The letter appearing in the February ’05 issue concerning health care reminded me of a concern I’ve had for a long time, upon which Congress refuses to act in any meaningful way, but just offers band aids.
Doctors and hospitals pay through the nose for medical technologies because no effective cost pressures are put on their manufacturers, who have highly profitable margins and offer ridiculous packages for their peddlers. The same applies to the drug companies.
It’s time the media did some snooping of their own. Why should it cost tens of thousands of dollars for health monitoring equipment, when it is both high-volume and no more complex to manufacture than any high-quality electronic device? Where are the economies of scale, where is the competition, and why are hospitals not wising up?
Health Management Organizations have put all of their efforts towards managing patients and limiting their options. It’s time they turned their guns on the manufacturers and put the pressure where it belongs.
Brian J. Teegardin
I enjoy your magazine very much. It is one of my “must read” pieces every month. One column in a recent issue requires a response, however.
Maryann Keller should title her column “Opinion” and not “Opinion and Analysis”. Her blatant anti-GM bias appears in both her books and her column. While she is entitled to an opinion, as we all are, she should stick to correct facts in an analysis piece. Her column in your January 2005 issue is an excellent example of media bias and a distinct disregard for the truth. She implied that GM is currently paying a $2.00 dividend and built her whole diatribe on that “fact”. As any GM stockholder could tell you, GM has not paid a $2.00 dividend in a very long time. This fact can be easily verified at www.gm.com. I have been a GM stockholder for over 30 years and know what the dividend rate has been and is currently. GM has had some problems in the past, but is now producing some excellent vehicles, as noted in other articles in your recent issues. Let’s focus on fact, and keep unfounded opinion where it belongs, certainly not in the pages of your fine publication.
Maryanne Keller replies
Mr. Chandler, I don’t have a bias against GM. I have witnessed the slow and now rapid deterioration of this company for more than 30 years and it frustrates me that even today as the management faces the greatest challenge of its history it chooses to give away $2.00 a share, yes I am right at 50 cents a quarter four times a year that equals $2.00 a share, instead of spending the money to market its new models which few people in the country have heard about or invest in a modern over cam engine…to name just a couple of ways to spend it and get a return for the shareholders.
GM management has wasted more billions than I can even count starting with Roger Smith’s $20 billion on automation in the early 1980s, then Saturn to try to change the corporate culture, then the acquisition of Saab and its continuing losses, billions into China where profits are down along with GM’s sales there and most recently and most egregiously $4.5 billion on Fix It Again Tony. Forays into the Internet and auto retail business sucked up more cash with no return. During my tenure as an analyst I watched this company spend more billions buying back their stock in the open market at prices well above today’s market price.
Frankly in the last twenty plus years GM management has squandered the shareholders assets on pipe dreams and they should be held accountable. Yes, quality is better and productivity is higher but not enough to offset the cost penalty of high legacy costs. More than you can imagine, I want to see a viable and strong domestic auto industry because I understand its importance to the US economy and to overall industrial development in this country. But frankly you and I as citizens of this country have been poorly served by GM, Ford and Chrysler.
When I wrote my second book, I mistakenly selected GM to be the winning company of the twenty first century over Toyota because the management change in 1992 seemed to signal a transformation of the company. How wrong I was! Toyota has already beaten GM in the one measure that determines success. It makes more profit. Now Toyota says it will have 8 assembly plants in the US, is building a research center in Michigan and is just months away from launching a series of pickup trucks that is aimed at the heart of the US car companies remaining area of dominance. I don’t see the 30 year slide reversing any time soon.
Safe Driver Training
Your editorial on Safety Training in the March 2005 issue had the right title but the wrong content. What we really need to reduce highway fatalities, and every other kind of crash, is a higher level of driver training before turning people loose on our highways. Your paragraph that stated that 89 percent of all crashes are the fault of the driver is the key, but you opted for technology to make better drivers, thereby burdening everyone due to the shortcomings of a few. Why continue to use up scarce R&D resources and add yet more cost and weight to new vehicles when we could substantially reduce highway deaths by upping the standard of skill needed for a license? All you need to get a driver’s license today is a basic understanding of local laws and vehicle operations, the ability to recognize symbols and letters in an eye chart, and be able to read English at a minimum level. If you actually have to take an operator test, short of having a wreck or doing something equally stupid like backing over a parking meter, you’ll probably pass.
We continue to require companies to commit scarce resources to make “technology” responsible instead of making people take personal responsibility for results of their driving. Air bags were the first big example; because people would not fasten the belts already installed in their cars, those of us that did use belts now have to pay for unwanted air bags. Per your article, now we will get to pay for ESC as well, without regard to if we want or need it.
Wonder where we would be if the multiple billions of dollars already devoted to ever smarter and more numerous bags, plus the additional money now to be devoted to ESC, could have been committed to better mileage or alternate power sources?
On the Level
Gary Witzenburg’s comments in “Level the playing field, Part two are nothing more than a clumsy attempt to explain his previous comments along the same lines. The condescending analogy to widgets is unnecessary as your readers are aware that A.I. is a trade magazine. Equally as condescending is his belief that consumers are too stupid or unsophisticated in their purchasing decisions, because the press is always critical of American cars.
G.W. seems bewildered that quality improvements at the Big 3 have been met with a decrease in market share over the last “half decade”, yet says nothing of the fact that in the 2 or 3 decades prior, they paid little more than lip service to quality issues. Bad reputations are born overnight, but often die a slow painful death.
Add to this that American auto companies continue to make boneheaded business decisions, such as spending valuable capital on low selling image mobiles, approving badly styled cars for production, hiring, promotions and policies based on whatever the latest politically correct orthodoxy happens to be, spending billions to buy temporary labor peace, with no thought as to the future consequences, squeezing price concessions from their suppliers until they go bankrupt, while at the same time ignoring the afore mentioned messes in their own back yards, and it’s not hard to see why American manufacturers are in trouble. As a former employee of a Big 3 automaker as well as a number of their suppliers i can tell you that this garbage is at epidemic proportions. It has been for years and what’s really frightening is that the Execs. who run these companies are showing no signs of changing such counterproductive behavior. Why should they? They’re rarely held accountable for their mistakes. These are the things that G.W. and the rest of the automotive press should be spending more time talking about. The auto companies already have enough enablers.
Mr. Witzenburg says it’s only a matter of time until the foreign owners of American companies move operations overseas. Perhaps he hasn’t noticed that the current American owners are already doing just that.
This is not to say that the government can’t do more, it can. But it ought to be clear to anyone who cares to take an honest look at things, where the lion’s share of the blame lies.
Regarding the article,” Level the Playing Field”, and subsequent letters, I have yet to see in print anything that supports the theory that the foreign-based competitors in the automotive industry enjoy an “unfair advantage of far lower operating costs”. Lets see an unbiased comparison of products from Asia, Europe and the United States that includes cost of living, standard of living, material costs, health costs and who pays for what. That may give me a more believable answer than the “whining” that I have heard and read so far.
I have to respond to Gary’s article concerning the “Bad Rap” that the big three are getting.
In 1986 fresh out of college, I purchased my first new Chevy. A Caviler Z24. The car was towed in from my parents house the same day that I drove it home because it overheated in the driveway. The fix was to have the electric fan run for 15 to 20 minutes after the car was turned off. That “FIX”, lead to a damaged battery every 9 months. About 4 weeks later the transmission stuck in drive and had to be towed in again. A hand full of metal chips was removed from the transmission pan. Next a year and a half later the mass air flow sensor went out and it took 3 service visits for the GM techs to figure it out when I suggested the emissions the first time that took it in. The electronic dash also went out three times under warranty.
I swore that I would never buy another GM.
After five Japanese cars without incident other than normal maintenance, and reading all of the articles touting the improved quality of the domestic brands, I purchased a 2002 GMC (The Professional Series) Envoy SLT. Over the next 1 ½ years it was at the dealer for service 15 or 16 times for the same things each time. I believe the time in the shop was 21 or 22 weeks. The main problems were the rear view mirrors and transmission. The rear view mirrors were replaced 4, or 5 times; they replaced several computers etc. The transmission replacement was a fight, but I would not take no for an answer, and they finally replaced it. A really irritating issue is that when the doors unlock automatically, the rear gate does not unlock about half the time. The dealer said that they could not replicate the problem, but it still happens to me all of the time.
Now the warranty is up and I have more problems. The service engine soon light is on and the reduced power operation is activating. The vehicle is in the shop for the second time for this same problem as I type. The first time cost me $400 this time they are telling me $800 more. All that is done is run diagnostics and replace a component. If it is not fixed, comeback and pay more, and be inconvenienced more and on and on and on.
My neighbor has had problems with her 2003 Envoy SLE and a coworker has had numerous problems with her 2003 SLT. A friend of a friend had a maxed out Trail Blazer and he had his engine block crack with less than 10000 miles.
I don’t know who the people are that are being surveyed about initial quality and long term quality of GM vehicles. They must be GM employees.
The point is that the quality from GM is just as bad as it always was, and GM does not care. I spent hours upon hours on the phone with GM about my vehicle problems and received not support. I asked numerous time to speak to a manager when talking with the service hot line personnel and was denied every time. I filled out the service surveys from GM unsatisfactory every time and not once was I contacted by anyone from GM to address my issues.
My future vehicle purchases will most likely be Japanese vehicles made in the states. Nissan, Honda or Toyota.
Just like Gomer Pyle, “fool me once shame on you”, “fool me twice shame on me”. There will not be third time for GM especially. Ford and Chrysler are somewhat guilty by association, but not completely out of the question.
Jeff Hemphill, truly at my “Wits End”
Just read your editorial in the TCC news email I get daily. Three Cheers to you for putting in words what many of us in the industry feel. Perhaps last weeks comments by Mr. Lutz may have spurred your column. His accusations are blunt to say the least, and you captured it well in your writing, the part about the press cheering on the visitors… Hopefully some or many of your colleagues will pay heed to your observation and move away from rooting the ‘visiting teams’.
I know we spend a lot of money on setting up press drives and catering to the elite few writers who have a large influence via their auto rags, so it would be nice to see them pay back by being fair and honest about the way our vehicles have improved over the last decade. Last week a Detroit paper writer slammed the new Toyota Avalon, calling it cheap in quality because a knob fell off the I/P, I wonder how the buying public reacts to that article? Another point which could have been made in your article is the difference in government involvement between Japan and the US. We know that MITI helps Toyota and Honda in offsetting the costs associated with the development of hybrid technologies and how the yen is unfairly balanced against the dollar and how it affects a manufacturer’s cost vs. sales pricing makes it unbelievably unfair to our domestic manufacturers. And now, how Toyota is trying to embellish their corporate community relations by advertising how ‘American’ they are and part of the landscape, when we know that all they are doing is leveraging low labor costs as well as no legacy costs against our own. I will stop for now, because some of the fault lies in our country’s economic engine of ‘free market enterprise’ and our openness.
Maybe it’s time to start closing some of the openness that could lead to crippling our largest enterprise- the auto industry. We should have legislation which says a large portion of profit generated by off-shores,be regulated and re-invested in the good ole US of A, and stem the tide of profits going back to the land of the rising sun.
Joe Limon, Jr.
Gary Witzenburg replies:
Well said, and thanks for the kind compliment! You might also enjoy my Jan. column on the same subject (see ai-online.com).
The reaction of one high-placed respected editor whom I’ve known for many years was the same as what they’re telling Lutz: we call ’em as we see ’em, and “don’t shoot the messenger.”
Lutz is right about media bias, but they don’t believe it and will punish him for saying it. Like liberal bias in the mainstream news media, pro-import auto writer bias is ingrained and learned over a lifetime of absorbing what they have seen, heard and observed (back not long ago when it used to be mostly correct) yet largely unintentional, and they’re blind to it. They just think they’re smarter than the average Joe (sorry), they know “what’s right” and anyone who disagrees must be wrong.
Maybe there’s a future column in that subject.