On the surface, Nardelli's comments are dead-on accurate . . . as far as
that goes. That he was at GE during the reign of Neutron Jack Welch is,
to me, not a great recommendation or attribute. If you look back at
when much of the layoffs and consolidations and such started, it was
generally during the era of Neutron Jack's activities at GE. That might
ALSO be the beginning of the business orientation of "cutting things
down to be prosperous"? Where it's easy to cut and whack an
organization to get expenses down, but those decreased expenses NEVER do
equate to prosperity in the long term. If that was true, then with all
of the combinations and such of General Motors over the past 30 years,
it should be one of the most profitable companies ever to exist . . .
but it's not as during the era of Smale's "brand management" and further
consolidations, they started to make money (which was applauded at the
time) as nobody noticed (or seemed to care) that market share was
dropping by 1% per year (10% total by the time Smale retired from the GM
Board). When profits started going away and expenses suddenly rose,
THEN the lower market share became very evident and "important" to fix.
That's when more employee buy-out packages and early retirement packages
became the alleged way to do things . . . more cutting and whacking of
experienced employees rather than leverage them to use their experience
for the good of the company to build better products and be more
efficient at the same time.
With no sales erosion (in total numbers), then the retiree health
expenses would not have been quite so dramatic (as a per vehicle cost
item) as it would have been spread out over more vehicles and more
profits to cover them. No rocket science there, but the older workers
and retirees got the blame rather than other flaky decisions 10+ years
prior on products and components that came back to haunt GM and others.
In the short term, Nardelli can ask the troops on the plant floors what
can be done to allow them to do a better job. That SAME thing has been
done before, so it's nothing new at Chrysler. In the earlier time, some
great suggestions were made and more cost savings were realized than
expected (by news reports of such). This was also during the "dream
years" when Chrysler had hit products in all areas and all plants were
working full shifts and still not quite meeting sales demands . . . as
GM was closing plants and Ford was doing decently well for themselves.
Back when Chrysler was putting their "golden eggs" in the vault for
rainy days in the coming years (as the business cycle might go the other
way for them) . . . but first Kerkorian wanted them and then later
somebody else got them (by my gut suspicion).
In the short term, Chrysler's operations can be made better by employee
suggestions of how to better do some job functions on the plant floor.
Supplier contracts and pricing are already fixed, so not much can be
done there.
They might tighten their quality standards for existing items from
contracted vendors to better weed out poor batches of items before they
get to the assembly line for installation, for example. They can look
at ways to not damage parts or otherwise be wasteful in the assembly
process and other things on the plant floor.
They can also use existing warranty records to design coming vehicles to
not have these same problems by "intelligent design", which might also
decrease production hours and boost plant efficiencies. Working with
suppliers, early on, as happened during the 1990s, was a key way to cut
vehicle production cost and improve innovations in the products, plus
getting the vehicles to market quicker.
As the FAQs mention, Chrysler was already on track with improving
quality and durability before the Germans got involved. What was
already in place at the Viper plant was similar to some of the German's
"new way" processes.
During the 1990s, Chrysler was doing a LOT of things right in production
operations and in product innovation AND making more money per vehicle
than anybody else. Many of the current products were already well along
in the development process when Daimler came around, but they had some
influences on them as these products matured toward production. I
believe, that if they'd been left alone, Chrysler would be a better car
company than it currently is. Continuing the then-existing culture of
dramatic products that influenced EVERY segment they were in, although
they didn't have the production capacity to really challenge Ford or GM
in these segments, Chrysler created "the buzz" that influenced what Ford
and GM had to do to keep up--especially GM, even in their truck models.
It seems that most of Chrysler's problems happened "Post-Lutz" (and his
oversight in many areas). These things might have been the result of
the Lutz culture not being carried through and then what happened after
"the merger of equals".
Nardelli's going to have to rally the troops to do great things once
again. In assembly and design of existing and coming vehicles to do
what they did in the 1990s when Chrysler was "on top". Unfortunately,
many that were there back then might not still be there to guide things
along. Many seemed to jump ship to Ford and GM, so the selling job
might be harder than it should be. I hope he succeeds!
I understand that Nardelli's already told the dealer body that they'll
have to get along with fewer products in the future. Probably looking
to decrease factory costs? Still, how they can expect to sell more
vehicles with fewer variations and market coverage seems like something
that GM tried and didn't pull off when Olds was discontinued AND when
Plymouth was discontinued.
What modern marketing types don't seem to understand is that an Olds
customer was NOT a Buick or Pontiac or Cadillac customer. If they could
not buy an Oldsmobile with a bench seat, they probably went over and
bought a Grand Marquis. People that bought Plymouths (even if it was
only a minivan) were not Dodge customers and usually not Chrysler
customers--an "image" orientation rather than hardware. So, with all of
the plant layoffs at GM and losing about 250,000 units/year of Olds
buyers, GM has managed to alienate a whole lot of former customers.
Chrysler, similarly, lost a lot of customers who did not want a Chrysler
minivan (even if it cost the same as the Plymouth used to!). How these
new car manufacturers' CEOs managed to miss those historic points is
totally amazing . . . OR do they even care.
The Chrysler Advisory Board is a great concept, as is the new blogs at
the Chrysler LLC website. There seemed to be a massive amount of people
flocking to sign up for the new Advisory Board, but if (as I did) you
waited a week to read the email and respond to it, you found a dead link
that didn't work anymore--quite interesting.
On the plus side, the new things on the Chrysler LLC blogs and website
are great! It gives the engineers and designers a forum to talk about
what they are doing and for enthusiasts to repond to them.
Unfortunately, the auto industry is now compensating for and living with
decisions which were made 20+ years ago that helped shape "the mess"
that they are now in. Each manufacturer is not without some "issues"
from those earlier times that are still haunting them . . . even the
imports.
Although Nardelli is seeming to try to cut the size of the dealer
network, THAT is the very place they should be expanding AND giving them
the product coverage they need to really make money (for everybody!).
It's what happens at the dealership level that determines IF and when
customers purchase the products and keep purchasing them in the future.
Products AND product support at the local and factory levels keep sales
going and money flowing in the economy. You can design and build great
products, but if the dealer tries to charge too much for them (i.e., not
"dealing" on them as they should to get the sale) and then take too long
to repair them under warranty (parts and dealership issues of timely
repair times), then even the greatest products will not have the degree
of success they should.
Nardelli needs to dust off the old "Customer ONE" dealer orientation
program and reinstate it for all corporate and dealership employees.
That was one KEY thing in the success of Chrysler in the 1990, by
observation, as it got the dealership operatives "aimed" in the customer
satisfaction direction. Buick had one too, called "Living the Vision"
of exceeding customer expectations (which worked well, too, from the top
Buick/GM execs down to the dealership porters and wash rack employees).
Just some thoughts,
C-BODY
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