SOME THOUGHTS AND OBSERVATIONS ON THE AMERICAN AUTOMOBILE INDUSTRY

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Dr. V.E.”Bill” Haloulakos is an AIAA National Distinguished Lecturer and a contibutor to The Business Thinker

INTRODUCTORY STATEMENT 

The opinions expressed here are those of the author and they have been formulated and gathered from a lifelong experience in industry and academia. The intent here is to express these personal opinions and describe how a once shining example of industrial success and ingenuity became a mess that required massive government takeover.

A PERSONAL OPINION

The woes of the U.S. Auto Industry are solely the making of weak leaders who, for a variety of reasons, “floated” to the top. Because they lacked the vision and the imagination for the future, they became “accomodationists” instead, to the various pressure groups, be they the Government, Labor, or the Environmentalists, and forgot their real purpose, which was and still is to build and market safe, reliable and affordable products to the general consumer public.

The current practice of massive and very costly car recalls, quite often because of minor and/or isolated design flaws, can easily be remedied and the federal bureaucracy interference eliminated, if only the automakers would agree to jointly form and sponsor an independent auto test lab styled after the Underwriters and/or the American Gas Association Laboratories.

THE MAKING OF THE CASE

There are many ambitious individuals who have a thirst for and a commitment to success and are relentless in their pursuits to accomplish great achievements. They possess natural leadership attributes and can command respect from associates and subordinates who are willing to help them in their pursuits. The word to be emphasized here is INDIVIDUALS!  Even sports teams that achieve championships do so because of great INDIVIDUAL coaches who know how to organize and train the right talent and motivate them toward the common goal. Likewise in military organizations and operations the attributes of the leader are of paramount importance.

In the American business and industrial landscape one finds numerous such individuals who by virtue of their visions and achievements changed and are still changing the world. The likes of Walt Disney, Donald Douglas, Thomas Edison, William Boeing, et al. are affecting and influencing our lives every single day. In the Automobile Industry there may be numerous names as well but the case can be made that none are as key and famous as Henry Ford. It was Henry Ford who truly popularized and spread the use of the automobile in the entire world. His vision of the new assembly line methods of mass production and his January 5,1914 two page press release envisioned  “…and a car in every garage” made cars affordable and spread their use worldwide. There is hardly a city or town in the Western World that did not have a Model T Ford at one time or another. His key to success was perhaps the fact that he saw to it that his employees were paid enough (five-dollar-a-day minimum wage in 1914… a true benchmark in U.S. labor history) so they could buy his car. What a novel idea! Others copied Ford’s methods and policies and soon enough we had General Motors (GM), Chrysler, American Motors and a multitude of others. In fact by the early 1940s the American Auto Industry was such an important giant of the American industrial landscape, they were in a position to convert to airplane and tank and other wartime material production and played a vital role in the WWII effort. During the WWII years a Soviet delegation was visiting one of the Ford plants in Michigan. As they went up to a balcony or viewing area looking out into the plant parking lot, they saw these hundreds and hundreds of parked cars and they exclaimed “look at the cars of the filthy rich capitalists”! Little did they know that they were looking at the employees’ parking lot and when they were told the truth they did not believe it but could only murmur the word “propaganda”!

Then came the post WWII years when the US Auto Industry was the shining example of the world. There were a multitude of cars that are now forgotten in the American folklore. There were the Hudson, the Desoto, The Studebaker, the Nash, the Packard and so on. Who can forget the ultimate worldwide word for auto luxury? CADILLAC!

All this great success was the result of competent key leadership at the top. In 1953, President Dwight Eisenhower, a great and proven leader in his own right, looked for a person to be his Secretary of Defense to run the defense establishment for the very critical and ugly cold war years. He chose Charles “Charlie” Wilson, then president of GM. In fact GM was such a giant American industrial entity that Mr. Wilson became even more famous and somewhat controversial for his saying “What’s good for General Motors is good for America”. 

This superb and superior situation ran through the 1950s and 1960s. Then came the not so great 1970s when automobile designs were influenced and/or dictated by lawyers, politicians and environmentalists. Who can forget the “S Car” or the “Nova”? One could here phrases such as “look at that S car go!” which would be heard as “look at that escargot”! As for the Nova, this author had a conversation with a Spanish language professor at the Defense Language Institute, located in the Monterey California Presidio, where he said that throughout Latin America the “Nova” name was said as “ No Va” which in Spanish means “it does not go”! So, no wonder these cars and names vanished very fast.

It was about this time, the mid seventies, that complaints started piling up against the automakers about the quality, safety and performance of their cars. It was also the time that recalls by the federal Department of Transportation (DOT) for the various defects started and are still going on. It is to be noted that for one or very few found defects the entire model lines were and still are recalled, usually involving many thousands of cars, although many of them may not have the noted defect. One can only begin to speculate about the enormous cost of this recall practice. One would also start thinking about a method to avoid or alleviate this costly practice.

In the late 1950s I worked for a number of years at the American Gas Association (AGA) Los Angeles Laboratories, testing all types of gas appliances, both domestic and commercial, such as water heaters, gas stoves and ovens, furnaces, and all their associated components, for safety and performance before they could be made available for sale and installation. From this work experience I have become very familiar with the value of this laboratory test work in the prevention of accidents, explosions, fires and the acceptance of the gas appliances by the consumer public. We do not hear of any massive recalls of water heaters, we do not hear of exploding gas stoves, or carbon monoxide poisonings, unless municipal code violations are committed with the installation and/or use of un-vented gas appliances.

In a similar fashion the Underwriters Labs (UL) perform a similar function, testing for safety only, for the electric appliances. Again here we do not have exploding steam irons, light bulbs, or televisions and the general consumer public feels very safe and has great confidence in their use. Whereas UL is owned and operated by the insurance companies, AGA is owned by the gas appliance industry but it is operating as a totally independent organization whose purpose is to police the safety and performance of their products.

It occurred to me then, and still does, that an organization similar to AGA for the auto industry would be an excellent thing to have. All the automakers could cooperatively set up such an independent testing lab, which would be responsible for the testing of all cars and their components for safety and performance.  They would be setting up the testing methods and operating requirements, have them approved by the National Bureau of Standards, and also free themselves from the present crushing “straight jacket” of the Federal bureaucracy. There will be no massive recalls because all tests performed will have eliminated most of the bothersome problems and there will be an open complete record of all this work as it is now for the cases of AGA and UL. This will also have an increased confidence on the part of the consuming public.

By the way, this auto-testing lab will also perform the same tests on all the auto imports as well to see that do indeed meet the same standards before they can be sold in the U.S.

Like the saying goes, “from your mouth to God’s ear”, around the mid seventies, the DOT issued such a request to the automakers and shortly thereafter all came out with a common statement that they could not do it! Personally I could not believe the logic and the thinking behind it. Why would they forego the opportunity to be their own masters but instead relinquish it to the federal bureaucracy? The results, of course, are very familiar. Massive recalls of hundreds of thousands of cars are a commonplace phenomenon!

While attending a conference of the Society of Automotive Engineer’s (SAE) Aerospace Division in Culver City, California, in the spring of 1976, I found myself sitting at the luncheon table next to a vice president from the GM Cadillac Seville Division. During the conversation I asked him about the automaker’s answer to the DOT request and specifically why they had rejected the idea. He promptly said “safety and performance?  It can only be done by legislation, not by engineering design”!!! I still cannot believe he said that but I heard it very clearly. Here again was a high executive who needed the Feds to legislate the details of his job! No wonder our shining auto industry, the pride of the forties through the sixties, started the downtrend until finally we had the recent Federal Bailout! It’s worthy of note that the Ford Company is the exception. Could that possibly be a Henry Ford legacy remnant?

It should be noted here, however, that we are not saying that the auto manufacturers do not do any testing. On the contrary they do a lot, but their emphasis is probably different from what it would be if done by an independent lab, and very often-critical decisions concerning safety are influenced by other factors that may result in compromises on the safety issues. One need to only remember the case of the Challenger Space Shuttle O-Rings and how managers overruled their engineers about their integrity in the very cold weather conditions.

The results of that case speak for themselves.

Here I like to close my essay with a personal story. I drove a 1967 Pontiac Grand Prix all over the Southern California freeways for over 250,000 miles without any problems or repairs. I only bought tires and had brake and lube jobs done. I was so pleased with the car and I thought that the Pontiac Division of GM would like to hear about it. So, I addressed a very nice letter to the top executive officer of Pontiac congratulating them and thanking them for building such a superb car that gave me so much good service. Being that I was then working on the Apollo Moon Program, I used the analogy that “I had driven my Pontiac all the way to the Moon and now I was on my way back”. I really and truly was expecting that he would welcome and perhaps even use such good and refreshing news about their products and that I would hear either from him directly, or some one close to him, with some sort of thanks and even perhaps some small voucher for my next set of tires. Instead, I received several months later an unsigned form letter with a rather nondescript content and a small sticker with the inscription “OVER 200,000 MILES” to affix it on my dashboard. It’s worth mentioning that at that time one heard nothing but complaints against the automakers and perhaps they were not prepared to welcome something different, like my congratulatory and thankful letter.

So, my conclusion was that I was dealing with a new type of managers who had “floated” into these high positions and only knew or understood negative comments and had been trained how to handle complaints. They simply did not know how to handle my letter!

 

The author:

Dr.  V. E. “Bill” Haloulakos, Adjunct Professor of Engineering at West Coast University for 30 years and recipient of WCU’s highest award,

Honorary Doctor of Humane Letters. Member of Board of Trustees.

Aerospace Science Consultant/Rocket Science Professor, an AIAA National Distinguished Lecturer

and the Distinguished Engineering Educator Award Winner

 

 

2 thoughts on “SOME THOUGHTS AND OBSERVATIONS ON THE AMERICAN AUTOMOBILE INDUSTRY”

  1. We are living in a completely different world now as opposed to the 50’s and the 60’s. And there’s no turning back
    I Cr 13:8a

  2. Hi Bill,

    Just read your article on the Auto Industry. Well done!

    How about airplane safety being handled similarly? A consortium of hull Insurance companies like Lloyds of London, etc., would do global, private airworthiness certification. This would replace governmental bureaucracies like the FAA, JAA and the multiplicity of agencies from other countries. Operators would not be able to buy hull insurance for a new airplane unless it had this Global Safety Certification. Politics would not be part of the process.

    This idea could also be carried through to pilots, ground crews, mechanics, air traffic control and passenger screening. These could be set up as risk-taking businesses seeking a profit, that is, the operating cash surplus needed for survival. The safer the industry, the more tickets would be sold. The more tickets sold, the more airplanes would be needed. The more airplanes flying, the more hull insurance policies would be sold creating more funds to pay for thorough global safety certification of air travel. Can a business model be made that does this?

    Although, the record is pretty good now, it can always be made better. One of my FAA friends referred to the present aircraft safety regulations as being based on \”tombstone technology\”. That\’s harsh, but the industry does base a lot of regulations on past accidents and well they should. The challenge is, can we do a better job of anticipating hazards?
    One would have to make the case that the present approach falls short. That would take a bunch of sifting through data and convincing many special interests to change their views.

    Right now, the insurance companies see things the way that Cadillac exec you spoke with sees things. Safety certification of the airline industry is the government\’s responsibility!
    They just want to collect insurance premiums believing the government is doing a \” good enough\” job. Hmmm.

    This idea came from the late Professor Andrew J. Galambos, founder of the Fee Enterprise Institute. If you wish to expand on it, be sure to check with FEI.com. I haven\’t been in contact with those smart folks carrying Prof. Galambos\’ ideas forward for a few years now, but I believe they are still active.

    Nice job, Bill.

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