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.
brains.PNGThe 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.

4 Comments

  1. David Moles

    October 27, 2008 - 6:40 am

    What amazes me is that this dysfunctional situation has continued for a whole generation beyond the point (however you date it — the 1980 Chrysler bailout? The NUMMI joint venture?) it should have become clear to everyone involved just how dysfunctional the situation was.
    (Did you ever read Halberstam’s “The Reckoning”, by the way? If so, what did you think of it?)

  2. Jon Miller

    October 27, 2008 - 5:17 pm

    Sadly David Halberstam seems to have been spot on in his conclusions. The packaging of his message though, like that of Dr. Deming’s, was not appealing to Americans twenty years ago when we still could have heeded it.
    Anyone who reads knows history repeats, empires fall, hubris leads to ruin. Perhaps people building empires are too busy to read… To quote a supposedly well-read bestseller, “Blessed are the meek, for they shall inherit the earth.”

  3. Just_Gerald

    October 29, 2008 - 5:24 am

    Exactly. I have often belaboured the layoff/pay-cut scenario with the companies I have been employed by. Loosing a couple of hundred buck a week when you are making $100,000 doesn’t hurt so much. loosing that when you are only making $15,000 and you soon have to start deciding if you want to eat or be warm (if you are not already asking those questions). I find it hard to believe that the upper echelons of corporate America don’t realize they wouldn’t be where they are without the workers.

  4. Isaac D. Curtis

    October 29, 2008 - 8:56 am

    If people are treated fairly and with respect by the employing company, there is no need for a union. The origin of the word “employ” is closely tied to the word “implicate”, which means “to interweave” or “connect”. A divided organization cannot succeed. Every person is equally important,connected,and relevant. Everything we need to know we learned in Kindergaarten 🙂