Driving to the FutureBy Faisal Hoque | Posted 2008-11-18 Email Print
The U.S. auto industry’s pleas to Washington for a bailout are a perfect illustration of the forces making management in the twenty-first century a hair-pulling exercise, writes Baseline columnist Faisal Hoque. We are witnessing a dizzying restructuring of a global industry, with new players popping up anywhere and everywhere, even given the high barriers to entry to the game of making automobiles
The stakes are enormous
Even veteran, global corporations face demise in the maelstrom of change. General Motors, just months after celebrating its one-hundredth birthday, announced that it was burning through cash at the rate of $2 billion a month and could not keep it going much longer than 2008.
Whole economies are at stake. The Center for Automotive Research (CAR) estimates that should all of the Detroit Three's U.S. operations cease in 2009 some 3 million jobs would be lost in the first year. That includes 239,341 direct job losses at the three auto companies; 973,969 secondary jobs at auto supply companies; and more than 1.7 million jobs at other employers from the reduced spending by those jobless workers.
It’s political football.
There are very serious players in this game, among them labor unions and environmentalists, whose interests do not always coincide. Today, more than ever, political risk must be factored into management decision-making. And not just in the United States. What about the Chinese government’s efforts to promote its own auto industry around the globe? What does that mean for U.S. companies?
It involves technology.
What doesn’t these days? Think about it in these terms:
<li" />Meeting certain emissions mandates, yet another financial burden for the automakers, will require technology not yet invented, the industry says.
<li" />What is needed to rescue us from the oil cartel, some industry observers’ claim, is the global adoption of technology that allows cars to run on bio-fuels as well as gasoline.
<li" />An energy company controlled by Warren Buffett’s Berkshire Hathaway plans to pay about $231 million for a 10 percent stake in Chinese auto and battery maker BYD Co., which expects to roll out fully electric cars before the end of next year.
These are game changing.
Hail Mary bets on technology that can only be made within a holistic management process and system. Still, those of us who labor in the vineyard of business/technology convergence recognize that technology, however well managed, plays the secondary role of enabler. Life or death rides on the execution of the strategy.
We are witnessing a dizzying restructuring of a global industry, with new players popping up anywhere and everywhere, even given the high barriers to entry to the game of making automobiles. Lifan Group, a Chinese company, working with the Communist Party, is bidding to buy a sophisticated car engine plant in Brazil from DaimlerChrysler and BMW. It makes more sense to dismantle it and move it 8,300 miles, rather than develop its own technology.