The Mighty Are Falling
The mighty are falling. Dave Ortiz can’t hit. General Motors is in bankruptcy. Will either recover? Well, if they don’t it won’t be for a lack of advice. Guys whose hitting couldn’t get them past little league can be heard on sports radio advising Big Papi how to get back into the heart of the batting order. Meanwhile, people who never looked under the hood are full of advice to the company of which it was once said, “General Motors has no bad years, only good years and better years.”
I am at a loss of advice for the slugger who brought two pennants to Boston. Dave’s troubles remind me of the ignoble end of the Babe’s fabled career. Gods who bring us such joy by playing the game as we dreamed it in our youth shouldn’t be discarded like a dixie cups when age knocks them off Olympus. Why can’t they be put out to stud like race horses? It would be comforting to us fans to know that their retirement was felicitous and we could look forward to seeing their offspring in future contests.
I know a little bit more about cars then baseball. I have owned about 30, an almost even number of American and imported. I have also owned a number of motorcycles and was, for a brief period of time, a BMW Motorcycle Dealer. My degree from motorcycle mechanic school hangs next to my law degree and is an equal source of pride.
This somewhat unique perspective leads me to qualify most of the reasons being advanced for GM’s fall. The acute problems of the last ten years usually cited in GM’s diagnosis are causes of its current illness, but they grow from a long-term illness. The problem didn’t begin in the last decade, or even in the 1970's with the Japanese invasion. It began in decisions made in the decade and a half after World War II.
At the end of the war, Americans had money and wanted to spend some of it on new cars denied them during the war. Inspired by this pent up demand, Detroit abandoned any vestige of the economical model of Henry Ford and started building cars designed to look old in two years and rust out in 5. Cars would be bigger, more stylized and powerful every year. Then in the late 1950's and early 1960's the first offshore challenger arrived in the form of a Henry Ford inspired car from Germany. I still remember a night in 1957 when I was in the front yard with Dad as a friend of his drove up in a brand new VW bug. First he told me he wanted show me the engine and got a great laugh out of lifting up the front hood. Later after we had looked at this strange car in a state of rest we got in and the proud owner took us on a test drive.
Looking back of that evening I am left with two impressions. For my Dad’s friend what was exciting was that here was a new car he could afford. Up until then he, like my Dad, had always bought a used car. Now he could afford a new one, but it didn’t seem cheap. For me the Bug seemed neat. It wasn’t super fast off the line like a V-8 hot rod, but the four speed transmission with synchromesh into first gear made it peppy and fun.
A couple of years later, Detroit responded with the Chevy Corvair, Ford Falcon, Studebaker Lark, Nash Rambler, and the Plymouth Valiant. All aimed at providing a car that the poorer working man could afford. Out of this new array 2 offerings are worth mentioning. The Ford Falcon was the best selling but it was just a scaled down American car. Nothing new, nothing interesting just a lower price tag. The Corvair was the most different and the most fun. The Corvair with its rear engine, bucket seats and unique styling was giving Europe a run offering a fun ride at a low price. Then Ford offered up the Mustang and Ralph Nader pointed out the dangers of oversteer in a rear engine car and the Corviar died. Mustang led to muscle cars and Detroit never looked back at it’s brief attempt to compete with cars which offered up fun it a different form: not big, but comfortable, not high powered but with good transmissions, and not with suspension designed not to hide the riding experience but suspension designed to enrich the driving experience.
For a while a casual observer could conclude Detroit’s decision was a smart one. The big profit margins are in the luxury cars not at the bottom of the market. Let Europe and Japan troll in these shallow waters and sell cars to college students, Detroit would sell the big iron. For someone who was in the motorcycle business in the 60's and 70's the danger of this approach was far too apparent.
In 1959, at a time when motorcycles were for bad boys and the motorcycle business looked to be going the way of the buggy whip, Honda Motorcycle came out with the Honda 90. Honda lured young men and women onto the 90's with its “You meet the nicest people on a Honda” campaign. Then with a new generation on 2 wheels, it introduced the 250, later came road bikes that could compete with anything on the market. Honda moved up as its customers moved up. When it came time to go for 4 wheels, they repeated the same trick. They started with the subcompact Honda Civic, a car aimed at young buyers. Then, as their buyers matured, Honda made sure it kept ahead of their wants and needs. Always providing fun, and quality at a very competitive price.
What Honda understood is the reality that Detroit ignored for half a century. Vehicles are big purchases that are entered into carefully. If people have a favorable impression of their current vehicle they will seek out one from the same manufacturer if it offers a model that meets their needs. By not providing an entry level model to say college students, a company puts itself risk of them buying a Lexus instead of a Cadillac when they are at the peak of their earning power. This invited the day when Detroit would wake up and ask what’s happened to our market?
Big trucks and SUV’s helped paper over the problem for a while, but would you pay a CEO millions of dollars to run your company if he was so dense he couldn’t see that all the lobbyists and payoffs in the world were not going to put off a day of reckoning on fuel prices. Furthermore, overlooking the need to be competitive on entry level vehicles allowed the American manufacturers to conveniently overlook the need to stay lean. If they had been trying to be competitive at small car level maybe they would have turned their lobbying power to getting health care cost off their backs instead of postponing the day the oil bill would come due.
This history doesn’t leave me as sympathetic toward GM as I am for Big Papi but there are too many people dependent of the onetime giant to just let them go under in the middle of this recession. I hope the GM that comes out of bankruptcy finally understand that building a loyal customer base must dictate every other decision, if not there will be no going out to pasture for GM, it will be straight to the dog food factory.
I am at a loss of advice for the slugger who brought two pennants to Boston. Dave’s troubles remind me of the ignoble end of the Babe’s fabled career. Gods who bring us such joy by playing the game as we dreamed it in our youth shouldn’t be discarded like a dixie cups when age knocks them off Olympus. Why can’t they be put out to stud like race horses? It would be comforting to us fans to know that their retirement was felicitous and we could look forward to seeing their offspring in future contests.
I know a little bit more about cars then baseball. I have owned about 30, an almost even number of American and imported. I have also owned a number of motorcycles and was, for a brief period of time, a BMW Motorcycle Dealer. My degree from motorcycle mechanic school hangs next to my law degree and is an equal source of pride.
This somewhat unique perspective leads me to qualify most of the reasons being advanced for GM’s fall. The acute problems of the last ten years usually cited in GM’s diagnosis are causes of its current illness, but they grow from a long-term illness. The problem didn’t begin in the last decade, or even in the 1970's with the Japanese invasion. It began in decisions made in the decade and a half after World War II.
At the end of the war, Americans had money and wanted to spend some of it on new cars denied them during the war. Inspired by this pent up demand, Detroit abandoned any vestige of the economical model of Henry Ford and started building cars designed to look old in two years and rust out in 5. Cars would be bigger, more stylized and powerful every year. Then in the late 1950's and early 1960's the first offshore challenger arrived in the form of a Henry Ford inspired car from Germany. I still remember a night in 1957 when I was in the front yard with Dad as a friend of his drove up in a brand new VW bug. First he told me he wanted show me the engine and got a great laugh out of lifting up the front hood. Later after we had looked at this strange car in a state of rest we got in and the proud owner took us on a test drive.
Looking back of that evening I am left with two impressions. For my Dad’s friend what was exciting was that here was a new car he could afford. Up until then he, like my Dad, had always bought a used car. Now he could afford a new one, but it didn’t seem cheap. For me the Bug seemed neat. It wasn’t super fast off the line like a V-8 hot rod, but the four speed transmission with synchromesh into first gear made it peppy and fun.
A couple of years later, Detroit responded with the Chevy Corvair, Ford Falcon, Studebaker Lark, Nash Rambler, and the Plymouth Valiant. All aimed at providing a car that the poorer working man could afford. Out of this new array 2 offerings are worth mentioning. The Ford Falcon was the best selling but it was just a scaled down American car. Nothing new, nothing interesting just a lower price tag. The Corvair was the most different and the most fun. The Corvair with its rear engine, bucket seats and unique styling was giving Europe a run offering a fun ride at a low price. Then Ford offered up the Mustang and Ralph Nader pointed out the dangers of oversteer in a rear engine car and the Corviar died. Mustang led to muscle cars and Detroit never looked back at it’s brief attempt to compete with cars which offered up fun it a different form: not big, but comfortable, not high powered but with good transmissions, and not with suspension designed not to hide the riding experience but suspension designed to enrich the driving experience.
For a while a casual observer could conclude Detroit’s decision was a smart one. The big profit margins are in the luxury cars not at the bottom of the market. Let Europe and Japan troll in these shallow waters and sell cars to college students, Detroit would sell the big iron. For someone who was in the motorcycle business in the 60's and 70's the danger of this approach was far too apparent.
In 1959, at a time when motorcycles were for bad boys and the motorcycle business looked to be going the way of the buggy whip, Honda Motorcycle came out with the Honda 90. Honda lured young men and women onto the 90's with its “You meet the nicest people on a Honda” campaign. Then with a new generation on 2 wheels, it introduced the 250, later came road bikes that could compete with anything on the market. Honda moved up as its customers moved up. When it came time to go for 4 wheels, they repeated the same trick. They started with the subcompact Honda Civic, a car aimed at young buyers. Then, as their buyers matured, Honda made sure it kept ahead of their wants and needs. Always providing fun, and quality at a very competitive price.
What Honda understood is the reality that Detroit ignored for half a century. Vehicles are big purchases that are entered into carefully. If people have a favorable impression of their current vehicle they will seek out one from the same manufacturer if it offers a model that meets their needs. By not providing an entry level model to say college students, a company puts itself risk of them buying a Lexus instead of a Cadillac when they are at the peak of their earning power. This invited the day when Detroit would wake up and ask what’s happened to our market?
Big trucks and SUV’s helped paper over the problem for a while, but would you pay a CEO millions of dollars to run your company if he was so dense he couldn’t see that all the lobbyists and payoffs in the world were not going to put off a day of reckoning on fuel prices. Furthermore, overlooking the need to be competitive on entry level vehicles allowed the American manufacturers to conveniently overlook the need to stay lean. If they had been trying to be competitive at small car level maybe they would have turned their lobbying power to getting health care cost off their backs instead of postponing the day the oil bill would come due.
This history doesn’t leave me as sympathetic toward GM as I am for Big Papi but there are too many people dependent of the onetime giant to just let them go under in the middle of this recession. I hope the GM that comes out of bankruptcy finally understand that building a loyal customer base must dictate every other decision, if not there will be no going out to pasture for GM, it will be straight to the dog food factory.