Eating An Elephant—Where Do You Start?

H. G. Wells wrote his short story “The Country Of The Blind” before automobiles made by General Motors, Chrysler, and Ford littered the streets of America, but I can’t help but think of auto executives when I think of his unusual story.

Wells wrote about a remote valley village in the middle of the formidable Andes Mountains.
About 300 years ago the village was cut off from the rest of the world by huge landslides. Shortly after the residents were trapped, an eye infection spread rapidly and all succeeding generations were born blind.

Over this span of time the villagers lost all concept of visual experiences. As they couldn’t see, they chose to work during the cool of night and sleep during the warmth of the day. The buildings have no windows and have no lighting.

After 15 generations have passed an adventurous mountaineer named Nunez falls off a narrow mountain path and finds himself in the village of the blind. When Nunez discovers he is the only one with sight, he makes the assumption that in the country of the blind a one-eyed man must soon be chosen king.

But Nunez quickly discovers the blind community thinks he is both stupid and crazy because he talks constantly about light and colors. The blind cannot accept the visual world of Nunez and consider him to be a hopeless eccentric, magically born out of the rocks that surround them.

A Remote Village Called Detroit

All of the above could be blamed on a failure to communicate. That’s why I think of the old saying “In the country of the blind the one-eyed man is king” when I look at American auto executives.

Here we have a group that more or less owned the world in the 1950’s and 1960’s because of American industrial power, but continued to fritter away advantage upon advantage until their market share in the 2000’s is half of what it used to be—and all are near bankruptcy.

How did these overpaid, country club geniuses get their heads handed to them by Japanese and German auto execs? How could they have been so dumb? How did they get stuck in a remote village called Detroit in the flatlands of Michigan?

In the first place, GM, Chrysler, and Ford built junkers in the 1970’s and 1980’s until parts actually dropped off cars as customers drove down the street.

The auto executives, busy at their free country clubs and golf courses, got greedy and looked at next quarter’s short-term profits instead of long-term growth and a plan to maintain world market share. These guys were just plain arrogant and incompetent—while being seduced by their friends on their boards who thought just like they did.

Hot Deals For GM Trucks And SUVs

The latest Consumer Reports ranks Honda, Toyota, and Subaru in first, second, and third respectively in quality and performance, while Ford, General Motors, and Chrysler are ranked 12th, 13th, and 14th.
The Americans have been blinded by short-term profits while foreign makers have kept their eyes wide open to long-term goals of their industry.

In just the last ten years GM’s U.S. market share has gone from 30 percent to 19.4 percent while Toyota’s share has increased from ten percent to 18.6 percent. That represents millions of automobiles.

Chrysler, once under the care and feeding of the German giant Daimler- Benz (but unceremoniously dumped after a very short uncivil union), had its sales drop 25 percent from the same disastrous period last year. They are even trying to sell cars now by promising to pay the difference in gas price for their customers when it’s over $2.99 a gallon. Why can’t CEOs making millions a year be as smart as the American people, who drove 11 million fewer miles in March of 2007 while using 4.3 percent less gas?

GM is now offering its trucks and SUVs on six-year NO INTEREST loans. Are these guys desperate or what? GM has announced they are closing four American truck and SUV assembly plants—which means a cut of 500,000 units! They hired Citibank to peddle the entire Hummer brand to some idiots who reside in a remote valley somewhere.
Experts say that The Hummer story is illustrative of Detroit’s problems.

But first I must tell you my Hummer story. Our youngest son had moved, so Corky and I loaded up our 33-ft long, 12-ft tall, 10-ton motorhome with about four tons of his possessions for a trip to Des Moines.

Gas at that time was $3.90 a gallon so a 75-gallon tank running a V-10 engine almost gets a person into the mortgage business. While I was filling the tank a Hummer 1 pulls in on the other side of the pumps and the driver begins to fill his tank. He looked at me and asked: “What do you get for mileage?”
I replied: “About eight and 1/2 mpg with the wind.”

He laughed and said: “Not bad. I get about nine with this piece of junk.” Ouch. I didn’t ask him why he had bought it.

Big Hummers Birth Little Hummers

The millionaire geniuses running GM decided they could make a quick buck, so they bought the Hummer brand from AM General in 1998, the contractor who had designed the replacement for the legendary Jeep of WW II. The Humvee, still widely used in Iraq and Afghanistan by American troops, is the war-version of the street-legal Hummer.

Arnold Schwarzeneggergroper of California fame popularized Hummer 1 and was rumored to own about a dozen of them. Psychologists had a field day and 15-minutes-of-fame by explaining that men with small apparatus and large billfolds bought Hummers to boost their own deficiencies and egos. Arnold, usually politically astute, has taken his Hummers off steroids by converting them to hydrogen and biofuels.

(One of the persons who made the decision to buy Hummer is currently vice-chairmen of GM and operates 16 classic cars, eight motorcycles, two helicopters, and two surplus military jets. His recent reaction to global warming was summarized succinctly: “Global warming is a crock of shit.”)

Newsweek’s August 4th issue revealed that GM executives in the remote valley of Detroit had plans to design a whole new sales plan for Hummers by urging GM dealers to build Hummer showrooms that looked like military quonset huts.

These highly paid executives could not see that gas prices were going to go north, and that the Iraq and Afghanistan wars were both going south in the minds of the public. Therefore, the militaristic, tool enhancement, ego-driven Hummer became quick roadkill.
A California Toyota dealer recently told a customer he would take his Hummer in on a trade for a Prius—but it would cost him $25,000. In other words, the Hummer had virtually no value because the Prius sells for about $25,000.

These Guys Are Not Too Big To Fail

These figures are absolutely astounding and show how inept our auto CEOs are compared to Japanese CEOs. Both Toyota and Honda made about $1,200 on every car sold in North America last year. Chrysler lost $1,072 per vehicle, GM lost $1,436, and Ford lost $5,234 during the same period! The three American automakers lost a collective $15 billion last year—while Toyota, Honda, and Nissan made $23 billion!

Why are we getting creamed by foreign automakers? Here’s a partial answer. It takes 5.2 hours more time to assemble a Chevy than it takes to make a Toyota. I think that’s called planning and management. It might even be related to intelligence—and listening to your workers. Perhaps that’s why GM had a Wall Street value of $5.9 billion about a month ago while Toyota’s was $165 billion.

Why are shareholders willing to pay these CEO losers hundreds of millions of dollars? U.S. execs still oppose auto fuel efficiency standards while the Japanese are cleaning our clocks with hybrids and quality-built small cars.

Toyota’s CEO issued a challenge to his engineers in 2000: Give me a hybrid that will make 50-60 mpg. By 2006 Prius was the third best selling car in the U.S. while our Big Three (getting smaller and smaller in the remote valley of Detroit) were still peddling three-ton SUVs and Hummers using barrels of $3.50-4.00 a gallon gas.

It’s tough enough when you have exhibited to the world that you are not only blind but that your one eye is covered by greed. There is no hope in the country of the blind that a one-eyed CEO will ever become king.

With landslides of bankruptcy a real possibility for the Big Three in the next few years, the American public and investors might take this advice from a character in a recent movie: “You had better brace yourselves for a whole lotta ugly comin’ at you from a never-ending parade of stupid.”

It is also said the important thing about eating an elephant is that it doesn’t matter where you start if you have some sense of its size and shape. It’s quite evident the auto execs have no idea they are eating an elephant while they are lost in the remote valley of Detroit.