July 18, 2011

'Car Guys vs. Bean Counters’ by Bob Lutz

Car Guys vs. Bean Counters:
The Battle for the Soul of American Business

By Bob Lutz
Portfolio; 256 pp; $26.95

It’s been said that Bob Lutz—Detroit shaman, veteran of General Motors’ (GM) Mad Men era, and inveterate ham—often attracted as much attention as his cars. The former fighter pilot wore expensive English suits, gnawed on cigars, and once dismissed global warming as “a total crock of s–t.” While president of Chrysler, he unveiled the first Jeep Grand Cherokee, in 1992, by driving it through a plate glass window. Five years later he modestly shared the secrets of his success in Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of Our Time.

Now comes an encore in the Lutz on Lutz genre—Car Guys vs. Bean Counters: The Battle for the Soul of American Business. It’s a topic on which he has undeniable expertise. Frequently described by industry insiders as the “ultimate car guy”—a man for whom no vehicle could ever be too big, too fast, or too thirsty for gasoline—Lutz spent 47 years in the business, with stints at each of the Big Three. Last year, at age 78, he retired as vice-chairman of GM.

Now it’s legacy-burnishing time. In Car Guys, Lutz argues that Detroit’s steady decline can be blamed on the fact that there aren’t enough Bob Lutzes anymore. After legendary designer and car-guy’s-car-guy Bill Mitchell retired as GM’s design chief in 1977, Lutz writes, the balance of power—at the company, in particular, and in Detroit, in general—began shifting from the car guys to the number crunchers. As a consequence, product planners determined which customers to target with a new sedan or wagon; engineers fretted over inexpensive assembly; and managers fretted about cheap mass production. Only at the end were designers summoned to wrap a steel body around a nearly completed vehicle.

The results, Lutz laments, were the not-so-fondly remembered Cadillac Cimarron, GMC Envoy XUV, Pontiac Aztek, and others. Yet Lutz believes a post-bailout renaissance is possible, and he has the solution. “It’s time to stop the dominance of the number crunchers, living in their perfect, predictable, financially projected world (who fail, time and again),” he writes, “and give the reins to the ‘product guys.’”

There are, of course, a couple of problems with this argument. A company like GM can make a great car, but if it lavishes unaffordable benefits on its unions in return for labor peace—as GM did—it will have difficulty making much money. Whether or not being a “car guy” is actually a valid qualification to run an international conglomerate, as Lutz suggests, most car buyers aren’t even car guys. Instead, they’re interested in more boring matters, like fuel efficiency. Not everyone thinks global warming is a crock.

Notably absent from Car Guys is any meaningful acknowledgment that the automobile business is no longer a U.S. monopoly—partly because old strategies no longer apply. As gas prices rose steeply in the late 1970s, the Big Three were painfully slow to abandon their belief that small cars were mere gateway products. “Small cars are like vodka,” the hard-drinking car-guy’s-car-guy Mitchell once noted. “People will try them out, but they won’t stay with them.” These days, people pay hundreds of dollars for bottles of colorless, flavorless, odorless liquor—and small cars are now at the core of GM’s strategy.

Yet when Lutz triumphantly returned to GM, in 2001, he followed the Mitchell Plan, championing the Hummer and rehabilitating Chevrolet brands such as the Camaro and the Malibu. And while he is given credit for pushing then-CEO Rick Wagoner to manufacture the much heralded hybrid Chevy Volt, the anti-global-warming-guy wasn’t exactly going green. By his own admission, Lutz was just miffed about the great press Toyota (TM) was getting for its Prius.

In the end, there was only so much Lutz could do for GM after decades of soaring union costs, high gas prices, and, yes, lousy design. In 2009, the year it declared bankruptcy, General Motors’ market share fell below 20 percent—down from its peak of 51 percent in 1962. While the company’s $50 billion federal bailout didn’t enhance its popularity, Lutz still sees a silver lining in its emergence from bankruptcy. Its 2010 initial public offering, the most successful in history, is deemed a fitting capstone to a glorious career.

Lutz the writer, like Lutz the executive, remains a master salesman, and what he sells best in Car Guys is nostalgia for a bygone Detroit. In 1965, he notes, French national TV produced a fawning one-hour special on GM—which, Lutz writes, then had sales revenue that “exceeded the budget of the French Republic.” Still, design mavens and penny-pinchers alike should recall that Ford—Detroit’s real success story—somehow rode out the recession by listening to the bean counters, mortgaging its assets, and using the cash to avoid a bankruptcy filing and bailout. Ford CEO Alan Mulally is no car guy, but the former Boeing (BA) executive figured out how to run a car company. Maybe someday he, too, will write a book about it.

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