A couple days ago I arrived in Traverse City, Michigan… right after the conclusion of the 2006 Traverse City Auto Conference. Organized by the Center for Automotive Research, the theme was "The Auto World Future: Round or Flat?" The Center calls itself a "think tank", but the news from this conference makes me wonder what fluid that particular tank is filled with.
Here’s the news report so you know I’m not making this up. First there was some truly earthshattering and groundbreaking news:
- The challenges that automakers are grappling with are not cyclical, but structural.
- The industry is global and competition unrelenting.
- GM’s CEO Rick Wagoner was especially brilliant when saying "I know the world is changing, and fast."
I’m glad someone finally figured that out… just a few decades after the first Toyota hit our shores.
But here’s the amazing part:
- The "convergence of increasing competition, rising raw material prices, and growing labor costs" have created the "perfect storm" and are the reason why U.S. automakers can’t compete.
- Richard Dauch, CEO of American Axle, urged companies to set up manufacturing in India and China to help reduce labor cost.
So let me repeat to ensure I get this straight… automakers are experiencing increased competition and higher material and labor costs, so they must flee to China and India in order to succeed (or "avoid dying" according to Dauch)… and get further away from their customers.
Toyota is building more plants in the U.S., including Michigan.
Who is successful?
Perhaps Toyota has access to a top-secret supply of cheap material and troll labor, and can push a button to erect a competition shield. Or perhaps they just know how to lead and excite their knowledge workers to help reduce every last ounce of internal waste… instead of laying off 30,000 of their best and brightest while blaming everyone else.
It’s time to drain this particular think tank. It’s already pretty shallow.