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Did Competition Kill The Big Three

 
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Louis Altazan



Joined: 15 May 2007
Posts: 774
Location: Baton Rouge, LA

PostPosted: Wed Nov 19, 2008 8:28 pm    Post subject: Reply with quote

Many excuses have been offered for the possible demise of the Big Three. Competition and unions are two of the favorite scapegoats. Without being overly wordy, I would like to offer a different view. I think there are ramifications applicable to any business. I feel the Big Three were crippled, not by competition but a total lack of serious competition. For decades they competed only among themselves and only to a very limited degree. Each had their own piece of a very large pie and things were good.

Car makers needed workers to build their products. With few ways [and little desire] to demonstrate superior value, higher cost would be a disadvantage. With unions, this cost could be more or less mandated on their competition. If all automakers had to pay the same labor cost, it really didn’t matter so much what that cost was. Just pass it on to the public in the form of higher prices.

The same might be said of many cost. As long as they are mandated to everyone competed with, poor management may feel there is little need to control them. Just keep raising prices and Joe Public picks up the tab. No need to increase efficiency, that would take effort. No need for a better product, we're as good as the competition.

This is a very vulnerable position. One I feel many businesses and organizations today are in. As long as the public has no alternative, it takes what it gets and pays what it cost. People do not ask for innovation, but they know it when they see it and have long memories. An efficient alternative with innovative products [services] is the death knoll for lackadaisical management.

I do not believe the demise of the Big Three began this year, nor this decade, nor in the last twenty-years. The seeds of their problems have existed for sixty years and except for artificial means (tariffs, protection, etc.) would have manifest long before now.

Jobs will be loss, not to competition but to ill management, short-term greed and lack of innovation. No man should start looking for the fire hydrant when his house is in flames. Every business should compete, everyday. Not with any perceived competitor, but with themselves to be better than the day before.



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Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA
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Tom Ham



Joined: 04 Sep 2007
Posts: 47
Location: Grand Rapids, MI, USA

PostPosted: Sat Nov 22, 2008 12:21 pm    Post subject: Reply with quote

Well said, Louis. And very applicable to many repair shops today. Here in Michigan businesses have been in a lousy environment for many years now. Many have failed, but many others have prepared and adjusted. Some are struggling, some are doing OK, others are thriving.

We do things today that I would not have remotely considered doing 5 or 10 years ago. We are constantly changing and building adjustability into our shop to prepare for hopefully anything that may be coming.

Many shops up here now produce 25-50% more per employee than they did a short time ago.

What killed the Big3 was poor management, arrogance and excessive dependence on easy credit. Of course, they are not going away anytime soon. Washington will dump billions into them and become partial, if not total, owners.

My current theory is that Michigan is about to shift economically from being the worst state to being in the top ten, if not, number one. If Washington is bound and determined to waste billions, it might as will be where I live.

Wink

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Tom Ham
AutomotiveManagementNetwork.com - Hams Management Systems
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Louis Altazan



Joined: 15 May 2007
Posts: 774
Location: Baton Rouge, LA

PostPosted: Sun Nov 30, 2008 1:17 pm    Post subject: Reply with quote

Hi Tom,

Tom Ham wrote:
Well said, Louis. And very applicable to many repair shops today. Here in Michigan businesses have been in a lousy environment for many years now. Many have failed, but many others have prepared and adjusted. Some are struggling, some are doing OK, others are thriving.


"When the tide goes out, you can see who's swimming without trunks on." Businesses like yours, that are inherently sound tend to do well, regardless of outside conditions.

Tom Ham wrote:
We do things today that I would not have remotely considered doing 5 or 10 years ago. We are constantly changing and building adjustability into our shop to prepare for hopefully anything that may be coming.

Many shops up here now produce 25-50% more per employee than they did a short time ago.

What killed the Big3 was poor management, arrogance and excessive dependence on easy credit. Of course, they are not going away anytime soon. Washington will dump billions into them and become partial, if not total, owners.


FEMA style efficiency brought to industry. I find it unlikely the government largely responsible for the current state of things, is capable of effecting much of a cure?

Tom Ham wrote:
My current theory is that Michigan is about to shift economically from being the worst state to being in the top ten, if not, number one. If Washington is bound and determined to waste billions, it might as will be where I live.

Wink


I see your point. Laughing

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Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA
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