While You Were Sleeping
Nov 24th, 2006 by Don Ray
You have probably seen the movie “While You Were Sleeping” with Sandra Bullock. In it she has an infatuation with Peter Gallagher and in the initial part of the move he falls on a train track and enters a coma. Through some convoluted movie magic, Peter’s family thinks Sandra is Peter’s fiancée and a wedding is planned.
While he is in his coma, Sandra falls in love with his brother, Bill Pullman. In the end the truth comes out and Sandra winds up marrying Pullman. Some where toward the end of the movie, Peter asks Sandra when she fell in love with his brother and she replied, “While you were sleeping”.
Well an automotive parallel is taking place. During my lifetime I have seen the American automotive industry loose its leadership position. The Japanese entered the race after WWII and have moved into the recognized position of the “Quality” leader in the world’s automobile production.
Meanwhile, Korea has been making strong inroads into the market and now is a serious competitor of the US and Japanese cars. Well don’t fall asleep because here comes the Chinese.
What it took the Japanese to do in several generations, the Koreans have done in half the time. I won’t be surprised to see the Chinese reduce that time frame once again. The Japanese and US manufacturers are investing heavily in China since it is the last frontier of cheap manufacturing labor.
The photo at the start of this post is two cars at the 2006 Beijing Auto Show. On the left is the Hyundai Santa Fe. On the right is the Chinese Huanghai. From what I read, it looks like the Hyundai in the front and the Kia Sorrento from the side. I think it is interesting that this Chinese company is stealing its designs from two Korean companies and not from Japanese companies or US.
I am afraid that in another 10 to 15 years we are going to be driving in our Huanghai and the passenger on the right will turn and ask the driver, “When did the Chinese become the car manufacturing king of the world?” The driver will look back and say, “While you were sleeping.”
If you want to see some of the exhibitioners at the show go to this link. You may be surprised when you open some of the Chinese companies’ icons and see what is being produced. http://www.china-autoshow.com/en/Factory.aspx
You seem so calm about this. About 20 or so years ago, I lived in Michigan where the economy of so many towns was tied to the auto industry. This was before Honda and Toyota and the like started building cars here. Everyone held their collective breath whenever a plant or parts manufacturer closed or moved south of the border.
I was quite surprised to see Buick, Chevy, and Cadillac at the China auto show you linked to. I almost half expected to see Oldsmobile resurrected in China. Heh.
I don’t know what else to say.
Well the handwriting is on the wall. And sending jobs outside the US is not going to solve the problem. The average US worker needs to understand what they are up against and both management and line worker will have to solve the productivity and quality issues. Then engineering is going to have to get aggressive to build what the buying public want.
Without the proper strategy, I can see the possibility of the death knoll of the US Car manufacturers in the not too distant future. Many Chinese cars are already being sold in the Latin American countries.
I am calm because here I am strictly a consumer. I have no family that depends on the US auto industry for existence. So I will simply buy what is the most economical and well built for my needs. Here in Panama the Japanese are in first place. If the quality control and dealer support improves then the Koreans could move into second here.
I have to agree 100% with you Don. Your comments are right on target. Even though my brother works for GM, I refuse to buy a GM car outside the U.S. first, because the cars they send to Latin America doesn´t comply with the American Standards, second, the price vs value of the Japanese cars is much higher, third, the local dealers of American cars lack the equipment, specialized labor and parts to give quality post-sale service.
You recall the USA automakers made some of the best cars ever in 1955, 1956, 1957 then in 1959 the quality were down hill. Remember what a dud the 1959 Chevy was. One problem the USA auto makers have is they were too generous with their health care benefits. Ford claims their health care cost input per car is more than what they spend for steel.
Lilia, thanks for the comment. The world is a changing.
John, the health care issue is one that the American worker needs to understand. If the prices don’t get competitive for the price the cars won’t sell and they won’t any health care without jobs. Thanks for stopping in.
Hi Don:
What a great post. I’ve read it three times and probably read again a few times more. As you know, I’m an Administrator and your remarks are accurate. It’s a different world and people will buy what is good for them, regardless of its origin.
I also see China as a very strong world competitor in almost anything. You name it–they’ve got it at a very good quality and competitive price. India is very close by.
Best Regards,
Omar.-
Hi Omar. Thanks for your comment. For cars, I think the main thing against them for some time will be distribution and service. Those things can be solved. The first Toyota I bought in 1967 was pretty sorry. Look at Toyota now.
How come nobody mentions the “UNION” word? The American auto industry will NEVER be successful until ALL Unions are eliminated from the Auto Industry! There is a study that has estimated that there is, at least $1500- $2500 added to each American vehicle sticker price, just to cover Union and Benefits packages of Union Auto workers! Not to mention the ALWAYS on going contentious relationship between Management and Workers. Management can’t do anything until the Unions OK it!
A large portion of that cost is health care and many companies are dropping employee health care packages. However, I don’t believe that the price is the reason for the US cars not selling as well. I think it is that they aren’t building the best cars.
I disagree: The buck is the bottom line always has been always will be. There was once a quality issue with Americana cars, but now that management forced quality control down the throat of Union Hacks about 10 years ago, with robotics American cars have just as good quality as foreign vehicles…hell Toyota had one of the biggest recalls of all auto makers this year! Quality is not a problem…its price!
Well I guess on this one we will disagree. Yugo had the cheapest car on the market and it is no longer there. Toyota may have had a recall, all manufacturers do, but Toyota still has a higher quality rating than any US car.
I grant you that price is important, but if the quality isn’t there, buyers will move to the car that lasts the longest.
I echo with Don about the importance of quality versus price. BMWs aren’t exactly cheap but they have a strong demand because of its high quality.
In Panama, American cars are almost non-existent–they have been bumped by Japanese and Korean automobiles. Quality is the main reason why they have dominated the market.
I for one, will buy a Nissan or Toyota over a GM or Ford automobile because it gives me more bang for the buck. This is a lesson the American automobile industry has to learn. I’m afraid it’s a little too late. Ford is having trouble drying the red ink and General Motors is having similar problems. We all know what happened to Chrysler.
Just my two cents on this interesting topic.
Regards,
Omar.-
Thanks for staying tuned in to the other comments Omar. The problem also is when you lose consumers confidence, even when you add the quality, it will take time to regain the buyers.
Well I guess the “Walmart” business model was a complete failure then? I guess I’m all screwed up because when I shop for a new vehicle I look at “Resale Value”. Example, I own a Jeep Wrangler ask any mechanic they call them “Cheep”…tell you what they have a real following and GREAT resale. Another “Harley Davidson” one of the worst over hyped pieces of JUNK…but tremendous RESALE value!
Now you are comparing apples and oranges. When you look at Walmart most of the products are relatively inexpensive. I could care less if I buy a coffee pot for a few bucks and have to replace it in a couple of years. That is a lot different than buying a automobile costing 10s of thousands of dollars.
If you look at resale values, here is what Motor Trend, Car and Driver and Road and Track reported for 2006:
Forbes Automotive says this:
How many US cars did you count in the positive lists?
Harley Davidson is a cult motorcycle. People buy them because they like the leather jackets.
I see my jeep wrangler…all I’m saying is that American car manufactures have made significant strides in quality control…I can find statistics to prove that American cars have had less Recalls on average recently and are equal footing with the Japaneses no better no worse…sure you can cherry pick individual models to bash, but recalls are the “real” tale of the tape! I myself won’t buy any American cars simply because I get better “Bang for the Buck” with a Non-Union Japanese car. Twice as many features and gadgets for a slightly lower price, end of story.
Many of the leading Japanese cars that are being bought in the US are being built in the US. I think now, that more of the Japanese cars are produced outside of Japan than are produced inside Japan.
But you are correct that they are not being built by union workers.
Down with the Unions!
Back in the days when I was busy worshipping the Bitch Goddess of Commerce, I took a failed distribution concept that was producing $36,000.00/year in gross sales and single handedly turned it into a multi-million $/year profitable success.
The application of two concepts helped me to do that.
One was’What do they want and why do they want it ?’
The other, which I got from our district manager, was, ‘ Whenever U buy something, there are three
considerations – price, quality and service. Pick your favorite two, you’ll never find all three in the same package.’
Toyota realized this and therefoe in each recent year has bottom lined more profit than the COMBINED General Motors, Ford and Chrysler/Mercedes corresponding conglomerate annual profit.
Here’s an interesting read on what China is up to.
http://tinyurl.com/y4bflk
Allen McDonald, El Galloviejo®
Hi Allen. That was a good article you attached. The Chinese are definitely coming to play!