Strategic Planners Recommend Actions Regarding US Auto Industry
A Report from the Association for Strategic Planning
February 16, 2009
The Association for Strategic Planning (ASP) released recommendations for specific
actions regarding the future of domestic automobile companies. In light of ongoing
national activities that will decide the fate of this key element of the United States’
economy, these recommendations offer a unique perspective that should be considered by
industry planners and executives as well as by government policy makers.
Based on a survey of its members, ASP’s recommendations address specific steps to
improve the strategic position of this important industry. The process included
developing a set of candidate recommendations and then evaluating these
recommendations across a range of potential effectiveness criteria. According to ASP
President Dr. Stanley Rosen, ASP’s members represent a unique assembly of thousands
of years of combined experience in developing and implementing successful
organizational strategies, and these recommendations represent the collective expertise
and business acumen of the assessment’s participants.
The results of this assessment are depicted graphically in the attachment, which also lists
the full set of proposed recommendations.
The assessment identified recommended actions that are highly regarded in several
dimensions. The strongest endorsement to strengthen the auto industry is that U.S. auto
companies should renegotiate all union contracts, seeking parity with those non-union
facilities in the U.S. that are producing non-US brands (i.e. Toyota, Honda) to
significantly reduce the legacy costs attached to each unit produced and sold. The
assessment’s participants also strongly endorsed this step as one that would also have
high value to taxpayers and strengthen the nation. ASP participants also believe that this
action has a reasonable chance of success.
Another highly rated idea to strengthen the industry is to truly build 'world cars' - cars
that share the exact same sheet metal, the exact same interior components, the exact same
drive train. Past attempts at building world cars were for the most part in name only. One
car built in one plant for worldwide distribution. This would simplify the manufacturing
process and streamline the parts distribution channels. We believe that this idea is only
moderately realistic, however.
The highest rated recommendation for taxpayers, however is that for the next 18 months
anyone purchasing a US car can use pre tax dollars, which can stimulate demand. This
one step also was the second highest rated idea to strengthen the industry, and is believed
to be likely to succeed.
From the standpoint of actions that will specifically strengthen the nation, the second
strongest recommendation is to continue to develop smart technology to evolve to more
efficient gas and other energy sources (since we will continue to have/need gas fueled
vehicles for at least the next 2 decades), and begin marketing to the consumer why they
should buy something other than large, inefficient SUVs and over priced luxury vehicles.
The Association is continuing to identify and evaluate critical steps this industry can take,
including the role of management culture, product styling and quality, and additional
definition of union agreements and relationships.
The complete results of the assessment are available for review, and will be presented at
ASP’s annual conference, to be held in San Diego February 22-24, 2009.
The Association for Strategic Planning is the only not-for-profit professional association
dedicated to advancing thought and practice in strategy development and deployment for
business, non-profit and government organizations. ASP provides opportunities to
explore cutting-edge strategic planning principles and practices that enhance
organizational success and advance members' and organizations' knowledge, capability,
capacity for innovation, and professionalism.
Scales:
X Axis
Y Axis
Size
Color
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Value to Auto Industry (Will this strengthen the industry?)
Value to Taxpayers (Will this strengthen the country?)
Realism (How likely is this to work?)
Specificity (Is it clear what is to be done?)
Issues:
1. Establish alternative unions to represent the labor force,
and let them compete for members and for work. The
best offer would be selected by the employers, and the
union winning the work would be in the best position to
attract members.
2. Ask government to stop overregulating the industry. For
example, overly rigorous CAFE standards may not be
economically achievable.
3. Truly build 'world cars', cars that share the exact same
sheet metal, the exact same interior components, the
exact same drive train. Past attempts at building world
cars were for the most part in name only. One car built
in one plant for worldwide distribution. This would
simplify the manufacturing process and streamline the
parts distribution channels.
4. Renegotiate all union contracts, seeking parity with
those non-union facilities in the US that are producing
non-US brands (i.e. Toyota, Honda) to significantly
reduce the legacy costs attached to each unit produced
/ sold,
5. Disband the unions and find a way to support the
victims who lose their pensions
6. Support the Pickens plan to make new 18 wheelers
powered by natural gas. Natural gas is much cleaner,
much cheaper and the U.S. is the Saudi Arabia of
natural gas. This move will also go a long way towards
making the U.S. energy independent.
7. Address the question: What is the future of
transportation in the US? The US auto companies
should refocus on transportation, not cars and trucks.
This involves imagining what the future of transportation
is going to be (high-speed rail, public transportation that
runs on natural gas or electricity, etc.) and then
designing products for that world (US and other
countries).
8. Significantly reduce the size of the automobile. Studies
of the use of automobiles and the effects of their size on
the people-carrying capacity of streets and highways
have revealed that a two-person vehicle in which the
passenger sat behind the driver would increase the
capacity by about 500 percent. . . . such a vehicle would
alleviate the demand for fuel and reduce air pollution,
both of which were correctly anticipated as constraints
on the industry.
9. Start making transit buses in the U.S.
10. The auto industry needs to cull down the number of
models/choices offered. GM should eliminate all of their
brands except for Chevy & Cadillac. That would allow
them to focus and prune dealerships at the same time.
11. Continue to develop smart technology to evolve to more
efficient gas and other energy sources (we will continue
to have/need gas fueled vehicles for at least the next 2
decades), and begin marketing to the consumer why
they should buy something other than large, inefficient
SUVs and over priced luxury vehicles.
12. Streamline the entire supply chain.
13. Create a unique car and a new brand for the masses,
the people in this country. Call it something like the
'Americans peoples' car' similar to the Volkswagen
Beetle. Market the idea the idea that this car will help
people who are on a tight budget, or even victims of the
economic downturn or they are just smart and ahead of
others, because they prefer to live more economically
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and support green. Furthermore, market the idea that
this car will support the recovery of the US automotive
industry. Most importantly: Make it the cheapest car
ever made and sold in the US! Follow the rationale of
Tata, however, make it a bit hip or attractive. Create a
combination of a cheap Tata car with the features of the
SMART and the Mini. Pay especially attention to safety,
and make it not only fuel-efficient, but even a hybrid.
Additionally, add a technically cool and useful feature to
it, for example a build-in iPod / hands-free phone set / a
simple navigation system or something that has not
been on the market, yet. Build this car in a collaborative
project with all 3 US automakers, using synergies,
reducing costs for the development, reducing time-tomarket etc.
Focus on green in all aspects of the business model,
organization and product line. Use this commitment to
"all things green" to differentiate the industry. Take a
strong unflinching stand. Instead of focusing on short
term returns look to be a leader in pointing the way
towards a sustainable planet. Get out and educate
everyone of the long term impact of this strategy. Scrap
those models not producing significant unit sales, and
make it job #1 to produce the most energy efficient and
environmentally friendly cars and trucks produced,
anywhere.
Expand use of vehicles powered by compressed natural
gas or the adoption of hydrogen fuel cell technology.
Both sources of power are cheap and abundant.
Compress natural gas, in particular, is a viable option
because the nation already has the infrastructure to
deliver the energy source. In every large metropolitan
area and most rural towns exists extensive networks of
gas mains and vertebrae. T. Boone Pickens is right.
Natural gas is clean, abundant and easily accessible
and distributable in the US.
Mobilize to beat Toyota and Honda to the plug-in
hybrid. The future lies with renewables-generated
electricity. Dedicate the resources to develop and
commercialize the (already existing!) technology FAST,
then transition the vast majority of existing models to
plug-in hybrids. Leading will ultimately create
competitiveness, though obviously, this will not happen
overnight.
Historical data should be used to cut production back to
where it was when the demand was the same as it is
today. Five years ago the industry was selling the same
quantity of cars it is selling today and making a profit
and the country viewed the economy as healthy. The
consumer is cutting back and industries must do the
same and the market will correct itself.
The problem with the auto industry "rescue" package is
that is doesn't address the problem low demand, which
is consumers are not buying. For the next 18 months
anyone purchasing a US car can use pre tax dollars.
Guarantee privately offered vehicle warranty insurance.
Offer cash to the public to buy older, polluting vehicles
thereby stimulating demand in exchange for
manufacturers accepting lower vehicle CO2 emissions
targets.
21. If customers are having trouble borrowing money to
purchase autos, the manufacturers should leverage
their lending business to provide credit to buyers.
Captive finance companies require innovative products
and credit policies to account for consumers who have
successfully rehabilitated their financial situation, but
whose credit record still remains scarred from the
mortgage loan debacle. Credit policies that can account
for the 'assignable cause' of the variant credit rating
while employing comprehensive debt service analysis
can assist US auto makers in stimulating real demand
for their vehicles.
22. Establish profit sharing with the government and
individual investors in the most efficient product
initiatives.
23. Government funds should be made available to
facilitate industry transition (in return for equity), and
should be offered to all qualified companies (including
e.g. Tesla). Companies demonstrating best market
acceptance and profitability would receive follow-on
tranches. The Government would eventually sell its
shares on the market.
24. Leverage and partner with education reform initiatives
to provide transferable skills training to displaced auto
workers; help them find new jobs and careers. Give
them financial help to buy some time to adjust their lives
to a new economic level. Help with refinancing
mortgages. Work with the vendors and industries who
will be impacted to retool their purpose and find new
customers.
25. Ask government to stop overregulating the industry. For
example, overly rigorous CAFE standards may not be
economically achievable.
26. Perhaps the place to start is to ask a few questions:
1)what is the primary objective? To preserve jobs in the
US? To preserve US ownership of manufacturers? To
make sure we don't abandon owners of cars already
purchased? To bail out incompetent managers? 2) If
the companies were to disappear, what in the fallout
and how can that be minimized to employees, retirees,
past customers? 3)What is the appropriate level of
support to those who are "victims" in this crisis, and all
the others (housing, investment fund loses, etc.).
27. The three major auto companies (Ford, GM, and
Chrysler) should be merged into one company to be
called "US Auto." Eliminate duplicate manufacturing
facilities and executive jobs. Utilize as many standard
components as possible to greatly reduce repair costs.
28. Let the industry die a dignified death and focus on
emerging industries where the USA clearly has
competitive advantages. We were great once and we
won't be again. And, yes, this change means dealing
with some sacred cows, including political self-interest
and education system reform.
29. Form new public companies that can manufacture
innovative vehicles (perhaps for current companies'
designers) using modern methods and processes
(including management and labor processes), and
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transfer the workforce to these new entities. Start over
with systems thinking people and theory y leadership
team and build it from the ground up. If you can't figure
out what to do, look at Toyota. Their performance
measures are stunning. It's time to finally learn what a
Lean Culture really is (hint, it's not just about the
processes).
Implement a pre-packaged bankruptcy with the
government providing extended unemployment benefits
and covering healthcare costs for laid off workers. A fire
sale to the foreign manufacturers already manufacturing
cars in the US is probably the most efficient and logical
step of all.
Use the power of the auto industry to get behind a
sensible national health insurance program.
The government should support a transition (esp of the
blameless workers) to alternative energy sources and
means of transportation, both growing sectors.
Co-create cars models with customers. Or develop
innovative ways to let auto buyers configure the
vehicles they purchase, working with experts at the
dealerships or online. Use the computer to decimate the
time to manufacture and deliver.