The victims of Vauxhall's Luton closure have plenty of candidates for blame, from the high pound and the relative ease of British shutdowns to the hire-and-fire mentality of the American overlords. But the real cause runs deeper and further back through decades of managerial mishaps.
The British managers bear some responsibility for the underlying, persistent weakness of the Vauxhall brand. That's as nothing compared to the monumental mistakes of General Motors, at home and abroad. Entangled in bureaucracy, paralysed by inaction, drowning in excess costs, GM has wasted tens of billions on learning how not to run a mega-corporation.
Very few other car managements are in a position to hurl the first stone. Consider the present scene of devastation. Chrysler, quite recently the most profitable US carmaker by far, is bleeding millions so fast that its purchaser, Daimler-Benz, is buckling at the knees. Daimler not only overpaid ridiculously, but compounded this sin by heavy-handed and typically unsuccessful long-distance interference.
BMW is still licking its wounds from the inept takeover of Rover Group. Lest British managers are licking their chops at these foreign fiascos, not only Rover, but Landrover were found wanting in fundamental management and manufacturing skills by their new owners. So, in spades, was Jaguar. The first American sent to the rescue by Ford declared its plant the worst he had ever seen, with the possible exception of the Gorki factory outside Moscow.
Not that Ford is any paragon of virtue. Its performance in the Firestone tyre recalls was so inept as to make the angels weep. The list of automotive ineptitudes could go on, and on. Is there some pattern here? The car makers have all that managers could desire: huge financial resources, vast accumulated expertise, armies of well-versed executives and specialists, global markets, insatiable public demand. How could they get so much so wrong?
The first answer is that this industry is highly inbred, dominated by company veterans who, like all their colleagues, adore playing with cars. Infusions of outside talent are rare, and so is jobhopping at the highest level. When jobs are hopped, as when a miffed Lee Iacocca quit Ford for Chrysler, the results can be electrifying. But Chrysler was a basket case then (as now). Others with bigger market shares, larger cash flows and greater conceit (which is endemic among car managers) are unlikely to place their heads on somebody else's block.
The conceit is compounded by a second major fault, autocracy. The Western industry was originally created by all-powerful entrepreneurs. Their heirs can't match their genius, but grasp for their power. A bitter boardroom battle at Daimler thus ousted the comnpany's top car man and left total control to Jurgen Schrempp, the mastermind (if that's the word) of the Chrysler fiasco. It's unfair to blame Schrempp for other flops, like the original instability of the A-cars or sluggish sales of the unsmart Smart car. But he's certainly responsible for the halved share price and the sadly reduced reputation.
The misfiring of Mercedes is a textbook study in top-down management. Because of the autocratic traditions, Western car firms have lagged behind the general management trend towards self-managed teams whose leaders have genuine autonomy. When the new approach has prevailed - as when Ford launched the Taurus in the US - the results have been spectacular. But the industry reverts to past form at the drop of a hat. Even Ford forgot the Taurus lessons, rediscovering them in the 1990s with, of course, renewed success.
That exemplifies a third fault, cyclical mismanagement. Periodically one car firm leaps ahead of the pack. It's hard to believe, but for several years GM Europe was a star performer, clobbering a money-losing Ford. The usual reaction is to rejoice over the success, remove its architects to head office, and complacently watch while the star rapidly loses its lustre. In the process, basic errors are made, like allowing models to run too long before renewal (witness Vauxhall's battered Vectra).
That damages not only the model but the brand. A few years back, a top GM executive announced enthusiastically that his company had neglected its brands, and was now pouring effort into their nurture. That's like a football coach revealing that his club has discovered the importance of scoring goals. All GM's brands have lost power - and one, Oldsmobile, has now died as a result. The death was not natural. It was suicide.
A fourth defect provides apparent excuse for these lapses. Schrempp's defenders would argue that the not-so-little local difficulties are mere blips in a long-term scheme for turning Mercedes into a full-line global manufacturer, competing in every market and segment. Ford, another long-termer, is in the throes of a second major reshaping, while GM has started yet another. This addiction to upheavals disorients good managers and makes the bad ones worse, while unwanted secondary evils often outweigh any good results,
The British, like the Vauxhall workers, are mere injured bystanders. The insularity and narrow-mindedness of the long-gone native manufacturers barred Britain from sharing in the fast-growing markets and laid companies bare to foreign competition. The consolation used to be that modern, well-managed foreigners (First Ford and GM, then the Japanese) kept the UK in car manufacture, even though on a relatively humble scale. The expanding Japanese presence, led by Nissan's achievements at Sunderland, actually sparked a genuine, strong recovery in output.
Again, poor parental performance, in a Japanese industry dominated by Toyota and Honda, is to blame. Now the Luton closure, Dagenham's withdrawal from making Fords, and the darkened prospects for Sunderland are sounding another retreat. It's too late to stop this slide. But managers in other industries - and politicians in government - had best take notice. Without growing customer franchises, indigenous research and product development, autonomous local managers and genuinely world-class management, the automotive debacle will be repeated elsewhere; and that includes the star industries of the New Economy.
