During a recent breakfast at the Westin Book Cadillac Detroit, Frenchman Alain de Rouvray was asked to assess the region’s business climate. The president of Paris-based ESI Group, which produces software for virtual prototyping, as well as software for the aerospace, energy, and electronics industries, was in town to accept the Corporation of the Year award from the Michigan Chapter of the French-American Chamber of Commerce. ( The company has 100 workers in Farmington Hills.)
A frequent visitor to Detroit, given his work with the Big Three automakers and their suppliers (along with nearly every automaker in the world), de Rouvray has, over the years, seen the good and the bad in the industry.
“The one criticism I had of Detroit, and this goes back to the 1980s, was a lack of ambition,” he says. “There was too much in-hiring among the Big Three and their suppliers. What were needed were more outsiders who could bring fresh perspective. I see much more openness today, and I believe that is directly related to the success the automakers are now enjoying.”
To be sure, the domestic automotive industry has been insular to a fault. Witness the nearly indistinguishable cars that were produced in the 1970s and 1980s. They were often lackluster and uninspired, or appeared nothing like their predecessors — compare the 1964 Ford Mustang to the 1985 version, for example. The latter didn’t come close to capturing the excitement of the original.
Chrysler and General Motors didn’t produce much in the way of memorable cars, either. The K Car might have helped revive Chrysler after its first bankruptcy, but it would never make the top 50 list of the most stimulating automobiles. Over at GM, the company’s effort to re-badge the Chevrolet Cavalier as a Cadillac Cimarron failed to attract attention. From 1982 to 1988, Cadillac sold some 132,500 Cimarrons, or about 19,000 per year. The project was a waste of time and effort.
Fast-forward to today, and the vast majority of what rolls off the assembly lines of the Big Three is eye-catching, well-engineered, and exciting. Witness the current Mustang, Chevy Camaro, Dodge Challenger, Chrysler 300, and Cadillac STS, to name a few. These cars turn heads, period.
Whatever your position about the federal government ushering GM and Chrysler through bankruptcy, no one can argue that the old model of providing generous benefits and pensions to thousands of blue- and white-collar workers was unsustainable. Now that those costs are in line with the foreign transplants, the domestic automakers and suppliers are recording sizeable earnings for the first time in years.
We’ve also witnessed the demise of the myth that outsiders couldn’t be expected to run the Big Three. As de Rouvray notes, the automakers now know that the world is becoming more flat, and the competition is more formidable. “If you can’t figure out how to become a global automaker, you’re going to be left behind,” he says. “No question about it.”
There’s also no escaping the fact that the Big Three can’t afford to be complacent or insular, lest they fall back into a financial black hole.