Monday, October 31, 2005

What would Carlos do?

By John McCormick / Autos Insider

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Are Detroit's big two facing an inexorable slide downhill or re-tooling for a dramatic comeback? This glass half empty/half full debate is keeping the automotive media pundits hopping, many of them all too willing to share their own prescriptions for reviving the patients.

Meaningful analysis of the issues facing General Motors Corp. and Ford Motor Co. depends on one's perspective. Will better cars and trucks alone solve these companies' problems? 'It's all about the product' has recently become the most over-worked refrain in our industry. Of course, product is critical - how could anyone in their right mind think otherwise?

Some argue the biggest concerns are the legacy labor and pension costs that burden Motown manufacturers. Radical restructuring, they say, is needed by Ford and GM in order to meet the market reality and to be competitive. The old strategy of expanding one's way out of trouble, the approach previously employed at Delphi, for example, is no longer feasible, if it ever was.

Spend time with financial analysts and the focus centers on management. Do GM and Ford have the leadership required to pull these companies out of their current predicaments?

The thinking goes like this. GM's upper management; Pros: Smart, experienced, stable, product-savvy team. Cons: Apparent reluctance to make more fundamental structural changes. Ford's upper management; Pros: Ford family commitment to saving the company. Cons: Family inexperience, debilitating management turnover, uneven product expertise at the highest levels.

Given these observations, some industry watchers are more concerned about Ford's ability to stage a successful recovery than they are about GM.

The 'who could save Detroit?' discussion often produces two names: Dieter Zetsche, who shrewdly brought Chrysler Group back from the brink, and Carlos Ghosn, the architect of the near-miraculous Nissan turnaround.

It's indicative of the depth of crisis at Ford that Bill Ford reportedly has approached both these recovery experts to tackle the job in Dearborn.

Ultimately, the ability of GM and Ford to dig themselves out of trouble will depend upon not just the personalities involved, but on a clear recognition of the problems faced, as well as an ambitious but feasible recovery plan. This is basically the approach undertaken by Ghosn at Nissan six years ago; analyze the challenges, make sure everyone inside the company recognizes the issues (no easy task) and then set clearly defined goals (in Nissan's case, the elimination of debt, one million extra sales and an industry leading profit margin - all since accomplished).

One of Ghosn's must-dos: develop attractive, fun to drive new vehicles, which with a few exceptions, Nissan has done. Good product, Ghosn said at the time, can save any automaker.

At GM and Ford, there are strong hints of product excellence, such as the Chevrolet Corvette, Pontiac Solstice and Ford Mustang, and there are compelling cars in the pipeline, especially from GM. The problem is that today, many of these two companies' mainstream models are not the runaway, uncompromised market hits they need to be.

With 2006 in sight, Motown's biggest need to make good on their familiar 'just wait until next year' promise of 'great' new cars and trucks, or even the most ardent believers will start to lose faith.

John McCormick is a columnist for Autos Insider and can be reached at jmccormick@detnews.com