The Big Three

Ever since Henry Ford with his freakishly attuned business mind bought out the Model T, America has been the leader in automobile manufacturing and the Big Three viz. GM, Ford and Chrysler have been ruling the roost. They were the automotive equivalent of the mafia; they weeded out or gobbled up all the small players (the Tucker story would substantiate that fact). They decided what to sell and what not to, the customer just played along, ironic, considering these companies are often considered to be the epitomes of capitalism.

Then, along came the Japanese with their small and fragile contraptions, which the Americans would not even honour with the tag ‘car’. To them a car had to have a V8, had to be two football fields long and should handle like fat momma on Viagra. As a twist of fate, they sneered at the small Toyotas and Hondas to their own peril. The oil crisis rolled in the 70’s and the environment crazies came along with their flower-power shit and suddenly these cars made sense to the gobbledygook Americans and boy-oh-boy ,the Japs took real advantage of the situation.

The American markets have always been the largest but they became increasingly served by foreign car makers, notably the Japs. The Big Three has been consistently been losing market share and have become less and less profitable, they tried offsetting their losses by expanding worldwide, mostly by acquisitions and exporting to countries where people are daft enough to buy them (e.g. Saudi Arabia). But still they kept on declining; the recent recession has hammered in the last nails on their coffins.  To make matters worse, Obama has been particularly against any kind of bailout, he has literally told them to go suck a lolly instead.

Well, what went wrong?  Everything actually, they still operated the old way, the push system. They set targets and estimated requirements and then produced and made the dealers to sell them off, it was prehistoric. They have spent millions to develop complex supply chains and organisations to support this business model. Each new product took several years to develop and hundreds of millions of dollars were tied up in massive inventory and working capital throughout the system. These flaws were masked by the huge demand for Trucks and SUVs.

Then there is the labour problem, the UAW (United Auto Workers) union was and is a pain in the ass. Sergio Marchionne, Fiat CEO, was quite eloquent about his concerns about the workforce when negotiating a lifeline deal with Chrysler, being a hard man, he said unless the union decides to accept major cost cuts- no deal.

So can we envision a turnaround? Even if mildly possible, it would require some radical changes in the system. They need to embrace the pull system, as the Japs and Germans have long back done. They should learn and develop new inventory systems; they can glean from lessons from all over the world; do something radical, challenge dominant thought (e.g. Tata Nano). However, their manufacturing facilities are world class and are capable of producing quality products. It just needs to factor in the details and make changes accordingly. It’s always about the little things.

YAMAHA

For those who have a passion for bikes and are old enough to remember Tom Petty and Guns N’ Roses tunes would agree that Yamaha were the bee’s knees. The RXs and RDs were a constant cause of wet dreams.

Yamaha came into our undeserving lives in the 80’s. It came out with the RD350 badged as a Rajdoot and it was brilliant, it was like having a crazy-in-bed high maintenance girl friend. People have gone bankrupt by taking care of it but the sheer exhilaration it gave was better than anything that you could snort up your nose.

Unfortunately it didn’t sell well but Yamaha had another ace up their sleeve, the RX100, and boy-oh-boy was it good. It was a light weight one-cylinder version of the RD. It left every other manufacturer in the dust, in terms of performance. It was frugal too, not as much as the Hondas but not as vulgar as the RDs. It became the choice ride for the young and careless.

As usual the green police spoilt the fun. Environment laws came in and the RX100 died in 1995. The company came out with another bike fortunately crazier than the 100, the RX135, it went through a number of iterations before it created a legend the RX135 5speed, it had the famous seventh port technology which the RD had used and it did fly, the new age bikes like CBZ or Pulsar were no match to this mean beast.

Growing petrol prices and environment consciousness put a stop to its life. Then Yamaha went through a dry phase with a slew of run of the mill models, they were capable but none were class leading and somebody else always did it better than them. Sales dwindled, dealers closed down and everything looked rather bleak. They even tried reviving it with John Abraham, as if that’s going to make a difference.

Yamaha woke up from its slumber and started to do what it did best, excite people. It sought to a flagship strategy; it bought in the cavalry namely the R1, raised brand awareness and bought in an aspirational sub-model the R15 which took the Indian market by storm. It didn’t end there; they bought out the radical FZ16. Sales have been racking up, dealers upgrading and once again children started dreaming about Yamahas. The balance is restored.