A salvage plan for Detroit’s Big Three
The Big 3 U.S. automakers—GM, Ford, and Chrysler—want the $25 billion federal legislators are hesitantly dangling in front of them. Today, Democratic leaders insisted that the trio spell out their plans for spending the $25 billion (which presumably won’t include additional private jets).
My advice to these companies: Go considerably further than a spending plan.
On his “60 Minutes” interview this past Sunday, President-Elect Barack Obama said he supported a bailout but wouldn’t sign a blank check. He’d want to see a plan for revitalizing the industry.
I do—reluctantly—support a bailout. The impact of 3 million or so people joining the ranks of the unemployed (and this would come from GM’s failure alone) would be devastating at a time when the economy can ill-afford such a hit. But that would be preferable to handing over $25 billion that would be spent on the same old same old, leading us right back to this point in another year or two.
A genuine turnaround in the industry, though, would result in repayment of the loans with interest, as Chrysler did when it was bailed out back in 1979.
The U.S. auto industry is riddled with problems. As much improved as American cars are from their sorry state 30 years ago, Japan and Korea (among others) have kept pace and continue to churn out generally better products. The power of the United Auto Workers has led to pension and retiree medical obligations that would be unthinkable in just about any other industry, creating a crushing financial burden. Huge bureaucracy and massive infrastructure make major changes slow and tedious, like the shift to more fuel-efficient engines. And these problems just scratch the surface
All of which makes the public skeptical that the industry will produce any ROI from its $25 billion investment.
So here’s what GM, Ford, and Chrysler need to do:
Get together and create a vision for the reborn U.S. auto industry, a road map for how they’ll get there, and a plan showing how the bailout will serve as the catalyst for achieving the vision.
This plan should be presented in simple social website. Extravagant design and bells and whistles aren’t necessary, just a clear articulation of the vision and the plan. In addition to initial feedback through comments and other crowdsourcing channels, the Big Three should plan a 72 hour public jam, just like those put on by IBM, to tap into the collective wisdom and surface more ideas that will lead to a revised vision and plan that now belongs to the American people as much as it does to the automakers. It’s very difficult to oppose a plan you helped create.
Legislators, meanwhile, would watch this transparent exercise unfold in public, with public involvement. That is, the voting public will have had a hand in developing the plan. It’s not easy to reject your voters’ efforts.
The final step is to institutionalize the means by which progress would be subject to public oversight, including an industry website chronicling each step and providing the means for continued engagement between industry and public.
The Big Three have a real opportunity to do something amazing. Dramatic change is not just a good idea; it’s a requirement. Ford and GM already understand the value of engaging their customers. Now it’s time to bring these factors to bear on a major reinvention of the industry.
With GM proclaiming it could run out of cash by the end of the year, time is short. With survival hanging in the balance, I bet they could do it.
11/20/08 | 17 Comments | A salvage plan for Detroit’s Big Three