jonsimon wrote:
Ford is not failing because of "branding". That's preposterous. I have heard three persuasive contributing factors to the failures of the big three, and keep in mind, these come from very near Ford's heart.
1. Unions. The big three have continually manipulated the UAW in an attempt to financially damage each other over the past years. One of the three changes their pricing and uses the UAW to force the other two to do the same, meanwhile the other two repeat the process in another area. The end result is a trust-like non-competition agreement between the three companies, essentially regulating pricing between the big three. This is all fine and dandy for them, and an easy out from anti-trust laws until the forgein market peeks in. Because they are not involved in this labor love-triangle, companies like toyota and honda aren't subject to the non-competition agreement and vastly out-compete the big three while each of the three is individually powerless to do anything about it.
2. Pensions. The current pension plan is, and always was, unsupportable. But even when advised from within not to adopt the policy, the inbred management did it anyway. Which brings us to point three.
3. Inbred management. Each generation of managment is taught that exactly what their predecessors did before them was the only way to manage well. As a result, the managment is incapable. Likewise, the Ford family itself is rather incapable, greedy, and altogether uncaring about the health of the company outside of their stock portfolios.
Professor, I agree with your assessment that the union and increased costs are a liability, but they merely limit the companies in some areas.
GM launched a price war three years ago which is still going on, which is responsible for killing most of the profit. This means your idea of price fixing is false.
I also disagree with #3. The companies have felt global pressure since the seventies...you believe they have never changed? What Bill Ford is doing is a complete strategic reversal of the past...
However, since we are talking about the big three:
GM is leading the industry in many areas...it's a complete different animal than Ford. The unions are responsible for GM's weakness via employee dissatisfaction & work stoppages. This is not price fixing. Retirement costs are an issue because the money is leaving the company instead of becoming engineering, but don't forget that GM has the largest share worldwide. It also has a brighter future than the others because the business model adapts faster and progressive engineering is being pursued. Plus it has the largest share because it has good brands.
Dail-Chrysler bet on hydrogen instead of hybrid and is playing catch up in that department. It's in better shape than Ford & GM in the union department, but its playing catchup in terms of market penetration in different parts of the world. Ultimately it needs to decide to press forward with hydrogen for the win, with a hybrid car as a hedge bet.
But here's the failure - Ford. Bill Ford is focusing the company on selling less cars for more money. He's reengineering the hell out of his cars. He now will be focusing on copying as a follower, instead of what Ford has done in the past - innovation. Reengineering & copying is a dangerous road - because usually reengineering means more fixed cost...and copying usually means constant change. His fixed costs are going to kill him...
My bet is GM & Chrysler will have a different fate than Ford.
But I still stand by branding - because this is a highly engineered product. This means your corporate strategy is engineered directly into the product. If you don't have a clear corporate strategy, and it doesn't translate into a strong brand strategy to the market...you are screwed.
So, why are the American brands lagging? Well, GM is doing quite well in the emmisions department...I think it's leading. Ford is doing pretty well with hybrids. And Chrysler entered a donkey in a horse race.
As far as the other companies:
Toyota's strategy is focused on servicing the United States, but the engineering cycle is faster. Hyundai is also being Toyota better than Toyota. Honda got left behind in the hybrid race, but the company's reputation is to provide quality, even if boring. Plus Honda's business model is what reinforces the dedication for quality.
As far as the other automakers...I haven't thought much about them because they are usually in alliances with the others.
So, you didn't understand what I meant by branding. The brand drives sales, and highly engineered products have the company strategy engineered in. You're focused on costs which will limit strategic options, but they don't make it impossible. Plus the US auto industry actually is doing some interesting things that do not fit into the "stubborn, money grubbing & inbred" category.