Business' Bonehead Management threat to national security?

GM and Ford are national security risks
The car makers are way behind when it comes to building fuel-efficient cars, and they're fighting rule changes for better gas mileage. This leaves U.S. consumers sending money to the Middle East for oil, or to Japan for hybrids.

Scott Burns - Dallas Morning News [sign up - free]

Nearly 35 years ago, General Motors Corp. asked a consulting firm to examine a problem.

Imported cars, mostly Japanese, had captured 25 percent of the California car market. GM management was worried. The Big Three still had 90 percent of the national market, but top brass at GM saw California as the future.

So the study was done.

Today, General Motors' market share is down to 25 percent nationally. The Big Three have seen their share shrink to 57 percent.

Our domestic automakers, including Ford and Chrysler, have lacked foresight and innovation for so long that they are now fighting to hold market share in the big categories essential for survival: midsize cars, sport utility vehicles and minivans.

Management will blame this on intractable labor costs. Although labor costs are definitely a problem, it's time to consider a larger problem: Intractable Bonehead Management.

The same Japanese managers derided for their conformity and slow decision-making are eating Detroit's breakfast, lunch and dinner. That's a management problem.

Today, GM and Ford are well positioned to be dinosaurs. So is Chrysler. Worse, they are threats to national security.

How is this happening? Here are three main thrusts:

• The industry has consistently lobbied against any changes to the Corporate Average Fuel Efficiency, or CAFE, rules, even as our dependence on imported energy has increased. The domestic carmakers talk about a global industry but have acted as though the United States was peculiarly immune to rising energy costs. One side effect is that domestic cars are unsuited for foreign markets because foreign markets are geared to fuel efficiency.

• The industry has focused its profitability on gas guzzlers that are supersized – like the Hummer H2 (10/13 mpg), the Lincoln Navigator (13/18 mpg), the Chevrolet Suburban (14/18 mpg) and the Cadillac Escalade ESV (13/17 mpg) – or on an array of super-muscle cars that are remarkably fuel-efficient relative to their forebears but still send plenty of money to the Middle East.

• Rather than innovate and invest in hybrid technology, as Toyota and Honda have done, the industry has repeatedly labeled the most successful car introduction in a decade as a "niche market" car. Ford, belatedly, is licensing Toyota technology for its first hybrid.

When fuel efficiency becomes crucial, American consumers will have two ugly choices: Send enormous amounts of money to the Middle East for oil or send enormous amounts of money to Japan for efficient cars.

Seems to be thread developing here. I've been sitting on a post about a recent fierce McKinsey Quarterly report saying that Corporate Directors think management are bonehads also. There's something for everybody: Sarbox haters and fans, Claw hammer haters and fans, Henry Kravis haters and fans, management haters and well, you get the picture. I'll put it up this weekend.

Seems BusinessWeek smells blood in the water also.

The Boss On The Sidelines
How auditors, directors, and lawyers are asserting their power

If anybody needed proof that the new balance of power in Corporate America has shifted, Maurice R. "Hank" Greenberg provided it on Sunday, Mar. 13. While the imperious chairman and CEO of American International Group Inc. was holed up aboard his yacht on the Florida coast, his company's independent directors were packed into a conference room in their lawyer's Manhattan office. The board members faced an urgent crisis: a growing accounting scandal that seemed to lead straight to the CEO. As directors debated whether to cut Greenberg loose, the 79-year-old titan lashed out at them by telephone. "This board is being run by a bunch of lawyers who can't spell the word 'insurance,"' he shouted. "If you get rid of me, you will destroy this company!" It was the kind of intimidation that had helped Greenberg consolidate unprecedented power in his four decades at the helm of the insurer. But this time, the bullying didn't work. Within a day, Greenberg, once the most powerful man in the industry, was out as CEO. Two weeks later, as the scandal widened, he was forced to resign the chairmanship, too.

Hank, Hank, Hank. When you ask for a loan from American Re in the shape of 500 million bux to quiet shareholders and analysts about your dodgy loss reserves, that's not spelling "integrity" either. And it doesn't do much for shoring up the long-term health of the company. What color is the sky in your world?

Hubris? Gilded Age 2.0? Bubble Hangover? Yeah. All the above. And plenty of bad mojo, deserved and otherwise.
There's lots of good stuff if you follow the Bizweek link.