Challenge: Keep Detroit from Dying
- Thread starter Emperor Norton I
- Start date
Have an early corporate raider á la Danny de Vito in Other Peoples Money try to take over one of the three big. Either he succeeds and can start improving the organisation, drop the "not invented here"-mentality and diversify the company, forcing the other two to follow. Or he fails, and then reveals how badly run the auto industry is, forcing them to improve.
The decline of the US car manufacturers in the 1970s, '80s and '90s had 2 major factors.
- They had an outdated model range by no later than the mid to late 1970s and it took them too long to update it (the first real improvement being the Ford Taurus) opening large windows of opportunities for non-US competitors.
- Ford and GM did not make good use of their european divisions (Ford Europe and Opel / Vauxhall) even though both had the models the US market was waiting for. Why did Ford spend a fortune to develop the Taurus when Ford Europe had developped a virtually identical car with the Scorpio, why was the Opel Omega A / Vauxhall Carlton not used as a basis for mid size models for the different GM divisions.
Ford Taurus 1. generation
Ford Scorpio 1. generation
- US cars were known for their abysmal build quality in that period so that the only reason to buy US cars was their value-for-money-ratio forcing US car manufacturers to sell their products at bargain prices thus further narrowing the operational profits available for future R&D thus further delaying necessary model range updates.
- They had an outdated model range by no later than the mid to late 1970s and it took them too long to update it (the first real improvement being the Ford Taurus) opening large windows of opportunities for non-US competitors.
- Ford and GM did not make good use of their european divisions (Ford Europe and Opel / Vauxhall) even though both had the models the US market was waiting for. Why did Ford spend a fortune to develop the Taurus when Ford Europe had developped a virtually identical car with the Scorpio, why was the Opel Omega A / Vauxhall Carlton not used as a basis for mid size models for the different GM divisions.
Ford Taurus 1. generation
Ford Scorpio 1. generation
- US cars were known for their abysmal build quality in that period so that the only reason to buy US cars was their value-for-money-ratio forcing US car manufacturers to sell their products at bargain prices thus further narrowing the operational profits available for future R&D thus further delaying necessary model range updates.
UrbanRedneck
Banned
It wasnt just Japans cars. Where was Detroits response to the Volkswagen Beatle and the VW van the hippies loved?
One of the major factors that I can recall from studying them a little at university a couple of years back was that as others have mentioned they didn't listen to their customers and what they wanted. One classic example that I can remember was that even ten years or so back when dealing with their dealership customers they were still doing it how it had always been done since that's how they'd always done it. This meant that the dealers had to take set numbers of different models they were given with little if any thought to local variation so large backlogs of unsold cars could occur, as opposed to other manufacturers that looked at the sales data to tailor what models were sent where and allowed the dealers much more say. Even when the problem had been identified and IT systems proposed to help increase their customer responsiveness the reaction from senior managers was fairly lukewarm, at best a "Well we might look into that" rather than jump on it as fast as possible.
the irony of course is that both Ford and GM potentially had the vehicles there and ready to go with their European Products
if the US car makers had hit back against the VW Beetle with the more sophisticated products of the their 1960s / early 1970s European Divisions ...
BlairWitch749
Banned
This is sort of what I had in mind with ~shake up in the 80's~. Detroit had a hothouse atmosphere for decades with too little outside and consumer input and their financial managers were idiots.
Any of the big three at various points would have been ripe leveraged buyout targets for a Warren Buffet/Carl Ichan/Mitt Romney style take over; who would promptly and permanently change the business models of the company
Warren Buffet could have directly bought ford in the early 80's outright; but that may not fit as his history was to buy successful companies in receivership (on the inherritance tax) or just strait buy successful companies; and Ford in the early 80's wasn't that; also his management style after purchase often involves leaving the companies alone to handle their own affairs (more or less) which wouldn't be the sort of big ticket change we are looking for
You could have a Bain Capital leveraged buyout around 1986 and still do it. I don't think it would even have to involve a hostile takeover; the ford family was very unpopular at this point due to loss of market share; and Mitt Romney has a lineage with the auto industry which would at least to start make him a potentially popular new owner. This would be sort of an ideal time since it's during the height of the Reagan economic boom, and it was open season on the unions
Bain, not bound to the hothouse atmosphere could shut down mercury much earlier (as this was wasted duplicative effort) and shift the funds to R&D and marketing; they can also approach the next round of worker negotiations from a position of strength with tacit support from the administration to scab out any strikes until they secure a more favorable salary and benefit structure giving them a lower cost basis than GM and Chrysler and put themselves more inline with the input/output costs of Toyota and Honda; there would likely be immediate studies of dealership inventories and it would be discovered that orders were not being submitted on need which would be quickly rectified which would reduce the need to offer so many incentives/price slashings. Bain would also not be afraid to close/revoke license from unprofitable dealerships and instead focus on good pricing/volume from a smaller number of mega dealerships
Would this garuantee success? Most certainly not; but it's hard to picture that coming out worse than OTL
multiple brands is something to consider / address in changing things
'rest of the world' GM operates with one or two brands in a territory
e.g. Europe - Uk Opel ( alone for much of the 1980s) and then Daewoo/ Chevrolet as the budget brand
UK - Opel products of the 1980s badged as Vauxhall ( apart from the Manta and Monza - placing Opel as a niceh 'sports' brand) then 1990s onwards Vauxhall and Daewoo/ Chevrolet
Aus /NZ Holden branded Opel products and the range topped with the local Commodore/ Monarp ( which is then exported to Europe in limited numbers and badged as a Vauxhall / Opel to replace the Senator ) then Daewoo/ chev as a budget brand
outside the US - who actually runs a multi brand strategy successfully ?
Volkswagen group ...
Ford in Europe's millenial flirtation with multiple brands fails and sees Jaguar- Land Rover sold off to Tata and Volvo sold off to the Chinese
'rest of the world' GM operates with one or two brands in a territory
e.g. Europe - Uk Opel ( alone for much of the 1980s) and then Daewoo/ Chevrolet as the budget brand
UK - Opel products of the 1980s badged as Vauxhall ( apart from the Manta and Monza - placing Opel as a niceh 'sports' brand) then 1990s onwards Vauxhall and Daewoo/ Chevrolet
Aus /NZ Holden branded Opel products and the range topped with the local Commodore/ Monarp ( which is then exported to Europe in limited numbers and badged as a Vauxhall / Opel to replace the Senator ) then Daewoo/ chev as a budget brand
outside the US - who actually runs a multi brand strategy successfully ?
Volkswagen group ...
Ford in Europe's millenial flirtation with multiple brands fails and sees Jaguar- Land Rover sold off to Tata and Volvo sold off to the Chinese
Boeing was well established in the Pacific NW by the time WWII comes around. I don't think they'd move, and more to the point it would devastate Seattle in the process.
The Corporate Raiders of the 1980s didn't exactly do wonders for a lot of the companies they took over. With Ford's financial problems in the 1980s, a corporate raider is the last thing one wants with a car company, as they would see the (very profitable) parts enterprises as an asset but the development of new cars as a liability. You all know of what happened to Eastern Air Lines. Imagine that happening with Ford and its 400,000 jobs in the 1980s. Eeep.
I'm not sure I'd jump to this conclusion. Detroit's range of products on offer in the 1970s was far more extensive than the Japanese at the time, and while the problems of updating is correct there are a number of other factors, namely the fact that Detroit compacts of the early 70s were terrible - the Chevrolet Vega and its biodegradable engines, the heavy, overweight and ugly AMC Gremlin, the abysmally badly-built small Chryslers of the time and the Ford Pinto and its infamous exploding gas tanks. The crap from Detroit gave the Japanese an opening, and helping that was the fact that the Japanese yen at the time was worth about third of what it is now, which meant that you could well-compensate dealers and still sell the cars at a competitive price. Also unlike Detroit, the Japanese didn't tend to offer everything as extra-cost options to pad profits.
The Scorpio and its smaller sibling the Sierra were sold in America under the Merkur nameplate, and they didn't sell well at all, while they look similar that's the extent of the similarities - the Scorpio and Taurus are very different cars underneath. The main problem there was that as a vehicle, the Taurus was the better one for the North American market in Ford's mind. I wouldn't bother with the Scorpio in North America (hell, a better idea might be to make the Taurus with better suspension and engines and sell it in Europe) but I would bring the Sierra here instead of the POS Tempo. The Escort was as good as could be expected at the time.
As for GM, the Cavalier could have been a much better car right from the start if GM had listened to its engineers and fitted it with modern engines. GM's engineers wanted to build the Cavalier with the Opel / Vauxhall Family Two engines, which would have given the Cavalier 110 horsepower (instead of 85 it came with in 1982) and much better performance. The Cavalier should have also been built with the better suspension (that was offered as an option) and four-wheel disc brakes (also an option). General Motors figured out its problem with awful build quality but the late 1970s, so an 80s shakeup isn't gonna make that much difference here.
That was a problem, but its worth pointing out that GM never had a problem making profit in the 1970s. Ford and Chrysler did, because of poorly-designed and poorly-engineered cars in both cases and in the case of Chrysler because of a truly-misguided 'sales bank' idea intended to boost Chrysler's sales and stock prices - and idea that was one of the root causes of their 1979 bankruptcy.
The first response to them was the Ford Falcon, Plymouth Valiant and Chevrolet Corvair. The Corvair even came with a van version. And to be honest, VW Beetle's weren't shining examples of great cars. Bombproof mechanicals and fabrication, sure. But their heating systems were awful, it didn't get particularly good fuel mileage and it's handling at higher speeds could be dangerous. The Corvair in particular, as a car, buried the Beetle alive. It was just that the VW became a counterculture symbol and the Corvair got cursed by Ralph Nader and his fraud of a book.
This is 100% true. GM is still quite bad for this today, though Ford and Chrysler appear to have learned their lesson on this.
The cars from Europe in the 1960s and 1970s weren't always good. Opel's Ascona would have been a definite improvement on the Vega in handling, but the Vega could have been much better in its own right. Ford was better off for this, but even their European offerings in the 1960s and 1970s weren't always that good. Detroit really needed to make better stuff across the board to fight back against the Japanese and the Europeans brawling to get their markets back.
The main reason for this was because General Motors, at its highest point (1982) controlled over 62% of the American car market. That's why they had many different brands, a leftover from the decades of expanding the model range to allow customers to trade up as their incomes improved and their needs changed. Volkswagen does this as well as you point out, but its not working right now - their SEAT and Skoda divisions right now are running huge losses, and VW itself is only a little better than break-even. The only VAG division making real money is Audi. GM could stand to minimize the number of divisions, I agree - personally I'd narrow it to Chevrolet, Pontiac, Cadillac and GMC and toss the rest.
On that we agree.
I can see it coming out much worse than OTL. The list of companies destroyed by the guys you mentioned is extremely long. If they had taken over one of the big Three in the 1980s, I'd wager money that company would not exist now - it would have been broken up and sold off. Buffett I can see doing better, but his largest acquisition ever (in 2010) was the $26 Billion takeover the Burlington Northern Santa Fe railroad, and that kind of money is nowhere near enough to buy a Detroit automakers. There is a good reason why when Kirk Kerkorian showed up to make buyout bids for Chrysler in the mid 1990s and GM ten years later that the company in both cases fought the bids bitterly.
Tearing down the unions as you say is going to end up with humongous strikes in the mid 1980s - we're talking strikes that cripple the company here. Scabbing out strikes will result in at the very least huge lawsuits, at worst dead bodies and damaged plants, and in both cases an abysmal PR disaster. (That's not a joke. I know of one case of a man who set up a Nissan dealer in Metro Detroit who made the mistake of driving past a strike picket line. He was dragged from his car and beaten half to death.) The UAW gave GM what they wanted in 1982 and it came back to bite them in the ass big time, leading the members kicking out the boss of the UAW at the time in 1984 and two years later to a major split between the UAW and the Canadian Auto Workers union. Considering Detroit's problems with assembly quality, having the labor force go militant on you is the last thing you want. Shuttering dealerships is also quite hard because of state and federal laws on franchises, as all three Detroit automakers discovered in the last few years. Getting a lower cost to Toyota and Honda requires America getting its health care system in order, because by the 1980s this was one of their biggest costs, one which the import makers didn't have to pay at all because most of their nations had UHC by the 1980s. Get UHC for the United States and you can make that point real, but if you can't get that then the idea of knocking costs down the level of the imports requires either enourmous salary cutbacks (possible but in the 1980s highly unlikely) or huge cuts in the cost of parts, and either way causes huge problems with vehicle quality.
What GM needs is better environmental conditions for the business (i.e. the health care issue solved most of all) and better management. If they can get those, the UAW will see the light at the end of the tunnel and go along, and Detroit will be able to move forward more smoothly.
the Sierra and Scorpio sold in the US were European built captive imports , the US Escort of the 1980s was not the world car that Ford Claimed the Front wheel drive Escort would have been - so the costs were higher when import completely built up Sierras and Scorpios from Europe than if the plants stateside where producing them
if the Escort, Sierra and Taurus/ Scorpio had been three series of true 'world cars' with te the principal differences for different legislatures being the extent of emissions equipment and the different fetishes over lighting around the world then it would have been a different kettle of fish
as would the US J-cars having the Opel Family 2 engine that did the Cavalier mk2/ Ascona Cavalier3 / Vectra A so well in Europe
ditto for the derivatives of the Astra 2/ Kadett
That's what myself and other posters have been thinking. How hard would it be to have one of the car companies diversify outside of cars or even have non-car industries move into Detroit?
I don't think that's avoidable unless you want to figure out how to turn the four automakers that existed in America in 1973 into six or seven, and I haven't a clue how you do that with a POD after about 1920. Adding to that, all of the American auto industry was based in Detroit anyways, extra car companies probably would as well just to be near the competition and all of the parts manufacturers.
That's true, but its also worth pointing out the local conditions. The Scorpio was meant as an executive car in the mold of the BMW 3 Series. The Taurus was meant as an everyday sedan. I think the gap can be bridged between them, but building Scorpios or Grenadas stateside isn't gonna replace the need for a Taurus.
Agreed, and really, they should have been. The Taurus tuned first as a European executive car and then made to work as a North America mid-sizer would be, if it could be done correctly, a huge game changer. The Escort began the design stage as a common car for both markets, but at the time US laws on safety and emissions were tougher than their European counterparts, a situation that did not change until the mid 90s. That was why the Escort wound up different in North America and Europe. It's not coincidence that the when said regulations were effectively harmonized in the 1990s, Ford replaced the Escort with the Focus, which pretty much was the same car in both sides of the Atlantic.
Truthfully, the third-generation Opel Kadett and the Chevrolet Chevette were almost identical underneath, differing only in body style - and the Chevette was an utter piece of shit that damaged GM's reputation as bad as the Vega did, and hammered home the point that Detroit couldn't build good small cars. If you haven't massively improved it, keep the Kadett out until the Kadett E in the early 1980s.
As for the Cavalier, GM's goal on that one was to knock the Honda Accord down to size. That didn't work, namely because it was underpowered and overpriced, and did not match the Accord's build quality. (Mind you, it was a damn sight better than GM had done before.) The Cavalier proved to be a pretty solid little car, but it should have been that way from the start had GM's management morons listened to their engineers.
The reality with American cars in general is that they tend to have better body fabrication than many imports do, and as a result they don't rust as easily. The parts put together inside, in most cases, were crap. That was part GM's fault and part poor suppliers. The story of the development of the Cavalier was followed closely and written up by Brock Yates in the early 1980s, and by his account GM was bent on getting it right the first time, giving suppliers hell in not a few cases for shoddy quality parts. The problem was that after so long where quality didn't matter as much as unit cost, Detroit and its suppliers didn't give a damn a lot of the time, and their workforce wasn't a help.
size wise the 1980s BMW 3 series ( E21s or E30) was really rather small ( sized between the Escort / Astra and Cavalier/ Sierra) although it did kick start the idea of premium cars in much of Europe.
the Granada / Scorpio on a size basis was more like the E28 5 series
the Granada/ Scorpio and the Opel Rekord E / Vauxhall Carlton and the Omega A successors are in what is now a funny segment of the European market of the 'none premium large car' - but at the time were seen as 'executive' prior to the premium push by Audi . BMW and Mercedes
this is pretty much the scenario that needs to be reconciled certainly a common Sierra and Taurus / Scorpio/ Granada could have been achieved , it would have been interesting if the Sierra was the big push for the 'World car' especially given it;s conservative by European standards underpinnings ( with longitudinal engine and rear drive and the engine range overlapping almost completely with the Scorpio the 'top' engine in each being derivatives of the Cologne V6 at around 3 litres
if you take the same strategy as discussed for Ford, GM bringing in 'European ' type J cars is the time frame ofthe Astra mk 1 / Kadett D i.e. the front wheel drive car that shared much of it;s drive train with the European J cars
although it;s rather later an interesting thing with regard to interiors is to compare the way in which the Omega B was Caddyfied in to the Catera , rather than GM 'doing a Merkur' and importing it as the Opel Omega with a european style choice of interior trim ...
it could have been the Volvo V70 but earlier - given the Omega B was the European traffic cop car of choice before the V70 t5
FDW
Banned
I've pointed that out, avoid the Second World War. The Second World War, and the economic boom that it created after the war was what turned Detroit into such a hothouse that eventually collapsed from it's own weight. If you avoid it, you might very well see foreign competition from the undamaged European Industry, which would keep the pressure on Detroit and force it to use it's resources more smartly. By having Detroit somewhat smaller and less dominant, you'll also end up with a fall (that will come in some form) that will also be smaller and less debilitating.
how about earlier gas crisis. We allow Britain and France to invade Egypt in 1957 during the Suez Crisis. Conflict in middle east, reduces the amount of oil coming from there and the Car makers have to start building more Fuel efficient cars by 1960's. The Big Three are then in better shape to deal with the 70's and 80's and will do better than in the OTL.
Would that effect US cars though? I thought the US was operating mostly on New World rather than Mideast oil until the '70s?
Is there any way Detoit could stay a major force in the music industry, could that help?