Showing posts with label GM. Show all posts
Showing posts with label GM. Show all posts

Sunday, October 7, 2012

Only innovation can really save the car business, and Apple has the juice to do it.


Generations X and Y grew up chauffeured in boring minivans and SUVs. The midsize cars in which these kids munched goldfish and raisins were virtual clones and brands were indistinguishable.  And now we wonder why those same kids aren’t buying cars? They weren’t inspired by Corvettes, Camaros, GTOs, Firebirds, Mustangs, Barracudas and the like. The 1990s and the 21st century have produced a lot of snoring wheels.

It’s not surprising car guys are predicting that sometime in the next twenty years or so, we may actually see demand for autos decline in the United States. When boomers hang up their keys, you can expect car sales to plummet. Unless, of course, wheels become cool again to their kids and grandkids.

How does Detroit reverse the declining trend? I think the answer is for GM or another carmaker to team up with Apple. The Silicon Valley super-brand has a knack for getting people of all ages to pour money into their products, and dump perfectly good gadgets for newer generations of the same technology. And with its stock value at about $650 per share, the tech giant has the bucks to invest an automotive line of products.

Perhaps an exclusively electric power plant, unlike the Volt, with automated highway capability, active-passive integrated safety technologies to make crashes virtually impossible. Of course, any Apple vehicle would be an icon for design and a real head-turner.

There’s a profound irony here. Steve Job’s adoptive dad, Paul Jobs, was a machinist who Steve described as “a genius with his hands.” The senior Jobs loved to tinker with autos. He’d buy used cars, fix them up and sell them for a profit, frequently schooling young Steve on Detroit style and industrial design.  Deep down, Apple has wheels in its DNA.

I’m only half kidding about Apple marrying an auto manufacturer. There was a time when GM and Ford produced home appliances in addition to cars. Remember the Frigidaire and Philco brands? All that is old is new again. I predict Apple is going to hook up with some other consumer products company. They could probably make anything that works, work better.

Innovative darling, Tesla Motors, is a thriving car company that has designed very hot-looking and expensive electric chariots. The S Model starts at about $50, 000. The carmaker recently announced plans to expand its network of proprietary charging stations to blanket the U.S. in the next two years.  They currently have six power plug-in devices across California that can fully charge a Tesla in one hour. That delivers 300 miles of driving. A half-hour provides 150 miles of Tesla juice. The technology is getting better and electric is going to change the way we think about commuting, especially with gas reaching five bucks a gallon this week in the Golden State.

And Tesla models look nothing like gas-powered clones mainstream carmakers churn out. They’re sexy.

My suggestion is that GM plug into Apple before Tesla or someone else does. I’ll bet Ford wishes they had put Macs in their cars instead of the Microsoft Sync.

Today’s kids pay a bundle for smartphones, tablets and monthly fees for continuous connectivity. If you want them to fall in love with your ride, it has to take them places the information highway can’t. Remember the way the rumble of a 327 V8 engine could send electricity up your spine? America is ready for another jolt of excitement and liberty from mediocre design and paralyzing prices at the pump.

It’s time for Detroit to plug in to what America loves best. It's the power of I, as in innovation and  iPod, iTunes, iPhone and iPad. Now imagine iDrive. 


Sunday, July 8, 2012

American muscle.

When I left broadcast television 25 years ago this July, it didn’t take long to land communications clients in the car business. That was a no brainer, because I live in Dearborn, part of the motor city’s metro area and birthplace of Henry Ford.

One of the first car company jobs I pursued involved a bid meeting with several video and film producers attending. One savvy sales guy turned to his competitor and announced, “Hey, is that your brand new Toyota out there in the lot? That’s a beautiful car.” The Toyota owner sank in his chair. His odds for winning the bid had just plummeted. The job was with an American carmaker and he had just bought a foreign sedan. What could he have been thinking? Should have borrowed a buddy’s wheels for the day.

I’ve been self-employed most of my 33-year career, and I’ve owned American vehicles, except three times. I did lease two Volvos, for two years each, and one Mazda for three years. At the time, both brands were under the Ford Motor Company umbrella. Incidentally, my Mazda 6 was Michigan made by UAW workers.  Not all models are equally American. The Mazda boasted 55% U.S. content, plus U.S. assembly. I read the label. The Ford Fusion was assembled in Mexico.

Buying domestic products just seemed like the right thing to do. Plus, my late father was a UAW-GM worker and my wife’s brother worked for Ford his whole life, so we got the employee discounts. But I have also been supporting the products my family, friends and neighbors created with their minds, hands and hearts.

American pride and manufacturing are hot again, in Detroit and across the United States. The car business is on the rise and the U.S. brands are going strong. GM is again the world’s number one carmaker. It even sold twice as many electric Chevy Volts this June as it did at the same time in 2011. That surge occurred despite the recent, temporary decline in gas prices. I guess people are warming up to the new technology and acknowledging that volatile energy prices are here to stay. It was great to hear those reports as we celebrated America’s Independence Day this week.

The rebounding car business is always good news in U.S. cities where autos are made, but it’s just as important to our global economy right now. Make no mistake. At no time in modern history has the U.S. recovered from a recession without the car business leading the way. It’s never happened. Never.

If you’re into reading economic tealeaves, there’s some not-so-quiet momentum building. Even fuel-efficient sport utility vehicles (SUVs) are selling well. Meanwhile, Ford is predicting huge losses in Europe in the third quarter, so its U.S. sales success is more vital than ever.

In 2001, when the 9-11 attacks stomped on our economic brakes, it was the autos that helped prevent a complete stall. Remember, the “Keep America Rolling” campaign led by GM and all those zero-percent car loans? They stimulated huge sales and in turn, lots of other economic activity. Now there are millions of drivers who own 11-year-old models that they need to replace. They’ve been too nervous to make a move in aftermath of the Great Recession. (In my opinion, it was actually a depression with a safety net or airbag, including Social Security benefits, Medicare, Medicaid, unemployment and food stamps. Those protections weren’t around in 1929 when the stock market crashed.)

So, now, many of those 2001/2002 vehicle owners are starting to buy again and that is churning up a wave of economic activity.

Cars create jobs like no other manufactured goods. Do the math. When most folks buy new wheels they get some sort of financing. They may pay to secure those payments or buy an extended service plan as well. Then, of course, their mandatory auto insurance goes up to cover the increased value of their new ride. They might also request some special protection like rustproofing, tire and wheel coverage or anti-stain treatment for their upholstery. Dealers pay to train their sales and financing people and advertise to get you in the door, even hiring specialists to paint their windows like oversized signs or they rent huge green dinosaurs for their rooftops to attract shoppers.

Cars include steel, rubber, plastic, textiles, leather, aluminum, wood, glass, paint, chemicals, copper and a lot of computers and software. They require many experts to engineer, invent, prototype, test, install and service the myriad configurations and components that become personal transportation. What other item do you own that is complex enough to carry you and several other people at sixty miles per hour, in an upright or reclining position, surrounded in symphonic sound and independent climate control, wrapped in a crash-resistant cushion, complete with interior and exterior lighting, illuminating your way to help you avoid collisions with an anti-lock braking system and standard electronic stability control? You get the idea.

Meanwhile, I talked to a lawyer from the West Coast this weekend and he said his firm could easily hire six attorneys and six paralegals right now, but he can’t get his bank to loosen the purse strings. And he has millions in accounts receivable for collateral. Ironically, his father was once a Senior Vice President of Wells Fargo Bank.  This barrister makes his living defending huge corporations, yet he believes the banks are again playing an undue role in orchestrating our financial future. There’s another tealeaf to consider.

Recently, my wife, Ellen and I visited a local furniture boutique that features quality, American-made products. One afternoon in the sweltering heat there were a half dozen folks test driving the cushions and puzzling over fabric, leather and wood samples.

The economy is beginning to slowly accelerate.  We’ve seen car sales continue to improve. Next, housing should bounce off the bottom. That is, if the banks return to applying conventional mortgage standards. Then the realtor, carpenter, plumber, and big box hardware stores will get rolling.

Go ahead, buckle up. The world is looking to America to lead the recovery, and Detroit is revving up its engine.

Sunday, June 3, 2012

Can we get there from here?


What do you write when you have too many unanswered questions going through your mind? I call it blog soup. Hopefully, you’ll find these pithy chunks appetizing and easy to digest.

Our younger son is headed out of town to work a great job for a Chicago law firm for the summer. We thought a train might offer the most affordable way to get there with a lot of luggage. You can fly for $28.00 but the baggage fees will kill you. Now, you can ride Amtrak from Detroit, Dearborn, Ann Arbor, Birmingham or Royal Oak for about $52 one way. But you can only bring two carry on bags, because there is no checked baggage service. However, drive one hour to Toledo, Ohio and you can check three bags to Chitown, up to 50 pounds each at no extra charge, plus two carry on pieces. If you’d like, you can check up to six bags, and pay only $10 each after the first three. What a deal!

My question: why do I have to drive an hour to Toledo? Detroit isn’t a big enough hub to have checked baggage service? During these times of high gas prices and tight budgets, affordable transit is a must.

“Taken for a Ride” was the 1996 PBS documentary that chronicled the demise of urban mass transit under pressure from the American car industry. According to the producers, GM put the squeeze on big city governments in the 1930’s to swap streetcars for yellow buses the car company manufactured. Who’s preventing us from getting checked baggage service at the Amtrak train station in Detroit? Is it the airlines lobby? Will the high-speed rail from Detroit to Chicago offer full baggage service?

On Mother’s Day weekend, we were tied up celebrating with our older son and his lovely new fiancĂ©. So I ran out of time to blog. My topic would have been “Look, Mom … No Job!” Economic signals remain crossed four years into this recession. Why can’t we gain employment momentum, while car companies report record sales and consumer confidence was up in April’s University of Michigan Survey of the U.S.? One reason is companies are exploiting the job shortage to maximize productivity at no cost.  More and more grads and even those with advanced and professional degrees are forced to take internships at no pay.  Plus, in the advertising and marketing business, there’s a whole class of young professionals who are paid low wages and subsidized with vendor perks like free dinners, complimentary cocktails at swank clubs and tickets to must-see events. Unfortunately, they can’t pay their bills with those gratis gifts and swag. That’s what a college education buys you today.

More than 30 years ago, I did two back-to-back internships with ABC-TV, but there were rules. I was getting college credit, a grade and my professor required a supervisor’s evaluation. I had to submit a journal of my experience and meet with my professor twice during the term. In fact, I had to beg my prof for permission to do a second internship, because the TV station was predicting they’d have a job for me if I could hang on for another few months. I did and they made me an offer two days before graduation. What’s happening today with college grads is a lot like what happens to illegal aliens desperate for work. They’ll take anything, even toil for free, rather than atrophy on the unemployment line.

There’s another key point in this story; when I did my internships, my four-year scholarship at Wayne State University was valued at $4,800.00. At the time, my brand new 1977 Chevy Monte Carlo set me back $5,700 cash. Try going to college today for the price of a midsize car.  Despite all these inequities, we’re soon going to hear cries for a tax amnesty program so big American businesses can bring their enormous offshore profits home without paying the piper. If they don’t get the tax break, will corporations continue to hold jobs hostage?

Meanwhile, the presidential election is coming. What should we believe about the race? I’m going to make a prediction. Regardless of what actually happens, we will continue to hear that the polls are tight. It’s in the best interest the TV and radio networks. There are billions of dollars in ad revenues at stake. Both political parties have huge war chests, and with the U.S. Supreme Court designating corporations as citizens with full freedom of speech, this election will be the most expensive in American history. The tighter the race the more money the media will make.

On Friday, Bloomberg TV interviewed Matthew Dowd, the former campaign strategist for President George W. Bush. His analysis was that in election years, voters actually make up their minds in May, June and July and spend the rest of the time rationalizing their vote for president. So, the money that pours into advertising is designed to prevent you from changing your vote. News organizations face a significant conflict of interest. Report the facts, or muckrake for billions.

Here’s a question for the Supreme Court: if a corporation owns a TV or radio network and it runs a free ad in favor of a candidate, under the equal time clause, is it required to do the same for the other candidate? Just asking.

Gas prices are falling as the summer vacation season heats up. Despite sanctions on Iran to help diffuse their nuclear aspirations, the supply of petroleum is rising with a surprise source filling the gap. Iraq is back and pumping millions of barrels a day and their capabilities are growing. Without the Iraq war, would the U.S. have seen $4 per gallon prices in recent years?

The good news is America has diversified its energy resources and continues to pursue greener options like incredibly abundant natural gas. Even utility companies in coal country are converting their power plants to burn natural gas instead of coal. What special interest is stepping up and attempting to derail our new found trend toward energy independence?

There are answers to all these questions. Do we have enough real journalists with the courage to ask them? I’m still waiting to find out.