Monday, March 30, 2009

Why Obama's Auto Plan Will Not Work

See also, Zuma's "LA Daily Blog" for today's story on American Apparel company going bankrupt. The story was picked up by the Wall Street Journal. The company, owned by Downtown L.A.'s biggest real estate landlord, Meruelo Maddux has declared bankruptcy. And Meruelo Maddux was the single biggest campaign contributor to Los Angeles Mayor Antonio Villaragiosa when he was elected in 2005. Click here for story. Inside sources tell Zuma Dogg this story ends like Enron and Bernie Maddoff.

I'm not happy that I feel President Barack Obama's plans to "save" the U.S. auto industry, as announced today, will not be working.

Unfortunatley, Obama's speech merely really drove home how the industry is looking more like the buggy whip, used by horse and buggy drivers.

There are three problems, as I see it:

1.) During this economic slow down, people will not be buying as many cars, anyway. So no matter what you do, people are still not going to be changing their auto buying patterns and running out to new car dealers, because Obama ordered GM and Chrysler to restructure their internal management. But this is not a criticism of the plan itself, just a commentary that the odds are stacked against this in the face of this uncontrollable negative market condition.

2.) It is a lack of innovation that brought us to this point. When the U.S. was the only country manufacturing automobiles, we did fine. But in this global economy, the consumer has voted, and U.S. auto manufactures lose. Peope still feel U.S. auto manufactures have a "quality" problem, as opposed to more efficient Japanese and other international auto makers.

But even if these autos were indeed as "quality" as any other (because Buick is among the "most reliable" cars manufactured anywhere in the world) - in order for a product to take off, there needs to be an
innovative, compelling niche (demand) that is being met.

Unfortunatley, all I heard President Obama say, is that the U.S. was built on the auto manufaturing industry, and all that "heritage/historical" warm and fuzzy talk, that is all well and good. But you can say, "The Los Angeles Forum is a great sports and concert venue. People have grown up attending events at The Forum. The Forum
has provided jobs to thousands over the years. It provides tremendous revenue for the area. Welp, that's all fine and dandy until the Staples Center opened up. No one really shed any tears for Forum workers, management or other related local economic factors.

I DID hear Obama speak of leading the way with clean energy, green cars. And that's a starting point. But that will take years, if not a decade to get those rolling on the streets, in masses. AND, who's to say there is going to be an actual mass conversion from U.S. auto buyers to "green "cars. Which brings us to the most important problem with this plan:

3.) The U.S auto problem (that people aren't buying enough U.S built vehicles) is more than anything, a "marketing strategy" problem. I think it is great the Buick is making one of the most "reliable" cars in the world. But have you seen all those movie posters for the new "Fast and Furious" movie? I don't think people are buying cars on the "reliabilty" factor, alone. Because most of these other cars people are going for are reliable (enough) in their minds, and they aren't thinking, "Hmm, I don't think this (fill in the blank status car) is reliable enough." So it's a marketing problem.

Remember when "Hairbands" dominated the Rock and Roll scene in the 80's. Then Nirvana and "Grunge" rock came out. You could tell the Rainbow to get together with the Viper Room to try and save the "Hairband" industry. But people didn't want "Hairbands" anymore. So you could restructure "Glamrock Records" management staff all you want. You better start making some "Grunge" records, though, first.

U.S. cars are as old and stoggy as the 1950 manufacturing lines that are producing them. If you want to sell more Buicks in the U.S., change the name from "Buick" to something else. And focus on making some small, flashy, low cost, most reliable car (including a "green" version) with some name that sounds hip, like the Phord Phenomenon. And yes, if you wanna start selling Fords again, start spelling it "Phord" with the "Ph" instead of the "F" like "Phat" instead of "Fat."

So to sum it up, in this economic slowdown, when the first thing people can put off buying is a new car, I don't have a lot of faith that this U.S. auto plan is going to be enough to make people decide to jump out of their Hummers, Lexuses, Toyotas and even Hondas and into the best thing the U.S has going for it, a BUICK. (However, in Japan, Buick is the #1 auto-import, so that REALLY shows how it is a marketing problem.

Official Zuma Dogg Website:

See "Interpreting Deming's 14 Points" for more on the topic of what it will take to bring the U.S. out of the crisis.

1 comment:

Allison Tara Sundaram said...

The director of our Lemelson Center for the Study of Invention and Innovation is asking similar questions about the future of American automobiles and innovation on our O Say Can You See blog. He looks for context through our transportation collection, maybe it will inspire you?

Hope you take a look,
Allison Tara Sundaram
National Museum of American History