Have gas prices affected you?

[tw]

Originally Posted by Hobbs

Like all manufacturers, car manufacturers are in buisness to make money, not make the world a better place. They change, they innovate, but to capture the current public market not to save the ozone or a spotted seal or something. When they felt threatened by foreign markets such as Japan, US manufacturers began to build better quality cars.

The purpose of a company is the profits only when the company has objectives equivalent to the mafia. Only organizations as corrupt as the mafia want profits; the product be damned.

For example, pre-1979 Chrysler was so driven to make money that, for example, windows would rattle in the doors. If management redesigned the bracket so that a parts supplier could make it correctly, then they would increase costs. It was cheaper to leave the bracket as is. A threat of bankruptcy was necessary to eliminate Townsend and Richardo - to get Lee Iacoccoa into Chrysler. So what did Iacoccoa do? He said finance is no longer the driving force in Chrysler. The product is everything. That bracket, et al was finally designed correctly. As a result, Chrysler was earning record profits in only 4 years.

Iacoccoa virtually laid this fact out in his book. But so many among us are so MBA brainwashed that we never saw what Iacoccoa was saying. That bracket story was told as a classic example of why bean counters and their finance oriented thinking is so destructive.

By worrying about the product instead of the profits, then companies stop losing money and earn profits. This goes right to the basic definition of a company - to make better products that advance mankind.

Examples are so long and numerous that it is amazing how many still let MBA school brainwashing distort their thinking. When companies worry about the profits at the expense of product, then they have no profits ... long term. You need only look at Apple Computer under Spindler and Sculley to see what MBA principles almost did to Apple.

Another example from the 1970s. Henry Ford, the anti-American, routinely made decisions from his spread sheets. He could not even drive a car and saw no reason to know how to drive. As a result, car guys designed their last car: 1965 Mustang. After that, all Fords were designed by bean counters. So what happened to Ford's profits? Gone. Why? Because the communist Henry Ford said profits are the purpose of this company. This caused much conflict between him and his son William Clay Ford. The latter is a car guy; not a bean counter.

First car designed by the car guys since the 1965 Mustang ......

1986 Ford Taurus. The Taurus saved Ford from bankruptcy. Why? Twenty plus years of cars designed to maximize profits meant Ford was unprofitable - cost more to build - failed more often - were intentionally changed to (in my case) result in a complete valve job in 10,000 to 20,000 miles

Don Petersen, who replaced Henry Ford (because we stopped buying Fords), demanded a car NOT designed by cost controls. He wanted the best they could do. Product oriented management. This change was difficult for Ford employees to understand. They had been told the 'purpose' was the profits. Suddenly the profits were no longer an objective. The product was everything.

In order to replace MBA mentality with product oriented thinking, Ford even brought the enemy of business schools back from Japan. "Quality is Job #1" is the result of bringing William Edward Deming back from Japan.

Why does 'profits are the objective' so destroy companies? David Halberstam describes the problem with but another example:

"The Reckoning" page 507
E-coat was a technique that Ford manufacturing development people had invented in 1958 to improve the quality of the paint jobs, particularly the rustproofing ... paint, electrically attracted to the car was pulled into the tiniest, hardest to reach crannies of the body. From the first the process was a stunning success ... Very soon it become the industry standard. ... Ford itself moved very slowly in installing the process in its American plants. It was an expensive technique ... That it was a much better process no one doubted. But when the manufacturing and product men pointed to its virtues, the finance men would point to the price. Somehow the manufacturing men would be unable to prove that E-coat would make a $4 million difference. ... In 1984, more than 25 years after Ford had invented it, [three years after the finance people were removed from positions of power and long after Ford had earned profits selling the process to other auto companies] the company got it into its last two plants.

The Ford system ... manufacturing people were ... politically and economically disenfranchised within the company. The finance people had their careers laid out before them: They never had to go out in the field and actually deal with the reality of making cars; instead, they found sponsors and they went right up through the ranks. ... By comparison a young manufacturing man would encounter a subcurrent of condescension and disrespect. ... Someone in finance who was the same age and performing equivalent would more likely be several levels above him in grade and drawing much larger bonuses; the total package might be three or four times as much.

Paul Weaver's 1978 Ford employment in "Suicide Corporation" page 54:
When I went to Dearborn, it worried me that I knew nothing about cars - that I didn't even own one. Wouldn't this be a handicap to a rising young auto executive, I wondered? The answer was no. People at world headquarters almost never talked about cars. Even the many colleagues who had risen through the ranks of NAAO and therefore had to know a lot about automobiles didn't show it. No one expressed any enthusiasm for cars that I ever detected. ...

What did interest my colleagues at Ford ... was the company's position in the auto industry. ... It often seemed that my colleagues would rather bear any burden or incur any risk than see a competitor gain the tiniest advantage. Issues like the character and quality of our products, or how customers used and felt about them, struck few sparks by comparison.

Exactly what happens - long term destruction of the company - when the company foolishly thinks finance rather than the product is more important.

I could write all day about dying companies and their MBA mindset bosses. The trend occurs so often that it is a more honest religion than organized religion. Finance oriented (rather that product oriented) companies die as a result of that MBA school philosophy; "the purpose of a company is its profits". What saves companies from the resulting communist mentality? Often bankruptcy with no government protection is necessary to remove bean counter types who destroy innovation and therefore the company. For a company to innovate, the product must be the company's #1 purpose - not its profits. "Quality is Job #1" means the product (not the finance) is the company's objective. As a result, a reformed and now product oriented company so often achieves record profits.

Chrysler demonstrated it after 1978. Ford in the 1980s. Apple Computer after Spindler was removed by what I am told were chains of four letter words from stock holders. A Board of Directors dominated by bean counter types had already approved Spindlers continued employment when stock holder reaction shocked those BoD back into intelligent thought. Profitable companies (long term) are product oriented because the profits are only a reward - and not the purpose.