Comments4u
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- Jan 30, 2000
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With automotive supplies (Delphi, J L French, and now Dana) running for bankruptcy protection, it must be wondered if GM and Ford can be far behind. The President has vowed no help for Detroit, and cautioned the automakers about their obligation to their retirees. Of course, when government spending exceeds income, the government merely prints more money, an option that is skewing the President's thinking.
It would seem, as a self-proclaimed war president, the President would want to retain war capable American companies. Nothing matches this description better than the auto companies. And if he were to come to this conclusion, it is obvious he would throw money at the problem, as that is always his solution. Yet money for Detroit is not the answer.
The typical demand of the critics is that Detroit must compete. The implication is that Detroit isn't building good products. What this ignores is two of the the big three factors of selling products: product quality, distribution, and quantity of competition.
"Build a better mousetrap and the world will beat a path to your door"? That's factor one, but its still not enough. Yet that's the shallow single demand of the critics.
People will not make excessive efforts to seek out the best product. They will make reasonable efforts. It has to be convenient. Having a good product is not enough, and, in fact, terrible products capture market share. Yugo is a perfect example. If what the critics say were true, Yugo wouldn't have sold a single unit.
Another enlightening example is the history of minivans. In the 80s, the Chrysler vans were the pick of the class. Yet mediocre products such as Ford's Aerostar and GM's Astro got significant market share. Even some of the hideous looking and ill handling conversions of Tokyo delivery vans by Toyota and Nissan were sold.
The Ford and GM products sold because of great distribution. The Asian products sold because of reasonable distribution and the inability of their buyers to look beyond the nameplate and see the products for the mediocre commercial vehicles they really were, ill suited to passenger use.
It can be expected that the President will remain in denial until the last possible moment. The ability to deny - and the ablity of the person to believe his own denial - dies hard. Even attending dozens of AA meetings can't change this.
Then a public outpour of criticism, similar to the post-Katrina rantings, will prompt the President to throw money at the problem. This is not certain, but probable, as the President would first have to find an automotive services company run by cronies, in the mold of Haliburton, to which he could award the contract.
The real problem lies in the quantity of competition factor. Its model and brand proliferation. Having a good product - or even the best product - isn't enough to overcome the onslaught of every automaker wanting a piece of the American market. The fact that most that attempt will eventually fail doesn't solve the problem.
The actual solution is reduction in brands and models. A prohibition on new brands would prevent disruption by those marginal players likely to fail anyway. Telling Honda, Toyota, and Nissan they must each reduce the number of models offered by one or two would clear a market currently so crowded people can't even learn of all the choices.
If brand and model limitation and reduction were enacted, the remaining question for the President would be whether Daimler-Chrysler, though not an American company, qualified as one that can be relied upon as a war industry, and thus provided protection, or as a foreign company to be ordered to reduce model offerings. Superficially, it seems foreign status would apply, and Daimler-Chrysler be considered an enemy company, not a friendly one.
However, the practical matter is that Daimler-Chrysler should receive the same benefits as GM and Ford. The cooperation of Daimler-Chrysler in war production might not be voluntary, but it can be counted upon. After all, the President has the advantage of enforcement, since the US occuation forces from World War II remain in Germany. Protectorates tend to be compliant.
It would seem, as a self-proclaimed war president, the President would want to retain war capable American companies. Nothing matches this description better than the auto companies. And if he were to come to this conclusion, it is obvious he would throw money at the problem, as that is always his solution. Yet money for Detroit is not the answer.
The typical demand of the critics is that Detroit must compete. The implication is that Detroit isn't building good products. What this ignores is two of the the big three factors of selling products: product quality, distribution, and quantity of competition.
"Build a better mousetrap and the world will beat a path to your door"? That's factor one, but its still not enough. Yet that's the shallow single demand of the critics.
People will not make excessive efforts to seek out the best product. They will make reasonable efforts. It has to be convenient. Having a good product is not enough, and, in fact, terrible products capture market share. Yugo is a perfect example. If what the critics say were true, Yugo wouldn't have sold a single unit.
Another enlightening example is the history of minivans. In the 80s, the Chrysler vans were the pick of the class. Yet mediocre products such as Ford's Aerostar and GM's Astro got significant market share. Even some of the hideous looking and ill handling conversions of Tokyo delivery vans by Toyota and Nissan were sold.
The Ford and GM products sold because of great distribution. The Asian products sold because of reasonable distribution and the inability of their buyers to look beyond the nameplate and see the products for the mediocre commercial vehicles they really were, ill suited to passenger use.
It can be expected that the President will remain in denial until the last possible moment. The ability to deny - and the ablity of the person to believe his own denial - dies hard. Even attending dozens of AA meetings can't change this.
Then a public outpour of criticism, similar to the post-Katrina rantings, will prompt the President to throw money at the problem. This is not certain, but probable, as the President would first have to find an automotive services company run by cronies, in the mold of Haliburton, to which he could award the contract.
The real problem lies in the quantity of competition factor. Its model and brand proliferation. Having a good product - or even the best product - isn't enough to overcome the onslaught of every automaker wanting a piece of the American market. The fact that most that attempt will eventually fail doesn't solve the problem.
The actual solution is reduction in brands and models. A prohibition on new brands would prevent disruption by those marginal players likely to fail anyway. Telling Honda, Toyota, and Nissan they must each reduce the number of models offered by one or two would clear a market currently so crowded people can't even learn of all the choices.
If brand and model limitation and reduction were enacted, the remaining question for the President would be whether Daimler-Chrysler, though not an American company, qualified as one that can be relied upon as a war industry, and thus provided protection, or as a foreign company to be ordered to reduce model offerings. Superficially, it seems foreign status would apply, and Daimler-Chrysler be considered an enemy company, not a friendly one.
However, the practical matter is that Daimler-Chrysler should receive the same benefits as GM and Ford. The cooperation of Daimler-Chrysler in war production might not be voluntary, but it can be counted upon. After all, the President has the advantage of enforcement, since the US occuation forces from World War II remain in Germany. Protectorates tend to be compliant.
