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Etmax
User Rank
Rookie
Re: Safety on Very Light Car
Etmax   9/29/2013 12:38:10 PM
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You are so right, I reckon 90% of drivers just shouldn't be on the road. They can't contend with the simplest of rules. The problem is that everyone thinks they have some GOD given right to be on the road, when in fact only those that are alert and able to follow the rules should be.

Bert22306
User Rank
CEO
Re: promise
Bert22306   9/26/2013 7:17:05 PM
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"At one board meeting, the head of the printing plant said that his division ought to get special treatment because it was the only part of Curtis that was profitable.  His business all came from the various Curtis magazines that he charged back internally for printing them, and the fact that if they went belly up, so did he, never seemed to have occurred to him."

That's too hysterically funny! Unbelievable that this came as a surprise. I have noticed this attitude in large corporations, though. The divisions that don't seem to "get" when their function is purely incestuous, as opposed to the divisions that actually bring in the bacon.

As to "buyers who bought a Pontiac weren't buying a Chevy," that's not always the case. If the buying public thought so, great for GM. Example: Camaro vs Firebird, towards the end of production of the previous version. They were, in fact, all produced at the same plant, as well as consisting of the same bits. Ford played these same games at different times, with some of their Mercury vs Ford models. So the waste and duplication were not what the average joe was led to believe.

On Chevy V-8s in Oldmsobiles, I guess my main point there was that the Chevy engine was a better deal. There was a mix of Olds or Chevy 350 cid engines sold in these cars. Aside from the fact that a Martian coming to earth probably couldn't tell them apart, the Chevy engine had oodles more aftermarket tuning options than the Olds. Those small block Chevy V-8s were excellent engines in every respect (for their day). So who in his right mind would object? On what basis?

Oh, and I should have added Alfa Romeo 159 and Saab 9-5, to the list of cars that were built on the Epsilon platform (Pontiac G6, Saturn Aura, Chevy Malibu (old) and Impala (new), Buick LaCrosse, Opel Vectra).

DMcCunney
User Rank
CEO
Re: promise
DMcCunney   9/26/2013 6:40:52 PM
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I'm not at all certain that eliminating Olds, Pontiac, and Saturn was necessary for GM's survival, actually. I think it was done more to appease the government officials who were bailing them out, than anything that made economic good sense. It was window dressing.

I don't know.  The problem the Big Three faced was globalization.  GM's competition wasn't just Ford and Chrysler.  It was Toyota, Nissan, and Honda, Mercedes, BMW, and Volkswagen, Renault and Peugot, Volvo, Audi... 

At some point, too many makes and models becomes counter-productive, because you can't sell enough of many of them to make it worth doing.

It's possibe GM could have survived with Oldsmobile, Pontiac, and Saturn still in the fold, but I'd be reluctant to place a bet on it.  (Though Penske Automotive did try to acquire the Saturn operation, and thought they could make a go of it.)

The various divisions were ALREADY sharing parts and production facilities. The branding was not typically a complete duplication of effort by any means. Remember a few decades back when clueless consumers were "surprised" and "outraged" that Oldsmobiles were being sold "with Chevy engines"? Which parenthetically, if they knew about engines, should have made them elated rather than outraged? That's the norm, not the exception.

I was watching GM's consolidation and rationalization for decades, so I mostly agree.  I recall the tempest in a teapot about Olds using Chevy mills, but didn't see the problem.  If Chevrolet had an engine model suitable for use in an Olds, it made mode sense to increase the output of the Chevy engine plant than to have a seperate one making them for Oldsmobiles.


But even with that consolidation, seperate brands have seperate overhead.  They have thier own management, design and engineering staffs, marketing operations, and assembly lines where completed cars are built.  And they'll have seperate P&Ls where their portion of shared costs will be allocated along with costs that are unique to them and not shared, and revenues from sales of their models.

Top management at a place like GM are fundamentally custodians of Other People's Money, responsible for investing corporate funds where they will get the highest return.  Sometimes, the best decision is to simply fold an underperforming division, because it doesn't look like it can be fixed and the resources it consumes are better allocated elsewhere.

It's not at all clear to me that attracting a wider audience, by offering different looks or different option packages, is a bad thing, in truth.


It isn't, if you can sell enough of a particular model.  The risk you run is competing with yourself rather than your competitors.  Like I said earlier, buyers who bought a Pontiac weren't buying a Chevy.

 

As an aside, one of the books in my collection is Otto Freidrich's "Decline and Fall", about the old Curtis Publishing Publishing company, which published the Saturday Evening Post.  (Freidrich was Foreign Editor at the Post.)  Curtis was structured so that each magazine was a division, as was the plant that printed the Curtis titles, and the Curtis Circulation arm that distributed them.

Curtis was in trouble.  Like any other magazine publisher, the revenues from newsstand sales and subscriptions didn't even cover the direct costs of production.  The difference, and any profit, came from advertsing revenue, and ads in general interest magazines like the Post were declining as advertisers shifted funds to more specialized publications focused on the sort of goods they sold.

At one board meeting, the head of the printing plant said that his division ought to get special treatment because it was the only part of Curtis that was profitable.  His business all came from the various Curtis magazines that he charged back internally for printing them, and the fact that if they went belly up, so did he, never seemed to have occurred to him.  And it was only the fact that they were Curtis magazines, required to use his plant, that made them customers.  Curtis had not invested in the plant, his shop was far behind the curve, and if he had to compete for outside business he woudn't be able to.

You can find similar stories in automaking and semi-conductor electronics...



junko.yoshida
User Rank
Blogger
Re: Who gets VC funds?
junko.yoshida   9/26/2013 5:34:44 PM
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@Bert, I agree, absolutely. I look forward to the day when I can write about large automakers experimenting a whole host of new things...and I am not being cynical here. I mean it. 

Bert22306
User Rank
CEO
Re: Who gets VC funds?
Bert22306   9/26/2013 4:53:50 PM
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Yeah, that's what I don't know, Junko. I've never seen that happening (big company seeking VC funds), and I work for a large company.

VC funding or not, I would be mighty surprised if the large autmakers aren't experimenting with a whole host of new things, especially because they now have the increasing fuel economy mandates looming over their heads, not to mention a lot more COMPETENT global competition than they had a few decades ago.

junko.yoshida
User Rank
Blogger
Re: Economies of scale
junko.yoshida   9/26/2013 11:33:15 AM
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@DMcCunney, I truly appreciate your honest, straightforward comments here. Yes, I inherited the automotive beat only three months ago. I am still climbing a steep learning curve. So, any help I could get to educate me would be greatly appreciated.

That said, I would also like to think that seeing the automotive industry through a fresh pair of eyes isn't all that bad either.

I may be off base a lot of times, but I also firmly believe that any industry could profit from learning business practices and models they have never subscribed to before. Well, I hate the word, but when so-called "sea changes" hits any good old industry, it's time to change. (or at least trying something new)

But more on it later...I would love to debate on that with you.

 

junko.yoshida
User Rank
Blogger
Re: Who gets VC funds?
junko.yoshida   9/26/2013 11:15:45 AM
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@Bert, true. When it comes to VC funds, yes, it's the start-up who needs it. But that said, if a big old company wants to do something entirely different and innovative, which could possibly move its business forward, wouldn't they seek for external investment?

Bert22306
User Rank
CEO
Re: promise
Bert22306   9/25/2013 4:52:08 PM
NO RATINGS
I'm not at all certain that eliminating Olds, Pontiac, and Saturn was necessary for GM's survival, actually. I think it was done more to appease the government officials who were bailing them out, than anything that made economic good sense. It was window dressing.

The various divisions were ALREADY sharing parts and production facilities. The branding was not typically a complete duplication of effort by any means. Remember a few decades back when clueless consumers were "surprised" and "outraged" that Oldsmobiles were being sold "with Chevy engines"? Which parenthetically, if they knew about engines, should have made them elated rather than outraged? That's the norm, not the exception.

Cars like the Pontiac G6, the Saturn Aura, the Chevy Malibu (first version), Chevy Impala (new model), the Buick LaCrosse, the Opel Vectra, and the Vauxall, are the same platform. All worked out, with just a different mix of options, perhas different suspension tuning, and slightly different sheetmetal. Same goes for the new Chevy Malibu, Buick Regal, and Opel Insignia. The design is there, it's not like every division is creating something brand new. If the public perceive it to be that way, that's actually great for GM. But we shouldn't be misled into thinking this was a huge waste of money, because it wasn't.

It's not at all clear to me that attracting a wider audience, by offering different looks or different option packages, is a bad thing, in truth.

Bert22306
User Rank
CEO
Who gets VC funds?
Bert22306   9/25/2013 4:35:33 PM
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I'm not clear on whether who gets VC funds is a good indicator of anything but size? Would a big company like GM even seek VC funds? I didn't think so, but I don't know for sure. My impression is that it's only startups with some (hopefully) cool new concept that search for such funding.

DMcCunney
User Rank
CEO
Re: Economies of scale
DMcCunney   9/25/2013 2:15:20 PM
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@Junko: You're quite welcome

You seem to be on the automotive beat these days.  When you are covering any industry, you really need to have an understanding of the industry, and the forces that drive and shape it.

Industries aren't identical.  There have been any number of classic B school study cases where managers from one industry entered another and thought that what they knew was transferrable, that the new company could be run the way they ran the old one, and found out the hard way they were wrong.  (As an example, look up Bill Agee and Morrison-Knudsen, which Agee almost ran into the ground before M-K's board fired him. Agee was a financial guy who didn't understand the industry M-K was in and thought knowledge of finance was all he needed. He was wrong, and almost killed M-K demonstrating it.)

My interest in this sort of thing can be described as "follow the money".  What is the industry?  What are the markets the industry serves?  What are the business cycles in that industry?  How does a business in that industry make money?

The answers will be rather different for an automaker than for a semi-conductor manufacturer, and understanding the differences is critical in properly covering the industry.

While EETimes covers tech, the tech is not an end in itself - it is a means to an end, and will be applied if it is a means to a particular end the company is trying to achieve.

To the extent I can provide background about an industry like automobiles to make things comprehensible, I'm happy to do so.

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