Not So Dismal

Making Economics a Little Easier to Understand

Steve Jobs, Auto Industry Savior?

with 5 comments

Marketwatch has an interesting column that follows up on a point made by a different interesting column written a few days ago by Tom Friedman. At the tail end of his article, he said:

Lastly, somebody ought to call Steve Jobs, who doesn’t need to be bribed to do innovation, and ask him if he’d like to do national service and run a car company for a year. I’d bet it wouldn’t take him much longer than that to come up with the G.M. iCar.

The question is, could The Steve save the US auto industry? The unionized workforce is a major bump in the road, so to speak. Part of what makes Apple so successful is its cutthroat culture. Called a “Stevetatorship” by more than one, the UAW would balk at any attempt to as tightly extract every ounce of effort from each employee.

Further, it seems like many of the Big Three’s designers and engineers are simply stuck in the past and not always willing to make the next big leap. Another important key to Apple’s success is its almost gleeful abandon at the prospect of leaving old ideas and technologies on the side of the road. Consider the switches from the old OS 9 architecture to OS X, from Carbon to Cocoa or, the most high-profile of these sea changes, their complete shift from PowerPC to Intel in less than two years. The last one in particular is incredible. Here was a situation where both the software and the hardware saw major changes across a variety of products in a very short period of time, and it was accomplished with the least pain of any comparable transition by other manufacturers by far. Compare this huge shift in architectures to simply trying to upgrade to Vista from Windows XP and tell me which operation was handled with greater care.

Concept Chevy VoltThis flexibility comes with a price, of course. As mentioned above, Apple is definitely a fast-paced company and has not shied from a tough decision since Jobs retook control. It is this mental agility and confidence in quality that has been Apple’s formula for great success since the launch of the first iMac. This level of innovation does exist within the bowels of the large American auto manufacturers; their presence is made most clear at industry trade shows when sleek and sophisticated concept vehicles are put on display. But, for one reason or another, this potential seems always dragged back to Earth. Just consider the differences between the original Chevy Volt concept vehicle compared to its production counterpart, even now at least a year or more away. What was once a beacon of great imagination has become just another Malibu after the first 45 miles of electric-only power.Volt Production

It’s not just the vehicles that need fixing, though. The whole fuel architecture must be changed in order to make any real progress from an environmental standpoint. The chief problem with electric vehicles is their relatively short range and long recharging times. The solution is to have battery-swap programs in place at refueling stations across the country. Simply putting a new battery into the vehicle should be no more painful than refilling a gas tank is now, and if the architecture is laid out efficiently then it does not need to entail a massive new line of expenses for the end user.

Finally, improving the driving experience is key. Americans continue to shy away from compact vehicles even in the face of high (but continually decreasing, at the moment) fuel prices because they like the luxuries afforded by larger vehicles. US auto makers must make the features onboard the most innovative and highly-sought after in the market. This, as Apple well knows, is a difficult and continuous proposition, because the competition will simply lift the best ideas and put them on next year’s model.

The magic isn’t in Steve Jobs, the person. The magic is in “Steve Jobs”, the mentality. “Fixing” the domestic auto makers doesn’t mean converting all of their factories wholesale into subcompact production lines, because this is not what the market demands. Prices must fall, yes, but more importantly, quality must rise. Because as Apple knows, this may not be the recipe to market domination, but because people will pay a premium for a clearly superior product- an American product, whatever that means today*- it is the recipe for recovering and roaring profits.

*-It’s important to remember that many vehicles from Japanese automakers are made today in American factories, mostly located in the South, where open shops ensure that the ludicrous arrangements devised by unions will not exist.

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Written by caseyayers

14 November, 2008 at 2:51 pm

5 Responses

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  1. While it would be nice that the auto industry would move as fast as Apple under the command of Jobs, it wouldn’t work. For one simple reason – safety. If you move at the pace Apple moves at, things are bound to go wrong. Look at some of the recent Apple debacles: MobileMe and iPod battery life. Now, when you take that into the consumer gadget realm, nobodies life is in immediate danger. When it comes to the car sector, moving slower means having safer cars. I would hate to own a “beta” version of a car.

    That said, bailouts are dumb. I’m a whole sale believer in free markets. The “Big 3” need to face it: they were beat to the Asian markets in this globalized world and they can’t surive because they didn’t adapt to supply and demand like Toyota and Honda. If it so happens that these companies are bought out by successful ones, that is the way it should work.

    Not That Easy

    14 November, 2008 at 3:36 pm

  2. You make a good point regarding safety. It’s true that major changes in terms of structural design and converting to different sources of fuel cannot take place at the same light-speed that is the norm in Cupertino. But one way to deliver new ideas as quickly as possible is to streamline the vehicle lineups that American manufacturers offer. GM has found raging success in the Chinese market, for example, by focusing on the basics: just a few high quality Buick models and some ultralight budget cars.

    This is another of the tenants of Apple’s success: notice that there aren’t a dozen models of the iPhone at once, just one. If the automakers focused all of their energy into creating a few masterpieces at a time, rather than trying to slowly evolve dozens of lines at once, they would dramatically reduce their costs and strengthen the odds of delivering revolutionary change.

    caseyayers

    14 November, 2008 at 4:02 pm

  3. Apple has the luxury of not having to design an iPhone for everyone. They have a very specific target: affluent tech lovers who are highly effective influencers.

    Everyone needs a car, not everyone needs an iPhone – is what I’m trying to communicate.

    People like to think of cars as an extension of their personality. American pride ourselves on being individuals and our cars show that. That is why there needs to be so many models, even though many models are just different “badges” of base platforms.

    Not That Easy

    14 November, 2008 at 4:56 pm

  4. It is a lot easier than it’s made out to be. Foreign car makers have a lot less options, colors and models in their lineups.

    They also have fewer lemons, recalls and just plain dogs in their lineups.

    Build a better product, cut back on the option train and shorten the lineup and they, the buyers, will come back.

    Al

    14 November, 2008 at 11:22 pm

  5. It’s not the union’s fault that Detroit can’t make any cars that people want to buy. Would you want to be at the mercy of these dumb bell executives without job protection?

    A government bailout should come with lots of strings, such as, the interest rate goes down for every zero pollution car they make and it goes up for every polluting behemoth that rolls of the assembly line.

    The auto industry needs to embrace new tech much more than they have. But in the long run, cars are a thing of the past. Welcome to mass transit.

    Jim Smith

    15 November, 2008 at 12:26 am


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