Confrontational Corporate Culture Killed the Carmakers

I’ve long been a fan of Jerry Flint, the automotive columnist for Forbes. In his latest writing, Flint offers a well-thought-out analysis of what brought the U.S. auto industry to its knees.

He spreads the blame around, and has plenty of harsh words for governments, both here and abroad, in regard to how they supported or failed to support their automakers.

But the heart of his column focuses on what we lean advocates have been saying all along: Detroit failed to provide value for its customers.

Car plants become profitable when running full and with overtime. To do that, the car companies must build vehicles the customers want. Detroit's managers not only didn't care about the factories, they didn't care about the products or understand American car buyers.

And why didn’t they build the right products? Flint blames the adversary relationship between unions and management – which is another way of saying the corporate culture was light years away from lean.

The Big Three workers are older, tired and often from urban environments. Doing less was always the goal, and they bragged about it, too, which is why auto workers may not be particularly popular, even in their own towns. Foreign manufacturers, with American plant managers, won over their factory workers with a new culture: uniforms for everyone, democracy in the parking lot and no executive dining rooms.

The foreign culture was about more than parking spaces. Its real focus was on eliminating class warfare from the factory floor. The Japanese and the Germans, too, put particular emphasis on teamwork and quality. Detroit talked a lot about quality but did not always deliver on its promises…

Listen to Robert Dewar, who worked at Ford's Sharonville, Ohio, transmission plant in the late 1970s: "Final quality fluctuated with the amount of power granted to the Quality Control Department. When sales were strong and growing, QC was treated like an annoyance that was getting in the way of making the numbers. If a QC supervisor tried to be a hero, and made a stand, production simply went to engineering and got an 'engineering deviation,' which allowed the use of defective parts in the interests of production. So much for control of quality…"

Times have changed. The worker-management battles in Detroit's factories may have ended. The union and companies may embrace each other, and the quality may be as good as the foreign competition. Unfortunately, Detroit may have already damaged its reputation beyond repair.

David Brooks, columnist for The New York Times, has also hit the nail on the head:

G.M.’s core problem is its corporate and workplace culture — the unquantifiable but essential attitudes, mind-sets and relationship patterns that are passed down, year after year.

Over the last five decades, this company has progressively lost touch with car buyers, especially the educated car buyers who flock to European and Japanese brands. Over five decades, this company has tolerated labor practices that seem insane to outsiders. Over these decades, it has tolerated bureaucratic structures that repel top talent. It has evaded the relentless quality focus that has helped companies like Toyota prosper.

The importance of culture can never be overestimated.