Toyota! I promise you we will not waste your money! Thank you for giving us the chance to keep these jobs in Japan! With your help we will proceed together to a beautiful future! I am the president of Toyota!..."

There is a Japanese politician from the ruling party who is detailed to go to a large train or subway station, typically in Tokyo, and shout something like this. Every. Single. Workday. More than one when the government is hurting, for whatever reason. The point is not to draw a crowd -- most people are busy on their way to work and pass straight by. The point is not to draw a camera -- they could have thrown a press conference in a nice heated room with 15 handpicked reporters and been far less embarrassed about things. The point is to demonstrate that nothing I could possibly be doing this morning is more important than demonstrating my commitment to you. Even the Prime Minister is occasionally expected to put in an appearance.

Of course, the Toyota CEO won't have to do that groveling because he runs a business which makes money. But if he didn't, oh boy, there would be an appropriate level of bowing and scraping.

tommusic• 18 years ago

Wow. This would feel so out-of-place in the US that people would wonder about the mental health of the shouter.

I like the assertion of importance implied by the shouting; it seems that the US car corps have enough separation between the performance of a company and the impact on the exec that it doesn't carry the same weight.

The "down economy" or "lower consumer spending" are too well-established as escape-goats.

mattmaroon9• 18 years ago

This is actually kind of stupid and poorly thought out. That thank you ad is just that, an ad. It's an investment. Just because a company's having a hard time doesn't mean it should never advertise. Sometimes it should advertise more.

And the American car companies have figured out what cars people want and at what price range. They were selling SUVs before the rest, for example. The problem is that the other car companies can quickly copy them, and the price range is set by the market, which is flooded with Japanese cars of the same sort. The Japanese can undercut them because of their lower employee salaries.

It's not as if the American car companies can't make a decent car. They just can't make one that doesn't cost $2k more than the Japanese because of their cost basis. No amount of innovation can overcome that.

justindz2• 18 years ago

No amount of innovation could overcome a labor cost disadvantage? No amount? Ever?

I'm not disagreeing with your main point. But I think you're either selling innovation a bit short or you're being too rhetorical.

mattmaroon9• 18 years ago

Not in the car industry, because the rest will copy any innovation that catches on. I have high hopes for the Chevy Volt, for instance, but I also have no doubt that if demand for it proves significant, Toyota will have a competitor out in 2 years, and they'll be able to price it $2,000 less.

You can't out innovate someone who can just copy you and sell a product just as good for less.

enra• 18 years ago

Employee salaries in Japan aren't that low. I don't know what is a fair comparison but http://www.worldsalaries.org/employment-income.shtml states that is US 30410/42028 vs Japan 25184/29882.

I would say that the bigger advantage that Japan car industry has is that they actually been always innovative, agile and reactive to markets. Hell, the whole "agile method" has some origination from Toyota. US industry has invented and started some markets like the SUV, but except for you guys, almost no-one else in their sane mind in the world buys them.

anamax• 18 years ago

> The problem is that the other car companies can quickly copy them, and the price range is set by the market, which is flooded with Japanese cars of the same sort.

In minivans maybe, but otherwise, not so much. There are no reasonably priced Japanese "large cars" (Impala, Town Car). There's nothing like the suburban or expedition. Toyota is finally trying for the "large pickup" with the Tundra, but it's a ways from an F-150 and there's still the f-250, f-350, etc.

The domestics problem is CAFE. They have to make cars that they don't make well (small cars) in order to sell the vehicles that they do make well. They don't get to count their imports either.

mattmaroon9• 18 years ago

Avalon for large sedan. Highlander for mid-sized SUV, 4runner for large. I'm not familiar with Honda's lineup at all, or really any other non-luxury vendor, so I can't come up with more.

shiranaihito• 18 years ago

> The Japanese can undercut them because of their lower employee salaries.

Because they're not burdened by silly deals by unions?

anewaccountname• 18 years ago

>Just one more example of how poorly run the car companies are. Note to the Big 3, spend money to make money. These types of ads have as much value as a Bernie Madoff account statement.

Or maybe even as much value as a broadcast.com earnings projection.

kqr2• 18 years ago

Here's the actual ad:

http://blog.chryslerllc.com/blog.do?id=564&p=entry

You Know Chrysler is Toast Because

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