Making your case

April 5, 2006 9:53 AM

What separates GM from Honda? The development process.An interesting read about Honda's lean and mean development process, as compared to the bureaucratic nightmare that exists at General Motors. A fascinating read and good insight into one of the many reasons why the domestic automakers are getting spanked these days.
posted by tgrundke (43 comments total)

It's worth noting that here, deep in the heart of Texas, the Ridgeline has not been selling very well. GM, Ford and Dodge trucks outnumber them exponentially. The Nissan Titan has sold only slightly better. I think the Ridgeline will go down with the DelSol as a rare Honda flop. It's been suggested that Toyota will have a big hit with their next full size truck.
posted by punkfloyd at 10:04 AM on April 5, 2006

For what it's worth, I live in Los Angeles and I've seen a lot of Ridgelines. But I like that Toyota that punkfloyd linked to better. Damn, I need to make more money.
posted by billysumday at 10:07 AM on April 5, 2006

version without all the ads and cruft. (just click cancel on the print dialog)
posted by blue_beetle at 10:13 AM on April 5, 2006

Honda (UK) - Hate Something Change Something
posted by ijoshua at 10:17 AM on April 5, 2006

I too live in LA, but it's completely pointless for me to own a truck in this city. What I really want is the 80mpg supercar that the feds dumped $1 billion into. What ever happened to that? It was supposed to be for sale by now.
posted by mullingitover at 10:32 AM on April 5, 2006

blue_beetle, thanks for the cleaner copy. I closed the first link because of the annoyances.

Is it any surprise that a US company is mired in beauracratic stupidity?

Though I have to say that the Ridgeline is one buttass ugly truck.
posted by fenriq at 10:35 AM on April 5, 2006

A quick parking lot survey shows that there isn't a single GM or Ford car in use as the daily driver at my 50-person company. It's all Germans and Japanese.

You gotta wonder what is really going through the minds of the upper-level execs at GM and Ford (DaimlerChrysler we'll set aside for the moment).

They know they're losing market share. They know their cars don't have the same kinds of quality (although there have been recent improvements, yes). They know they're saddled with bad union contracts and looming pension disasters.

So what's the five-year plan? Is there one? Or is everyone too busy sewing jump lines onto their golden parachutes?
posted by frogan at 10:39 AM on April 5, 2006

Huh, If I was going to buy a truck, it would probably be a ridgeline. And to be honest, I can see a lot of advantages in having a truck.

I'm not really in the market for a vehicle right now though.

According to this the sales figures are good, or were so near the end of 2005, but that's an interview with the creator on a Ridgeline forum, so...

I don't think Texas is a very good indicator
posted by delmoi at 10:42 AM on April 5, 2006

frogan: Did you see the 60 Minutes profile of GM the other night? It was sort of a puff piece, but it was interesting. They had one senior VP who is a designer who kept talking about the design of the vehicles and how GM needed to get back to putting design first. He also insisted that they needed to get rid of the indecisive beauracrats that were ruining the company. Cut to: the head of GM being asked whether or not he planned to put into production the new Corvette, the prototype of which just won the award for best new car: "Um, well, you know, we don't know. We'll have to wait and see."

Hilarious? Not if you own GM stock, I guess, but it was pretty funny to me.
posted by billysumday at 10:44 AM on April 5, 2006

Here's another bit from that interview:

Another big issue I went to the mat on was displaying the “H-O-N-D-A” badge on the tailgate. Again, this was a minor element in the grander scheme of issues – but demonstrates one of the countless details that we went to great lengths to execute carefully.

I can't imagine that happening in Detroit, with their idiotic "Brand DNA" BS where they try to make every car look the same.
posted by delmoi at 10:49 AM on April 5, 2006

God I can't wait for low-sulfur diesel to make it to the US. Maybe that'll bring the Proper Truck Engine to more Japanese trucks (and cars too).
posted by Skorgu at 11:07 AM on April 5, 2006

God I can't wait for low-sulfur diesel to make it to the US.

Don't hold your breath.
posted by delmoi at 11:14 AM on April 5, 2006

I can't imagine that happening in Detroit, with their idiotic "Brand DNA" BS where they try to make every car look the same.

Although the next sentence in the interview does say:

"This went completely against the grain of the corporate branding rules. I ended up directly negotiating this with Mr. Yoshino himself (HM President during the early Ridgeline Development)."

So even here he had to appeal to the President of the company to get past Honda's own bureaucracy and standards.
posted by smackfu at 11:24 AM on April 5, 2006

It sounds like Honda has kept things flat, avoided too much hierarchy, and most importantly let the people they pay for their talent and ability to actually contribute meaningfully. Why give an engineer or even a union worker a high 5 or 6 figure salary and then tell them not to think or challenge? Why make a good idea have to fight upstream through 6 levels of nonsense?

Maybe it's my incredible bitterness at American corporate culture, but I saw a lot of GM-ness at Microsoft. It might not have always been that way, but by the time I left MS it was a nightmare of politics over any substance. I honestly believe the only problems that company has boil down to a top-heavy manager-centered culture- a problem that is slow but terminal, because the very people in charge are not going to fix the "problem" that got them a sweet cushy job with Director-level six-figure bonuses. Too often good technical ideas get shot down because they either weren't proposed by the "right" person, or because it was politically detremental to whomever was building a little fiefdom in their corner of the software giant. You had incompetent people hanging on, floating from one vague, vaporware job to another, with no accountability: the people they reported to were likewise lost at sea, and were in no position to challenge the culture of cruft that was MS.

And I suspect it's something in our American culture hurting us, a pattern seen at most corporations these days: we have left any innovation behind, and now our power and money is devoted to and controlled by people who know they aren't going to contribute anything meaningful. We have somehow elevated the "executive" into a quasi-rockstar, without merit. Whether it's clueless business grads who think you can "layoffs- and- plant- closings" your way to success, or think that regular re-orgs every 8 months to put your piss mark on the company are really what success looks like. These people in charge can't actually design a car or write good software, they can only deal in general human interactions. So they protect their own job security and upward mobility by making the company itself more about interactions between people than about creating a product and selling it. That's the only thing they can do to protect their jobs, because outside of creating an eddy of confusion and control around themselves they'd quickly be recognized as functionally useless and be let go.

I wish I could explain it better, and yet... any of you in the working world probably understand exactly what I mean. It's akin to the way the modern media and psuedo-journalists on TV can't be bothered to learn the nuances of history and politics and geography... so instead they report the news like a soap opera, lots of he said/she said emptiness that is so much easier for them: the names and faces change, but you can keep reporting the same story without depth or insight or background.
posted by hincandenza at 11:26 AM on April 5, 2006

Related story: I have a friend who's still at MS that is as fed up as I am, but just holding out till law school starts in the fall at which point he'll quit (they have no idea he's leaving). He's working on a section of MS that deals with mobile devices in cars among other things. His own experience is that as screwed up as things are at MS, they seem even worse at the particular company they are dealing with, where clearly their shit is not together: they produce reams of paperwork but little actual content, and he gets different information depending on who he talks to. It's a wonder they ever actually build a car....
posted by hincandenza at 11:29 AM on April 5, 2006

or think that regular re-orgs every 8 months to put your piss mark on the company are really what success looks like.

Right on, hincandenza... we call 'em "Seagulls". They fly in, shit all over everything, and then they're gone in 8 months.

No loyalty or dedication to the company or it's products at all.

I hates 'em!
posted by BobFrapples at 11:33 AM on April 5, 2006

Don't hold your breath.

Actually, the EPA deadline is Oct. 15 2006 for retail, which coincides with several manufacturers releasing diesel models in the US, namely Toyota which should have a diesel Tacoma and Subaru for the 2007-8 model years.

Naturally, I'm giddy with excitement. Between proper diesels and Ethanol compatability, we're finally getting towards using smart fuels.
posted by Skorgu at 11:34 AM on April 5, 2006

So what's the five-year plan? Is there one? Or is everyone too busy sewing jump lines onto their golden parachutes?
a
I live in Janesville, whose plant was on 60 Minutes.

> General Motors Corp. said better- than-expected sales of new models such as the redesigned Chevrolet Tahoe are stabilizing its share of the U.S. retail market as it seeks to reduce incentives and low-profit sales to rental agencies.

The Tahoe is made in Jvl, so this is good news. But the article really seems to betray that they don't have a real long-term plan other than to react -- years late -- to the fact that they have the most infrastructure of any automaker in the world, but no longer the highest sales, and the most expensive workforce. There seems to be some realization that they're no longer 50% of the US market, but something a little less than 33%. But it's like only recently they woke up to the fact that those customers are not coming back. The supertanker is starting to turn the rudder, but there's a lot of inertia to overcome. They've trimmed Oldsmobile, but most analysts say that at least two more brands -- Saturn and Buick, probably -- have got to go. They've been closing plants since the 80s -- Roger and Me, anyone? -- but still have too many.

What they've done in the last few months, as the Delphi crisis has deepened, is prepare to take over responsibility for Delphi employees and their pensions, and plan to reduce their own workforce by tens of thousands of workers through buyouts. So they'll need cash, something hard to come by for a company losing $10B/yr., so they've sold off their stake in Daewoo and probably will sell what they own of Isuzu soon. (Janesville's plant makes a coop product with Isuzu, but it's a tiny fraction of the output here.)

And they're selling General Motors Acceptance Corporation to people in the financial markets (expect the brand to live on a couple more years). It was always odd that a) most of GM's profits came from a bank and b) that one of America's largest banks was an automaker. In B-school they call that losing focus on your core business.

So what I see is finally some practical recognition of the straits they're in, and some aggressive treatment of the wounds (not just the band-aid approach of decades past). That doesn't mean they'll turn into a nimble, smarter automaker overnight, but it's more hope (on their behalf) than I've had for a long time.

On the Ridgeline point, I'll say tht car sales are extremely regionally variable. Janesville makes the Tahoe/Yukon line and used to make smaller Blazers, but you've never seen many SUVs in this city. There are many more crew-cab pickups than SUVs (and yes, this is a small manufacturing city, not a farm town). I don't think the Ridgeline is any uglier than the Avalanche and it's clearly going for the badass imposing-bulk look that came back with the Dodge Ram. The only problem I see for Honda is that the American brands own that particular market, but then as a transitional SUV it will probably be popular with Honda owners who want to move up from a car. I think the goal for Honda is long-term though, very long-term, in the sense of capturing some pickup buyers and making them Honda buyers for life.
posted by dhartung at 11:34 AM on April 5, 2006

hincandenza--

i was at msft from 1985 until my parole in 1992. your description is why i left even back then. what were your years of service?
posted by paddbear at 11:38 AM on April 5, 2006

dhartung: I think its telling that many people (myself included) are commending GM for selling its most profitable arm. Losing focus, sure but perhaps also telling that GM was massively better at clever banking deals than it ever was at selling cars.

Given unlimited power over GMs future, I'd fire about half the managers, put all the drivetrain/engine engineers in one division and call it GM Powertrain or somesuch, then spin off all the brands into partially-owned companies that would buy platforms from GM (Powertrain) and build cars around them. Its not like anything massively different happens now anyway, just formalize the process.
posted by Skorgu at 11:44 AM on April 5, 2006

Seems like the Ridgeline's holding its own, saleswise.
posted by Smart Dalek at 11:51 AM on April 5, 2006

You know, before blaming American corporate culture, keep in mind every company is different. I've read a few articles about how bad Sony's bureaucracy is and how they lost a huge market to the American iPod because the different departments couldn't agree on software and DRM and stuff.
posted by bobo123 at 12:00 PM on April 5, 2006

Dang- as bad as it might have been, paddbear, I'm thinking that in retrospect you'd have wanted to stick it out (unless you got mad stock from the get-go, and are now retired in VT- in which case, you have no cause to complain :) ).

Me, I had two tours of duty, from 96-99 (but only a couple of months into 99), and then again from 2002-2005. In between I worked for dotcoms including Amazon, which was even worse. But it's kind of sad to hear that the "mythical Microsoft" of old didn't exist. Or maybe it was always bad, yet has still gotten considerably worse since you left.
posted by hincandenza at 12:03 PM on April 5, 2006

bobo123: I agree, it's not purely an American problem. But I do think that it's a problem that plagues any large organization, and in America seems to almost be considered a good thing to have the "CEO coach" or whatever best-seller nonsense it is now. Companies that are different are the exception that proves the rule (and there should be a Jobs' Law that states Apple can never be used as anecdotal evidence to prove anything about American businesses in general :D )
posted by hincandenza at 12:06 PM on April 5, 2006

Skorgu : There already is a GM Powertrain Division. It's been around since the late 80's.
posted by rfs at 12:06 PM on April 5, 2006

I wish I could explain it better,

Actually, I think you did a damn fine job explaining it!

That is so spot on with large corporations and government agencies.

If what is good for GM is good for America then we're in a world of hurt very soon now people 'cause GM is sucking wind.
posted by nofundy at 12:16 PM on April 5, 2006

rfs: I figured there must be. They seem to make good motors, Lotus thinks so anyway.

What I think the General needs to do is to Pick Something and focus on that, and spin everything else off. Clearly economies of scale aren't all that economic for them at this point. Maybe competition can do what M&A failed to.
posted by Skorgu at 12:21 PM on April 5, 2006

The Truth About Cars has had an editorial/opinion series called The Death of GM running for a while now. Currently up to episode 64.
posted by asparagus_berlin at 12:25 PM on April 5, 2006

Microsoft used to develop software using methods similar to that espoused in the article. So did a lot of other places.

But, when managerial positions are rewards for individual contributorship, and performance reviews tie directly to your involvement in a project (and not necessarily if you did any work for that project), well, the more flappers, the better it is...for the flappers.

Everyone's congratulated, the product is shipped, and then the same folks involved in shipping the product are then asked to analyze why it's not exactly greeted with open arms, or why it's so buggy it crawls on its own, or why the company's now spending more money to support it than they made shipping it.

Feh. I remember when software engineering actually emphasized the "engineering" portion.
posted by FormlessOne at 1:38 PM on April 5, 2006

FormlessOne, you expressed it better than I: Individual contributors are not seen as an asset, but more like larval stages of managers. Accountability even on a successful project ship and release- much less an unsuccessful one- is non-existent, and too often those who busted ass to get something concrete completed in the face of constantly shifting specs and amorphous managerial whimsy feel resentment towards those who chaired meetings full of sound and fury, etc, etc... yet are the ones getting the six figure bonuses.
posted by hincandenza at 2:05 PM on April 5, 2006

I think everyone here has hit on legitimate points about corporate bureaucracy. I think that for large corporations it becomes almost inevitable that they collapse under their own weight and need to be 'reborn' at some point. It's happened to IBM, it happened to Apple and General Motors/Ford sure as hell need it to happen to them to clean out the dead weight.

The way I see it, bolstered by a lot of the commentary here, is that as bureacracy grows, innovation becomes stifled. Nothing terribly surprising there, but it's particularly dangerous at companies such as Microsoft or Sony. Sony's problem is too many divisions with too many competing interests resulting in too much compromise and/or clutter and paralysis. Microsoft's problem is its very success and the legacy baggage they must carry.

Companies such as Apple are successful because they're still small enough to be willing to take "hail mary" risks and they seem to have a corporate culture (thanks to steve jobs) that is willing to say every few years, "yeah, that platform was great, but if we want to do the next great thing we're going to have to pitch it and start from scratch". And they do it.

In the auto world, the nimble ones are like Audi. Volkswagen's smartest move a few years back was bringing Martin Winterkorn in as the head of the unit and then granting it very broad autonomy from its parent company. The result has been spectacular for Audi in the past five years or so as their product line has become more unique, its styling more pronounced and its quality (thank god) far better than it has ever been.
posted by tgrundke at 2:09 PM on April 5, 2006

And all this corporate bloat reflects on the bottom line - either through more people to pay or the price you have to charge to customers. With MS, since they're still more or less a monopoly the price they charge doesnt matter. Whereas GM or Ford, they have to compete on price (look a all those "employee price" sales).

I remember seeing something on TV (maybe 60 minutes?) about how the money was just too good on the asembly line for someone with a college degree (not sure if it was BS or MS) to move into management.

People on the assembly line making $70,000/yr in mid-america (where $70,000 goes a VERY long way) plus pension, health care, etc. Its no wonder American automakers are in trouble. An assmebly line takes at most a HS diploma, if that. These people should be making half of that.

Its a delicate issue though. If the cost (labor) to make a car got cut down (say, $1000 less, no idea how accurate that is) where would the money go? Would it go to the engineers who designed it vehicle? The executives running the company? I doubt we'd see a lower price point, even though thats probably what would help the most.

Its one of the things that make me think unions are a necessary evil - without them the people in control (regardless of talent, education, etc) will continue to make more money and the assembly line worker doesn't have incentive to work hard since they know they're just making someone else richer. Jobs that pay $35,000/yr are more plentiful than jobs that pay $70,000 especially without any college degree. So there is an incentive to work hard to keep the $70,000/yr job , where there might not be one to keep the lower paying job (beyond the traditional incentives to try and keep a company afloat to keep your job).

Hybrids are an interesting example right now. Toyota just released their Camry Hybrid which has a MSRP of $25,950, and it gets 40/33. Uh, HELLO. That beats the pants of any other hybrid on the market in terms of value - a standard size sedan plus really good fuel efficiency. The accord hybrid is more performance oriented and sells for 30K. The Escape hybrid (the Escape line occupies the same range in terms of price, 20K-24K) is $27,500 (FWD, 4WD is 29K).

Regardless, if I had a bunch of money, I'd be writing a business plan to take over all of GM's assest when they fail. Start over fresh, hire some GM engineers, no UAW contracts, find the cheapest parts, etc. Come to market with good cars a much lower price points. Make sure the cars dont suck so you dont have the Hundayi stigma.
posted by SirOmega at 2:22 PM on April 5, 2006

Great links and discussion. I just last week finished an incredibly well-written book on the whole American vs Japanese auto industries, starting basically from the beginning, and how decisions made decades ago doomed Ford (the book was mostly about Ford): David Halberstam's "The Reckoning."

The thing reads like a thriller....I was at the point of missing my stop on the train because I was so absorbed. (no affiliation, just a huge fan of this unexpected book...)

I'll save my comments in case anyone wants to read it. (Spoiler-the Japanese win)
posted by nevercalm at 2:31 PM on April 5, 2006

I used to run servers at GM's Warren Tech Center. While I was there, they took Unix workstations away from all the engineers in R&D, and gave them Windows computers with a CAD program that took over 2 hours to render one drawing.

I don't think we'll be seeing any innovative designs out of GM any time soon. This saddens me.

Nor was this the only brain-damaged decision I saw GM attempt to implement. It ain't the guys on the line who are the problem.
posted by QIbHom at 2:58 PM on April 5, 2006

I recall reading somewhere that GM's biggest expense is healthcare for its workers and pensioners. Not steel, not engineering, not expensive electronics; heathcare.

I find that sort of odd. The auto unions themselves may be victims of their own success. The deals they negotiated with GM and Ford are just too good, turning a what is supposed to be an oppositional, but symbiotic, relationship into a terminal one.
posted by generichuman at 3:46 PM on April 5, 2006

GM got its face ripped off in the GMAC deal. It has the potential to be one of the best private equity deals ever for the investors. It does provide GM the immediate liquidty it needs to withstand the potential Delphi strike, its own pension/union issues, short-term bleeding from the possible closure of another brand, and continued loss of market share.

Also, Ford, Honda and Toyota all have massive captive financials, they just haven't expanded into mortgages and the other business like GMAC. GMAC was profitable, but it wasn't that strong of a finance company. Especially not compared to other captives like Ford and GE Capital. The mortgage business is poorly managed, but it is big enough to be profitable anyway.
posted by mullacc at 4:20 PM on April 5, 2006

Bottom line is: Honda and Toyota build a better quality product than GM and have earned a reputation for reliability. People don't want a vehicle that's going to rattle and complicate their life with mechanical problems.
posted by disgruntled at 6:34 PM on April 5, 2006

generichuman - good point, do you see that pattern emerging with the 'ailing' airline industry as well
posted by infini at 6:45 PM on April 5, 2006

I'd like to emphasize that the series that asparagus_berlin pointed out is extremely good, as are many of their other articles on the industry. Their name sucks which is why I'm bringing it up again.
posted by spiderwire at 7:02 PM on April 5, 2006

GM, Ford, Chrysler (US): accountants call the shots. Have been for decades.

Honda, Nissan, Toyota, the major European carmakers: ENGINEERS still running those companies.

It's why I never buy a Detroit product.
posted by wfc123 at 7:50 PM on April 5, 2006

Props for the Truth About Cars link. Their auto reviews are a bit too clever but the editorials look quite good and insightful.
posted by zsazsa at 9:34 PM on April 5, 2006

Maybe I'm being dense but what exactly is the sale of GMAC supposed to accomplish? For a company neck deep in poo, how is the sale of its most profitable division supposed to keep it from drowning? I think GM would be better off selling a few car brands (Pontiac, Buick, Saturn, maybe Hummer), keeping GMAC as the cash cow, and then work on getting lean with the remaining brands. Selling off GMAC just comes off as accelerating suicide to me.
posted by junesix at 11:16 PM on April 5, 2006

Maybe I'm being dense but what exactly is the sale of GMAC supposed to accomplish?

Cash. As in, GM desperatly needs some.

Blaming all of GM's woes on the Unions is typical America, but there's so much more wrong with GM that even if you moved every assembly plant to Mexico you wouldn't have a profitable company.
posted by eriko at 5:39 AM on April 6, 2006