Not a day goes by without more news about Detroit’s beleaguered automakers. While each new development is notable in and of itself, I find it more telling to take a few steps back and look at the big picture.
Below are a few clips from selected Wall Street Journal articles I’ve run across over just the last few days. Take a minute and scroll through them. They tell a fascinating tale.
First, GM continues its inability to focus, revealing a growing lack of consensus between management and the board:
“In a dramatic change of course, General Motors Co. backed out of a deal to sell the company’s European operations to car-parts supplier Magna International Inc., and now plans to spend billions to restructure the money-losing business itself.”
“The decision…was made at a board meeting Tuesday in which the company’s directors strayed from the plan of Chief Executive Frederick “Fritz” Henderson, who had spent months negotiating the Magna agreement.”
“The Opel deal is the second major transaction to fall apart for Mr. Henderson in little over a month.”
“Whereas Mr. Henderson’s predecessor, Rick Wagoner, had often won in the boardroom by relying on the support of long-serving directors, Mr. Henderson appears to be tiptoeing through land mines of strong opinions by adjusting his game plan.”
“Carl-Peter Forster, who worked for GM for more than nine years, is quitting as chief executive of GM Europe. The decision follows a vote by the company’s board of directors on Tuesday to scrap a plan to sell control of the German Opel unit…”
“Despite his dissent of late, Mr. Forster was long viewed as a strong asset on GM’s executive roster and his departure serves another blow to Mr. Henderson, who has seen his management bench shorten since the company’s exit from bankruptcy.”
Across town, Chrysler is making fairy-tale sales and market share predictions to try to convince investors (that means you, taxpayer) that it will repay the $9 billion it owes us by 2014:
“The company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival.”
“Chrysler – which has seen its sales plunge by half in the last few years – predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011.”
“To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014.”
Meanwhile, Detroit’s only private automotive company, Ford, has gone about regaining its focus, finding its nerve and sticking to its game plan.
“Last week Consumer Reports gave the company quality ratings comparable to those of Honda and Toyota.”
“On Monday, Ford reported its second consecutive quarterly profit – and more impressively, a swing from a $7.7 billion cash burn a year earlier to positive cash flow of $1.3 billion in the just-ended third quarter…”
“The company gained a percentage of market share in the first 10 months of this year, no easy feat in an ultra-competitive market.”
“The company’s turnaround actually began three years ago with decisions that amounted to zagging every time that General Motors zigged, which was remarkable for a company whose strategy for decades was to follow GM.”
“While GM kept its unwieldy assortment of eight brands, Ford sold Jaguar and Land Rover, cutting its brand lineup down to a manageable size.”
“What’s more, shedding brands and shunning the mortgage business has helped Ford focus on quality, where it had slipped badly early in this decade.”
“Consumer Reports said last week that 90% of Fords, Mercurys and Lincolns rate average or better in quality, right up there with Honda and Toyota.”
“When the economy recovers and car sales increase, Ford could be in great shape.”
The automotive business is complex, but it doesn’t have to be that hard. Focus, nerve, consistency, consensus – no matter the industry, all tend to diminish when growth stalls. And all are essential to getting it back.
At the moment, Ford is the only one of the Big 3 to be paying attention.
Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at https://twitter.com/whengrowthstall.
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