Grosse Point Hyperopia (First Part)
About forty years ago, Car and Driver magazine published an article which was entitled “Grosse Point Myopia.” (Grosse Point historically has been the Detroit suburb in which the highest level auto industry executives reside, in great luxury.)
Though seldom credited to its source, that phrase has become shorthand that encapsulates the notion that everything wrong with the domestic auto industry is the product of executives who lack vision, and can only see that which is directly in front of their collective noses. “Hyperopia” is the antonym of myopia. It means far-sighted.
Today, it’s the critics of the domestic auto industry that are myopic. General Motors and its executives, in particular, have developed congenital hyperopia.
But, that viewpoint isn’t one that finds expression by most of the “experts.”
Today provides a perfect illustration of the point.
Mark Phelan, the auto columnist for the Detroit Free Press writes a column today headlined: “Vote is in: GM rules.” Call that the euphoria view of General Motors.
Phelan is referring to the nominations for North American Car of the Year, an award given annually at the Detroit Auto Show in January. Of the six finalists this year, four are from GM: Cadillac CTS, Chevrolet Malibu, Buick Enclave, and Tahoe Hybrid. The other two are foreign: Honda Accord and Mazda CX-9. Phelan’s implicit, albeit unstated, premise is that these products signal a real change in the culture at General Motors, that the company is now producing world-class cars, and that more will be following. These cars are winners, he seems to be saying, and it takes winners to make winners.
Then there is a much more pessimistic, even dismal, viewpoint.
Keying off comments in another blog, Blogging Stocks, Robert Farago at The Truth About Cars trashes GM’s management for telling the world that GM sales currently are depressed due to the housing market, but that sales will increase soon because the housing market will begin to recover in about six months time.
Farago’s position is simple: GM is still making excuses. The housing market is not going to recover for three years. The housing market affects all car manufacturers, but Toyota’s sales are off only slightly and Honda’s are up slightly, while GM’s sales are down over ten percent. If GM can’t grasp the reality that its sales are down because it’s management has repeatedly failed to anticipate where the car market was going, then it’s nothing new. But, it’s also a sign that the company has no future.
Farago concedes the company has recently introduced some winners. But, he says, they’re not enough to carry the company.
Though arriving at opposite viewpoints, both Phelan and Farago are focusing on the near-term. That’s a mistake – at least if one wants a 20-20 vision of GM today.
Phelan can be forgiven. His topic, after all, was an event that will occur next month. Farago’s near-sightedness, on the other hand, is studied, even calculated, ignorance. He’s like one of those government-funded grant writers that gets money to prove a thesis, then must produce evidence to back it up, regardless of what the data really shows. He makes his money by blogging the negative.
The data, however, is much more interesting.
It is all right there, in an article about Byron McCormick and Electric Drive University, appearing in today’s Globe and Mail, a Canadian newspaper. It’s the article that both Phelan and Farago should have read. Truthfully, it’s the article both should have written.
Byron McCormick is the boss of GM’s fuel cell program. “Electric Drive University” is the name of a program recently hosted by GM in Los Angeles, at which some of the top GM brass appeared.
Here’s the message GM had to offer at that conference:
- Installing hydrogen pumps at a mere 12,000 of the 170,000 gas stations in the United States would put hydrogen pumps within less than two miles of each other in the 100 most populated areas of the United States. It would also put them within twenty mile intervals along the Interstate and similar road systems. So, it’s doable.
- By 2030, energy consumption is expected to increase 70% over today’s level. To get that, energy consumed must be developed from new energy sources.
- Growth in the automobile industry on a global scale will swamp current levels of production, growing until ANNUAL world-wide vehicle production exceeds 90,000,000 vehicles per year. This will happen within the next ten years.
- Hydrogen powered fuel cell vehicles do not use petroleum and do not create CO2.
General Motors has some experience at changing infrastructure.
It was General Motors that caused the development of “premium” fuel. GM developed “high compression” engines and then developed the fuel needed to run them. Then it obliged the oil companies to produce it to meet the demand GM was about to create.
It was General Motors that gave us the Interstate highway system. (Yes. Engine Charlie Wilson became Defense Secretary for President Eisenhower and the notion of a national defense highway network was born.)
Heck, if you believe the conspiracy theory folks, it was GM that destroyed urban rail transit by buying up the trolley companies so that it could sell more buses. (Disney even made it a movie: “Who Framed Roger Rabbit.”)
Sure, that was back when GM was a monolith. It’s not like that today.
Or is it?
General Motors still sells more cars and trucks than any other company in the world. Its sales in Europe are up. It has been the most aggressive of all the auto companies, not just domestic companies, in entering the Chinese market. It sells one of every four new cars and trucks in the United States.
There is not a single competitor to General Motors that wouldn’t kill for GM’s current market share. Sure. It’s easy to say that GM is a failure because it once owned half the domestic market.
But, even a wounded giant is still a giant.