Thursday, July 24, 2008

The American Auto Industry Does It Again

Here we go again. General Motors announces further plant closings and layoffs. It makes one wonder how much longer this can go on. Eventually, GM executives will run out of plants to close and people to fire and have to look in the mirror at the true cause of the problems they face.

A manager’s ultimate responsibility is to build the health of the organization so that it can withstand the external pressures that cause decline. Just like people, organizations have an immune system. A weakened immune system may go unnoticed as long as there are no external influences or stressors that can cause disease or decline. Organizations and people with compromised immune systems may even feel strong and healthy as long as the environment is friendly. Once exposure to an external event or stressor occurs, however, disease sets in and decline begins. At this point, drastic measures need to be taken (e.g., layoffs/plant closings for an organization or surgery/chemotherapy for a person) to attempt to stop the decline. It is during times like these that people realize how much easier – and enjoyable – it is to work on improving health than fighting disease.

General Motors and Ford claim that legacy costs and an unexpected shift in demand to fuel efficient cars are the causes of their problems. After all, both were fat and happy a few short years ago when they ignored the market signs and raked in huge profits from SUVs and trucks.

Things have gotten to the point where Toyota is also facing declining sales in the U.S. market. A first for Toyota, they are responding by closing down their truck and SUV factories for three months in an effort to reduce the inventory of large, slow-moving vehicles. The difference? Toyota is NOT laying off any of the 4400 employees affected by the closing. Instead, they are keeping workers on the payroll and using the time for productivity, safety, and quality training.

Imagine the loyalty that Toyota is gaining from its workforce by taking this action. This gives the workers the feeling that they are just as much a part of the company as management. Do you think GM and Ford workers that remain after the layoffs and plant closings feel the same way? Do you think that Ford and GM executives care what the workers think?

An executive who continues to layoff workers because of economic problems is like the captain who runs into rough seas and throws crew members off the ship. Isn’t this the type of leadership we used to see in stories about pirates?

It’s no secret why Toyota continues to improve and innovate in its manufacturing process while Ford and GM continue to . . . well, be Ford and GM.