TRAVERSE CITY – The tarmac at Cherry Capital Airport was populated with corporate jets Wednesday morning, indicating the arrival of automotive industry big guns scheduled to share their wisdom with 1,200 or more acolytes assembled in the ballroom at the Grand Traverse Resort.
This year’s theme is “The Road Ahead – Steering Through Discontinuous Change.” A good title? Several of the principal speakers didn’t know what it means and said they had to look it up in the dictionary.
James Lentz, vice president, Toyota Motor Sales USA, recalled that when his company first imported Japan’s best-selling Toyopet to the U.S. in 1958, the car flopped. Only 288 were sold that year. Toyota withdrew, licked its wounds, studied the American market, then returned with the Corolla and then the Camry. The rest, as everyone says, “is history.”
Now, Toyota addresses world marketplaces undergoing many changes. Principal challenges include “politics and powertrains” (read CAFE and emissions demands), an increasingly powerful youth segment that wants personalized cars and trucks, and a need to improve customer relationiships, especially with respect to retail sales. In surveys measuring public trust, retail car salespeople rank below lawyers and just above burglars.
In the U.S. alone, Lentz estimates that four million new drivers will take to the roads each year for the next decade. This means there will be lots of prospective customers for new vehicles. “Good times are coming back again,” Lenzt says, if the industry can correct what’s wrong and embrace change intelligently.
ArvinMeritor CEO Chip McClure says, “Steering though change is simply dodging potholes” and reveals a reactive management that can only postpone disaster. For the road ahead, managements must become proactive, capable of anticipating change, embracing change and mastering change. In this context, “change” becomes “transformation” on a global scale. Speaking as a global supplier, McClure says “If you’re not everywhere today, you’re nowhere.” The world is where the customers are. “This is where the U.S. automotive supply base needs to be.”
Unconventional thinking is required, McClure says, to analyze and fix problems that could, if neglected, cripple companies and the whole U.S. auto industry. According to McClure, these problems include soaring healthcare costs, pension costs, weak supplier-customer relationships that, if strengthened, could spur innovation, and financial practices that are mired in convention. Information Technology will become a singularly effective tool for finding solutions to these problems, he says.
Hyundai Motor American vice president John Krafcik concurs. “Data is like a floodlight in a dark room,” he says. Using IT to leverage data can benefit company and consumer relationships by revealing what’s really wrong, whether that be a producer’s performance shortfalls or overly high consumer expectations. In Hyundai’s case, consumer opinion research supports the company’s claims for steady improvements in quality and reliability, and is credited with boosting sales. And using correctly interpreted market research data, rather than relying on what Krafcik calls “the golden gut,” can verify the merit of new product plans even when “conventional wisdom” says otherwise. Hyundai’s soon-to-be-announced luxury sport sedan and sport coupe reflect consumer-derived data.
In his presentation today, Ford Motor Company’s new CEO, Alan Mulally, eschewed the podium for stage-center, and delivered ad lib comments that were as pointed as they were concise. Speaking about what has to be fixed at Ford, Mulally ticked off four essential goals. First, he said, the company has to correct its over-capacity so that it can operate profitably. Second, Ford must “accelerate development of new products that people really want.” Sales of cross-over vehicles, he said, are up 40 percent. Third, he said Ford is investing heavily in capital improvements. He cited “the biggest home improvement loan ever,” worth $23.5 billion. Fourth, he said Ford ‘s recovery operation must more deeply involve Ford’s employees, its suppliers, the UAW, its customers, “everyone who has a stake in Ford’s success.”
Questions from the audience echoed the sense of “discontinuous change.” Asked about the origin of Toyota’s Scion line, Lentz said it was designed for youthful buyers who are web-literate, self-expressive, impatient and well-informed. Via online chat rooms, Lentz says, Toyota is receiving ten times more consumer feedback than it has from conventional surveys.
Asked if the auto industry will lobby Washington for national healthcare, McClure said he didn’t know. But, he said, “the IT side of healthcare” could do far more if it were based on nationally recognized standards.
Lentz was asked to forecast the future for hybrids and plug-ins. If you look at “hybrid” as a system that encompasses battery technology, gas, diesel and bio-fuels, then, he said, “eventually everything will be hybrid.” He said Toyota is “experimenting with plug-ins.”
Mulally was applauded when he said the industry’s biggest problem is CAFE. “Think about what we stand for, not what we stand against,” he said. In his view, the industry should stand for improving mileage every year, forever. But not by fiat that defies the Second Law of Thermodynamics. “What we need,” Mulally said, “is a national debate on fuel economy.” To Mulally, the critical question is whether we can, in fact, have such a debate.
A Dave Cole pearl of wisdom: Before you criticize anyone, walk a mile in his shoes. Then, when you are ready to criticize him, you’ll be a mile ahead of him and you’ll have his shoes!
This special report for MITechNews.Com was written by Neil Jackson of Hudson Mills Communications.
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