Conference on World Affairs

This year’s international Conference on World Affairs was, by far, the best in the last decade, perhaps because so little time needed to be devoted to Bush and Cheney. Subjects covered ran the gamut— global warming, Charles Darwin, black holes in space, Islamophobia, economic meltdown, the demise of newspapers, Rush Limbaugh, dark energy discoveries in the universe, breast cancer, American education, terrorism, international traffic in sex slavery, Mexican drug wars, and the political danger of misunderestimating the Republicans. In the next couple of weeks I’ll be summarizing many of the best ideas that I picked up from this amazing annual gathering of intellectuals.

One of the highlights was a lecture by Bill Reinert, national head of advanced technology for Toyota. His subject, of course, was the auto industry, and his talk can be summarized in three numbers— 17 million, 14 million, and 8.5 million. Last year the global auto industry produced 17 million cars. After the latest round of cutbacks, the global auto industry now has the capacity to produce 14 million cars per year. This year, the global auto industry is on track to sell 8.5 million cars. Do the math. More than any other single element, it’s overcapacity which most frightens auto industry leaders. There are currently 16 auto companies building cars around the world, and Bill Reinert’s educated prediction was that, when the economic crisis has passed, there will be 6 auto conglomerates left to supply the car industry. Don’t look for GM and Chrysler to be among them.

And Now A Word From Our Sponsor

It’s the annual football orgy time with NFL playoffs and a seemingly endless stream of bowl games, and this year it represented a chance for the dying auto makers to advertise their way out of bankruptcy with a Fed fueled cash injection paying for the TV spots. Since I was going to be watching most of the games anyway, I decided to use this opportunity to monitor the advertisements more closely than I’d done in the past. Here’s what I found.

GM and Chrysler were, by far, the most prolific sponsors of televised football this year. Every single game that I watched had the play on the field interrupted by AT LEAST a dozen car commercials. Twelve was a minimum. Some games had two or three times that number. Chrysler’s advertising agency, BBDO Detroit, seems to believe that college football audiences are overwhelmingly made up of testosterone-loaded young macho types who dream of piloting Dodge Ram pickup trucks through fiery explosions as they drive like a bat out of hell without pavement under the tires. Maybe BBDO Detroit has the Chrysler customer demographic dialed in to perfection, but I have to believe that these commercials (which look like they’re being filmed in a war zone) have a lot more to do with the fact that Dodge Ram pickup sales are still languishing in the aftermath of $4.00 gas.

GM’s new advertising agency for Cadillac, Modernista!, is trying something rather daring. They are conspicuously tying the GM brand to the various makes and models from Pontiac and Cadillac in addition to Chevrolet. I wouldn’t have believed that there was anyone left in America who didn’t know that Cadillac was a subsidiary of GM, but since Modernista! believes this, here’s my question— is now the time to set the record straight just as GM CEO, Rick Wagoner is fresh from his Congressional fiasco? Wouldn’t it be better to let a prospective buyer for an Escalade think that, since the vehicle has a European sounding name, it must be made by a foreign car maker? This is especially true since GM is touting a 5 year warranty in the new commercials. Good luck with that GM warranty three years from now.

The tragedy is that none— zilch—zero percent of the commercials from GM and Chrysler were for green vehicles that would give fuel efficiency and lower emissions.

Why Public Relations Matters

There’s a saying that “you can’t make a silk purse out of a sow’s ear,” but that seems to be the best description for the task set before the PR teams at Ford, GM, and Chrysler. Less than two weeks ago, the CEOs of the big 3 automakers presented themselves in front of a congressional panel to beg for money, and they came away with nothing but the image of their own incompetence and narcissism burned into the mind of the American public. If one of these men had been unprepared, it would have been remarkable, but the fact that all three were unprepared is simply astonishing. So tomorrow, they get to try all over again.

There should be page in the CEO “how to” manual that tells a titan of industry to meet with his PR director before he appears before congress. Most people think of PR guys as spin-masters and slick mouthpieces, and some are just that, but the very best PR directors working at the most successful companies are paid handsomely for one very important talent— they can see things the way that people outside the company see things. They are inoculated against internal groupthink, and— most importantly— they have the personal fortitude to speak truth to power, and to tell a CEO the things that a CEO doesn’t want to hear. A good PR director would have told any one of the big 3 CEOs to cut his own salary, to sell off the corporate jets, and to carry a pen and paper to take notes so that it would appear to the congressmen that somebody actually gave a shit.

I suspect that all three American automakers have such PR directors on their payroll. The fact that they weren’t consulted explains why their companies are in financial trouble. The inept and arrogant big 3 CEOs have accepted the dysfunction in their styling departments, and their engineering departments, and their strategic planning departments, and their marketing departments— so why would they think about trusting their PR departments? The good news, however, is that Americans have the choice to not buy their products.

What Didn't Happen This Week

There’s an old joke about the customer who asks the salesman, “How can you sell your product at such a low price?” The salesman replies, “We lose a little bit on each sale, but we make it up on volume.” What was never elaborated in that joke was that the salesman eventually went on to become the CEO of an American auto company, so I guess the joke’s on us as American taxpayers.

Stevedores at the shipping docks in Long Beach and Los Angeles report that there is no longer room to store the imported cars coming into the U.S. from Asia because nobody is buying the cars that are already unloaded there. Meanwhile, auto workers are facing layoffs at the GM plant in Bowling Green, Kentucky where the Corvette is manufactured because there are still unsold 2007 model Corvettes sitting on the paved lot down there, but the body style on America’s sports car hasn’t been changed in more than ten years, so I guess that GM could fudge the paperwork on those 2007 models and sell them as new. It would make about as much sense as anything else that GM is doing.

This week, the CEOs of GM, Ford and Chrysler flew from Detroit to Washington on their own separate private jets to appear before Congress, and this symbolically spoke volumes about what’s wrong with the auto industry. However, it was the things that DIDN’T happen which spoke even louder. What didn’t happen was that someone from the UAW (the “union”) was sitting there on the hot seat right alongside the CEOs. I’m sure that a top union official could have hitched a ride on any one of the three corporate jets if somebody had thought about the fact that the union is, perhaps, the most important player in all of this pathetic auto meltdown. What didn’t happen was that any of the auto CEOs thought to bring along a pencil and paper to make any notes. What didn’t happen was that any of the CEOs had the faintest clue about what to do besides begging for free taxpayer money. And most importantly, what didn’t happen was that potential car buyers saw or heard anything at all that would make them want to “buy American.”

That’s the fundamental problem, that there’s no logical reason whatsoever to “buy American.” The quality is second rate. The management is imperious and disgusting. Having an American auto service infrastructure years down the line is a highly remote possibility. The car value for the dollar spent is much less than with the foreign models, and when American car prices are actually lowered, the reduction is done with clunky rebates. Even a federal law requiring us to “buy American,” would not work because we’d still be free to drive what we already have until the American companies finally throw in the towel. When you lose a little bit on each sale, you really can’t make it up on volume.