Autos and Economics : Lutz

Showing posts with label Lutz. Show all posts

Saturday, March 10, 2012

Bob Lutz, the VOLT, and the Right Wing

The recent media coverage of so-called “Chevrolet Volt fires,” especially by the conservative talk shows and Fox News, has attracted my attention and ire. Let’s set out the facts (and feel free to check them yourself):

Not one Chevrolet Volt has ever caught fire in normal use or in accidents. Not a single one.
The National Highway Traffic Safety Administration, even after the highly artificial crash test (placing the car on its back, even though it did not roll over in the test) nevertheless awarded the Volt NHTSA’s highest crash-safety rating: 5 stars. Volt is supremely safe.
The crashed Volt, its battery shorted by coolant from the period unjustifiably spent “feet up,” caught fire three weeks after said test. (I submit that this would provide adequate time for surviving passengers to exit the vehicle.)
On average, 278,000 cars with gasoline engines caught fire in the U.S. each year between 2003 and 2007, according to the National Fire Protection Association.
No factory-produced electric vehicle has ever caught fire, to the best of my knowledge.
The Volt, the most technologically advanced car on the planet, was conceived by me and my team well before any federal bailout of GM.

These are the bedrock facts.

Now, how did the U.S. right-wing media choose to report this admittedly headline-tempting news? A nationally syndicated editorial three-panel cartoon stated (I believe I remember the sequence): “Thomas Edison discovered electricity;” then, “Alexander Graham Bell discovered the telephone;” and, in the third panel, “But it took the US Government to discover fire!” (accompanied by a drawing of a burning Chevy Volt).

Meanwhile, my fellow cigar-aficionado and erstwhile friend Rush Limbaugh launched the usual outraged, breathless tirades, denouncing the Volt as a typical failed President Obama initiative, on a par, grosso modo, with the dreaded Obama Care. The screen regularly depicted an exploding Chevrolet Volt.

But the Oscar for totally irresponsible journalism has to go to The O’Reilly Factor on Fox News, with, as its key guest, Lou Dobbs. Amid much jocular yukking, the Volt was depicted as a typical federal failure. In attempting to explain why Chevy has sold fewer than 8,000 Volts, Dobbs states, flatly, “It doesn’t work.” He elaborates, “It doesn’t go fast and go far on electricity. What happens is it catches fire,” adding that Chevy has recalled some 8,000 Volts. Bill O’Reilly, nodding approvingly, helpfully interjects: “So they’ve recalled cars that haven’t been sold.” Boiled down to the subtext, Dobbs’ message was this: “All Volts catch fire, and therefore all Volts have been recalled.” That simply isn’t the case.

Much air time was spent on the $50 billion-plus bailout, which, the audience was left to assume, “funded” the Volt, doubtlessly at the whim of Obama’s known army of evil enviro-Nazis, intent on forcing vehicle electrification on a good-ole’-boy, V8-lovin’ populace. To top it off, these two media pros lamented the fact that the same government that had forced GM to produce the Volt was now extending $7,500 tax credits towards its purchase, thus squandering even more of “our taxpayer” dollars on this failed Socialist-collectivist flop. Truth? The $7,500 tax credit was enacted under the Bush administration!

But who the hell cares about facts when you’re in O’Reilly’s self-described “No Spin Zone?” (The fine print might as well read, “We said ‘no spin,’ not ‘no deliberate misstatement of facts.’ ”) What on Earth is wrong with the conservative media movement that it feels it’s OK to spread false information, OK to damage the reputation of perhaps the finest piece of mechanical technology our country has produced since the space shuttle, OK to hurt an iconic American company that is roaring back to global pre-eminence, OK to hurt American employment in Hamtramck, Mich., as long as it damages the Obama administration’s reputation?

While as a conservative Republican I may well share the goal, I deplore the means employed to attain it. The conservative cause damages itself, destroys its credibility through the expedient spreading of untruths. The public will figure it out. The right-wing “talking heads”, O’Reilly and Limbaugh at the forefront, have managed to make me embarrassed to describe myself as a conservative.

Come on, you guys. Shape up! There’s plenty of legitimate fodder out there. Let’s leave the “invention of facts” to the left-wing climate-change alarmists.

Published in Forbes

Wednesday, August 3, 2011

Bob Lutz - "Car Guys versus Bean Counters" Book Review

"Car Guys vs Bean Counters"
The Battle for the Soul of American Business
By Bob Lutz

The automotive world has been waiting for this book for months. Lutz gave a preview to a group at a fleet conference I attended in Las Vegas last summer, where he received a Lifetime Achievement Award from the Automotive Fleet and Leasing Association (AFLA). His previous effort, “Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of Our Time” made “best seller” lists.

Now 79, Lutz knows his auto industry history better than most. He has lived it in the most inner circles, having held executive positions for GM Europe, then, BMW where he coined the phrase, “BMW, The Ultimate Driving Machine.” Then worked with Lee Iacocca at Ford, followed him to Chrysler, where he lost out to Robert Eaton for the top job, perhaps the biggest mistake Iacocca ever made. After a stint as CEO of Exide Battery Corp., he rejoined General Motors. Who better to tell us the story of the struggle for authority and dominance in the various domestic auto companies, as well as the recent history of GM’s fall and rise?

According to Lutz, the GM he found when he returned in 2001 epitomized , “The tyranny of process over results.” He does so in true Lutz style as evidenced by his personal motto, “Often wrong but never in doubt.” Anecdote after anecdote kept me chuckling while I marveled at the man’s insight and ability to articulate. While Lutz comes across as confident, he also impresses with his candor and humility, free to admit a personal mistake or miscalculation. Then there is his notorious acerbic wit and occasional tendency to be blunt with comments like, “Global Warming is a total crock of sh*t,” made during a private lunch with reporters in 2008 but repeated over and over again by the press.

Lutz gets some things off his chest as he rails against government over reach, Toyota, CAFE, MBAs, and the “liberal media” one minute, then skewers Limbaugh, Beck, and the radical right wing the next. He spends a chapter on second guessing the tenures and decisions of others but does it in a humble way, pointing out that those people made sincere decisions based on their personal beliefs and information available at the time.

Lutz chronicles the history of GM from the days when iconic stylists like Harley Earl and Bill Mitchell ruled the roost. GM achieved market dominance by executing stylish cars that people lusted for because of their innovation and beauty. Post war Cadillacs, finned V8 Chevrolets, the Corvette, sixties era Toronados and Rivieras, and many other exhilarating vehicles resulted from when “Design” was dominant. This was replaced by the premise that, “You can’t manage what you can’t measure,” which led to bureaucratic process where no one tried to achieve anything other than to be perceived as not having made a mistake. Lutz calls it “analytics run amok,” preferring “art over science,” but seeing the need for both. “It’s the balance that has been out of whack.” He cites “penny wise and pound foolish” anecdotes one after another to make his points.

He singles out for particular scorn the “brand era” at GM, headed by Ron Zarella, brought over from Bosch and Lomb to be president of GM North America. Instead of designing desirable products first and then creating the underpinnings to make that design work, the first step in the new “bean counter” dominated GM was to create cost constrained underpinnings. The Design Department was then given the mission to “wrap the underpinnings in something that looks as good as it can under the circumstances.” This is the opposite of how things were done when “Design was Dominant” at GM. Lutz cites the ill fated Aztec, the “Quasimoto of Crossovers,” as an example. Over the years, GM had established “a stifling thicket of criteria: where the wheels had to placed relative to fenders, how the windshield should slope to permit easy viewing of traffic lights, how ash trays were to open and close, etc. etc.”

GM had purchased a Chrysler 300 to try to determine how Chrysler could develop such a vehicle, but GM couldn’t. The Design Department covered the car with 90 “Post It” notes, identifying areas where Chrysler had violated GM design criteria.

There was a time when GM paint was intended to be purposefully dull so as to not reveal flaws, in search for an optimum JD power score. There was no desire to excel or develop a “smash hit. The focus was on meeting “data points.” By following “process,” executives could avoid the accountability of failure as long as it was perceived they had followed the GM process.

Brand managers were recruited from companies like Procter and Gamble, and cars were developed and marketed by people who were deodorant, baby wipe, and toothpaste experts.

“The ebullient, dynamic, seductive volcano of creation had been transformed into a quiet mountain with a gently smoking hole at the top, spewing forth mediocrity upon mediocrity,” says Lutz.

The internal confusion at GM is exemplified by a conversation Lutz relates with an automotive supplier over lunch. At the time, Lutz was President of Chrysler. He asked the supplier who his favorite customer was. The answer came back, “GM!”

Why,” asked Lutz.

It seems the supplier was able to sell the same bearing under seven separate parts numbers, but in seven different boxes at wildly different prices. The purchasing departments rarely talked to each other. According to the supplier, doing business with GM was sure hard to keep straight, but it was mighty lucrative.

Lutz is careful to exclude GM trucks from excoriation, pointing out that the truck division produced success story after success story. Of course, everything changed when fuel prices suddenly increased, as they did in 2008. Not only did profitable truck sales suddenly cease, but the GMAC mortgage business, which had been subsidizing overall North American operations, started hemorrhaging cash at an astonishing rate.

Lutz tells his own version of the auto CEOs going to Washington D.C. on their private planes. He talks realistically about the firing of Rick Wagoner, and the role President Obama, Steve Rattner, and others played in the bailout. He discusses the fierce debate over whether or not the government should have taken a stock position in the new GM and about whether or not the UAW was favored in the deal. But you’ll have to read the book to find out what he said!

Lutz says, “In a sense, the decline, failure, and rebirth of General Motors is simply a metaphor for what is happening to business in the whole United States.”

According to noted automotive journalist, David E. Davis, Jr., “This book should be required reading for any young person who seeks a business degree." He also applies his advice equally to the current management of GM.

Saturday, September 11, 2010

Bob Lutz – “The Triumph of “Gut” over Number Crunching”

Bob Lutz, auto industry icon, recently received a Lifetime Achievement Award from the Automotive Fleet and Leasing Association (AFLA) at their annual conference in Las Vegas. As part of the ceremony Mr. Lutz was asked for his opinions on recent events in the automotive industry, as well his perspective on his career in the auto industry. Not only has Lutz had a brilliant career in the auto industry, his ability to articulate is what sets him apart.

Lutz has written another book, to be released next year. His previous book, “Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of Our Time” is well known and widely read. While I like my own title for his book, he prefers “The Car Guy Versus the Bean Counters.” I’m sure it will be an instant best seller.
Lutz’s long adversarial relationship with the numbers people goes way back. In my own view, bean counters live by the mantra, “You can’t manage what you can’t measure.” They have no understanding for the fact that, “What you could have had, but didn’t get” is just as real, despite the fact it can’t be easily quantified. For years, Lutz has had to deal with those who thought designing and building vehicles should be based on study group data. The previous generation Malibu was an example. According to Lutz, GM’s numbers people maintained that that Malibu scored the highest in study groups of any vehicle they had ever developed. We know how that car worked out. Thanks to Lutz, GM now takes a different view in the development of their vehicles. By investing an additional $500. to $800. per vehicle in content, with a focus on interior quality, transaction prices are higher as fewer and lower incentives are required to maintain volume. The current Buick LaCrosse is an example.

Lutz points out that GM is not in the transportation business, but in the business of emotions. Consumers buy vehicles mostly based on how they view themselves driving it, and how they are perceived by others.

On the subject of Buick, Lutz addressed the issue of why GM chose to maintain the Buick brand instead of others they let go. Buick is a hot brand in China. Over time, Chinese became impressed with the Buick brand because it was the chauffeur driven vehicle of choice of the wealthy and high ranking officials going back decades. In fact, Chinese preferred Buick to Cadillac. This preference made the Buick brand the obvious choice when the decision had to be made.

Lutz is highly critical of the U.S. government’s CAFE approach to fuel economy, preferring the European model of fuel taxes. His comment, “CAFE is like trying to control American obesity by only producing standard sized clothing,” brought down the house. In his view, phased in fuel taxes would influence consumers in what they buy and drive, making it easier for manufacturers to predict consumer preferences. The fact that this is not politically viable is another story. Lutz believes that U.S. consumers will not pay a premium for high fuel economy vehicles without a dramatic rise in fuel prices, despite the fact he raves about the new GM VOLT. At some point Americans will tire of fighting the war against radical Islam and paying for both sides of the war.

When questioned about any possible political ambitions Lutz replied, “First of all, I’m too old. Secondly, I wasn’t born in the U.S., and we know how that plays in this country. But should those things be waived, I might agree to be Emperor for a couple of years.” Extreme laughter followed this “tongue in cheek” comment.
When the subject of the auto industry bailout came up, “Lutz first responded by saying, “I really don’t have anything in common with the average Democratic voter.” Again laughter. But he went on to say, “The administration’s team did an admirable job. There is no doubt they had to trample on some due process issues, but the end result was magnificent.” While I would have loved to have been able to ask questions about SIGTARP, the dealer terminations, the executive shuffling at GM, the impending IPO, etc., there wasn’t an opportunity.

Lutz kept his audience spellbound and there was a discernible wave of disappointment when it was time for his segment to conclude.
Going into his version of retirement he has left a lasting legacy on the auto business. Bob Lutz is at the top of my list of those I would most like to have a beer with.

David Ruggles
WARDS Dealer Business
Sept 2010