Bailout the car companies; fire management

By Scot Herrick | Job Performance

Nov 25

On the surface, the problem with the American car companies is that credit is hard to come by, people have too much debt, and people will hang on to their cars a bit longer before buying new. The same problem as “foreign” car companies.

But below the surface, American car company management is incompetent. Not the workers, though the union rules can be breathtaking. Even though the UAW has now set it up that new workers being hired will make significantly less than current workers.


  • Go to Congress and ask for $25 billion and fly there in private corporate jets. Tone deaf just doesn’t begin to describe it. Security as an excuse is ridiculous – that’s why there is this organization called TSA for airlines.
  • Total dependence on big trucks and SUV’s for all profits. Top management can’t figure out that there is an energy crisis in the making? Did we learn nothing from the 1970’s?
  • Inability to go for the game-changing car. Sure, we’re hearing about the Volt, but what about fuel cells? Hybrids – but only for big SUV’s! If you want to be the leading car company in the world, innovation is a lot more than rounding the fenders and adding chrome.
  • Management who believes only they have the top-down answers to the questions.
  • A management culture isolated from the employee experience
  • The only answers are beg for money and downsize the employee base – because there was no foresight to seeing the problems

This isn’t the first time the car industry has asked for a bailout; and, to be fair, the last one was successful – in a completely different competitive environment. In today’s global economy, what you have going on in Detroit is a horse and buggy competing against an Indy 500 race car. Management has demonstrated no ability to manage, foresee problems, or change the culture of isolation from employees and customers.

It is the culture of Detroit car company management. No one can apparently change it. Despite efforts to do so from the top down.

So bailing out Detroit is simply throwing taxpayer money against the wall and watching none of it stick. Good money going after bad. There will be no game-changing work coming out of Detroit, nor will there be any change to the culture of isolation from employees and customers. Even if there is a good plan given to Congress and they drive out there in their publicity-seeking car pools to ask for money.

The problem – failure will eviscerate the job market

But letting the car companies go under causes its own consequences. Not only is it the employees who will lose their jobs, but thousands and thousands more that supply Detroit – and others – with parts, inventory, and other needed services. It would kill the economy.

So bail out Detroit. But fire the management team. However big the management team is. The culture needs to change. The environment needs to change. Creativity needs to flow again. Game changing dynamics are needed when one week you fly to Washington on your own jet plane and think three weeks later driving in a car pool is change.