@AIPothoof: Later came Checker Motors (I grew up near Kalamazoo, MI, where they were located). Their model was the same: buy axles, motors, suspension and so on from the Big 3 (and their suppliers), attach it to their chassis and cover it with their own body.
Yes, I was thinking about them. IIRC, they bought chassis and running gear from Chevrolet. They were essentially custom coach makers, putting their body on someone else's frame. I've ridden in classic Checker cabs, and you still occasionally see the odd Checker Marathon (taxi body but not in yellow, and packaged as a family sedan without the taxi jump seats in the back.)
When Detroit started downsizing their cars late 60's-early 70's, Checker could no longer buy their larger components for a competative price. They went out of business.
Their alternative would have been new downsized models of their own, but the market for purpose-built taxis wasn't big enough to support that, (And while taxis are increasingly down-sized now, too, a lot of them were things like Ford Crown Victorias or Chevy Caprices intended for the fleet market where customers buy many at a time.) Pressure these days on taxis is fuel economy, because stop and go city driving is the worst from an economy perspective, and fuel costs will be a major portion of a taxi's operating cost, so taxis are downsizing to get fuel economy.
I came to the conclusion that a company had to have a certain amount of proprietary content in their product if they were to survive (but I don't know that the lower limit is).
"Proprietary content" had a lot more to do with styling than components. Models were differentiated on what they looked like, more than by wat was under the hood.
I would also argue that PC's went through the same thing: in the early 90's, everybody and their brother was assembling desktop systems from components and putting their own label on them. Now, we've got 2 or 3 major desktop PC manufacturers and perhaps 5 or so laptop manufacturers (the laptop side seems to have more proprietary design content).
Agreed. PCs became fungible commodities. Given the same specs, it largely didn't matter whose name was on the box, and competition came down to price, with lowest cost producer winning. You had to make and sell huge volumes just to cover costs. let alone make money, and smaller vendors rapidly became unable to compete.
@Bert22306: The other thing is that all of these electronics, as well as power steering systems, transmissions, engines, batteries, climate control systems, windshield washers and wipers, brakes, shock absorbers, wheels and tires, and on and on and on, are certainly modular and are installed in many different models. That's why anyone who looks under the hood or underneath, can see the strong family ties between, say, a Chevy and a Cadillac.
Yep. And an awful lot of that stuff is not actually made by the auto manufacturer whose label is on the car. It's made by third-party suppliers selling to all of the automakers. Consider the ubiquitous spark plug. People like NGK, Bosch, and Champion - Federal-Mogul are competing to get their plugs supplied in new cars from major manufacturers.
Increasingly, automaking resembles PCs - the automakers are assemblers, putting together parts made by others.
Another thought on auto industry innovation: instead of looking at the car, look at the factory that builds it.
One thing I think you'll see if you tour an assembly plant operated by one of the big manufacturers is steadily increasing automation and use of robotics, with a declining number of people required. Machines are doing more and more of the work that used to be done manually.
In addition, there have been changes in other areas, such as organization. Led by the Japanese but now common, we see increasing emphasis on supply chain management and "Just In Time" inventory control.
While not obvious to a car buyer, this is as much innovation as what's currertly on an engineer's CAD station at an automaker R&D facility.
@DMcCunney, thanks for your thoughtful reply. Certainly, I believe that there are lots of innovation going on at major automakers' labs -- things of the nature consumers aren't aware of.
In my defense, I wrote this piece from chip companies' point of views. As more and more electronics is going inside a car -- whether infotainment or ADAS, I am hearing more chip suppliers complaining about the auto industry.
Sure, the automotive industry represents a "steady" market for some of these chip suppliers.
But to be clear, chip vendors are under pressure to innovate a number of key electroincs systems for ADAS. When semiconductor companies come up with a new image sensor, software and camera modules that see things differently, for example, they find carmakers not exactly as their "partners" to innovate new ADAS technologies together. Rather, chip vendors remain "suppliers" -- essentially to jump hoops for them.
Of course, in this case, chip vendors ARE automotive parts suppliers. And parts suppliers to complain is probably out of line in the eyes of carmakers. Perhaps. But as a Freescale executive was quoted by saying in the last graph of this story, I suspect the advancement of electronics systems inside a car will need a much tighter collaboration between the two parties, on a much more equal footing in the future...
The uncomfortable truth is that the fundamentals suggest that the industry needs to rethink how it goes about sustaining innovation. This requires a completely different kind of collaboration -- and true partnership -- to manage through new emerging challenges.
Their alternative would have been new downsized models of their own, but the market for purpose-built taxis wasn't big enough to support that.
Except that wouldn't match their model: they were't just custom coach builders, the frame was theirs too. And the combination was modular: if you needed another 2 benches, 6, more (I've seen "stretch" Checker limos with 10 but I don't know what the limit was) they could just drop another center section in the frame and body and weld them up. That meant certain sizes and strengths had to be adheared to. As you say, the market wouldn't support the cost of reengineering for down-sized parts.
"'Proprietary content" had a lot more to do with styling than components. Models were differentiated on what they looked like, more than by wat was under the hood.'
In a way, that's kind of my point: "badge engineering" isn't going to be enough. If the only thing unique about your vehicle (or other product) is the color of the paint, you're not going to hold market share. I think that's what killed so many of those early car companies: the only thing differentiating them was their body, everything else was interchangable. Since the bodies followed the fads, they all looked alike and the market was too small to sell enough to stay in business.
I suspect the big automotive chip suppliers (Freescale, TI, Infineon, etc) aren't under any more price pressure than, say, Apple's suppliers. I suspect they also like the longer, more pedictable automative lifecycle. (Yes, automative has its cycles, but they're a lot less severe -- on both up and down -- than semiconductor's).
From an embedded perspective, industries such as automotive and telecom infrastructure which are big AND have long product cycles are a gigantic plus. Spec in a x86 CPU or hot phone/tablet ARM chip and see if you can get it in a few years. On the other hand, my company has a board using the TI 320C6701 DSP which has been in production since 2000, and we still don't have any problems getting them (unlike buying a new Pentium III).
@AIPothoof:As you say, the market wouldn't support the cost of reengineering for down-sized parts.
I wasn't aware Checker made "stretch" variants, but it's not a surprise. There are custom coachmakers that will do stretch versions of whatever you like - I've seen a stretch Humvee limo tooling around NYC. But those are custom one-offs with prices to match, not an option you can order from the factory.
I think that's what killed so many of those early car companies: the only thing differentiating them was their body, everything else was interchangable.
Except that it wasn't. All of those folks were largely making all of their own stuff. It might not even have been interchangeable among their own models, let alone with anyone else's
I think what we saw was the inevitable consolidation that affects any industry. Back then, the automobile was a whole new thing, with a huge potential market. Lots of folks tossed their hat into the ring and started building cars. Costs were much lower, prices charged were higher and so were margins, and an auto company could make money making and selling a lot fewer cars.
As the market expanded, competition set in. Henry Ford revolutionized the industry with his innovations in assembly line manufacturing, which allowed him to make and sell the Model T at a far lower price than his competitors to a whole new class of buyers who coudln't have afforded previous vehicles.
Competition occurred. Some folks were successful and got larger. Some folks couldn't compete and folded or were bought by a bigger competitor. (General Motors was the result of comnining several smaller independent manufacturers into a larger entity.) Cars became the norm, not the exception, and most people had one.
In any industry, the eventual result is a few big players dominating the market and some smaller niche market players serving segments the big boys don't. That's pretty much what happened with automobiles in the US, with the Big Three dominating the market and others addressing specific niches.
The issues the Big Three faced came as the market and competition became global, and dominating the US market was no longer a guarantee of survival. Foreign automakers led by Japan entered the US marketplace with vehicles better than what Detriot was turning out and rapidly became major players. The Big Three are competitive again, but it took nearly going under and government action to force the changes that made them so, and their future is not guaranteed. I expect to see further consolidation in the global auto marketplace in coming years, and expect more brands to go under or get acquired. I don't see the Big Three as in immediate danger, but I don't see tham as invulnerable, either.
@Junko:Look no further than Taiichi Ohno, a self-taught engineer who developed the just-in-time manufacturing system at Toyota -- and that was introduced in Toyota plants in mid 1950.
Speaking of Toyota, they got some local NYC press in an unexpected area. Their engineers consulted with a local soup kitchen on improving operations. The manager of the soup kitchen didn't see what auto industry engineers could do to make his operation more efficient, but they were able to analyze his traffic patterns and dramatically decrease the wait time to get in and get a meal.
Essentially, he was admitting people needing food ten at a time, so those waiting had to wait for ten seats to be clear before being admitted, seated, and fed. The Toyata folks changed it so that one of his people was dedicated to watching for seats to become free, and admitting people as seats became available for them. Wait time dropped from 90 minutes to ten minutes. This sort of process analysis to streamline operations and make things more efficient is what the Toyota engineers do, so it was no surprise they could apply thier skills to a soup kitchen as well as an auto plant. :-)
January 2016 Cartoon Caption ContestBob's punishment for missing his deadline was to be tied to his chair tantalizingly close to a disconnected cable, with one hand superglued to his desk and another to his chin, while the pages from his wall calendar were slowly torn away.122 comments