The Spooky Resemblance of GM, Ford and Chrysler to Zombies

This week families across the United States celebrate the pagan festival of the harvest and visitation by the dead. They place hollowed-out and glowing gourds and gruesome decorations in their homes. Their children go out to harvest sweets from their neighbors, dressed up in festive or eerie costumes. Those dressed up as zombies may stumble around hungrily crying out “brains, more brains!” This may be the one need which zombies have in common with the leaders of the Detroit Three automobile companies as they go through their own particularly frightening period.
The October 25, 2009 Wall Street Journal article titled How Detroit Drove Into a Ditch gives an assessment of why GM, Ford and Chrysler are struggling and how they might still find their way out of their predicament. Surprisingly, it is not a call for regulation, deregulation, government bailout in the form of developing and building energy efficient vehicles, or even the adoption of lean manufacturing principles across the supply chain. All of those things may be necessary, but not sufficient. Detroit auto firms may not yet be undead, but they hunger for brains:

But to thrive, instead of just survive, Detroit will have to use the brains of its workers instead of just their bodies, and the UAW will have to allow it. Two weeks ago some automation equipment broke down at the Honda factory in Marysville, Ohio, but employees rushed to the scene and devised a temporary solution. There were no negotiations with shop stewards, no parsing of job descriptions. Instead of losing an entire shift of production, Honda lost just 150 cars.
Contrast this to the classic example of labor management conflict cited in the article:
Not terribly long ago, says a Ford manager who must remain unnamed, Ford dispatched a team of welding experts to a factory to explore efficiency moves. The plant’s union leaders, fearing layoffs might result, refused to meet with the team, and the effort came to naught. UAW leaders aren’t bad people; far from it. But when everything is a negotiation, many things don’t get done.
What is most needed is a foundation of mutual trust and respect for people so that people can work together to improve productivity, quality and product innovation without the constant feeling of fear or unfairness that seems to be the tone of the Detroit Three today. Dr. Edwards Deming observed in his book Out of the Crisis:
In Japan when a company has to absorb a sudden economic hardship such as a 25% decline in sales, the sacrificial pecking order is firmly set. First the corporate dividends are cut. Then the salaries and the bonuses of the top management are reduced. Next, management salaries are trimmed from the top to the middle of the hierarchy. Lastly, the rank and file are asked to accept pay cuts or a reduction in the work force through attrition or voluntary discharge.
In the United States we are do almost exactly the opposite. We protect the interests of the executives and shareholders first, even at the expense of tens of thousands of jobs. For what it’s worth, this model seems to have sustained the free market economy for over half a century. Yet a massive experiment is in progress with the U.S. government bailout of between $700 billion and a trillion dollars in the financial and housing sector. It’s a big solution for a big problem. Whether or not such an approach succeeds in building trust between the classes of “management” and “labor” remains to be seen. But without that trust and mutual respect, we may find ourselves at the wrong end of a boom-and-bust cycle in a few decades, relearning the lesson that got Detroit into a ditch: brains, more brains.

---