MASON/MASON: Geared for happiness

The central thesis of this argument is wrong, and by extension, the entire article is wrong. Here is the central thesis that is wrong: "... because they are not competitive in the longer run even if relieved of their pension liabilities and union contracts ...." General Motors and Ford are extremely competitive in all parts of the world except the United States. Both are profitable everywhere except the United States. Mason & Mason appear not to know that GM and Ford are big, bold, profit making producers in Latin America, China, Asia, Europe and Russia. GM and Ford are using the profits from world wide operations to keep afloat in the United States. Everywhere, they are successful except in the United States. Everyone who takes a look at the problem knows that it is wildly excessive union wages and benefits, and that has been the problem for 30 years or more.

MASON/MASON: Geared for Happiness 11/30/08 The Masons' contrast between the Japanese auto industry and the U.S. auto industry focuses upon Edwards Deming's powerful theories about the effectiveness of constant improvement of the quality of the product by a coalition of the company's management, designers, and production workers, and how those theories reshaped Japanese manufacturing after WWII. But to understand the situation in Detroit, we must also note what the Americans did after WWII, to see how that shaped today's corporate culture. Until WWII, U.S. manufacturing companies concentrated upon manufacturing--constantly developing better designs, processes, materials, machine tools--such that the U.S. was the premier manufacturing country in the world. During WWII, Col. Tex Thornton and his ten Whiz Kids (Robert S. McNamara, etc.) convinced the top brass of the Army Air Forces that by collecting statistics on almost every aspect of the combat, and then crunching those numbers, his men could reduce the unknowns and enable those generals to make informed choices. Their services were considered indispensable, and staffs ballooned. The pace of WWII burned out the managements of the U.S. manufacturing companies, so after the war they no longer had the energy or the interest to continue innovating in manufacturing. Instead, they copied the strategy of the Air Forces generals, and acquired huge staffs of number-crunchers, and allowed them to make the real decisions for their companies. Now the staff jobs were the glamorous jobs, and the jobs of plant manager, manufacturing engineer, etc., became the low-status jobs. At the same time, the stockbrokers who had been seared by the Great Depression were now withering away, and a new crop of stockbrokers wanted to get richer quicker by inventing all manner of derivative instruments to bring more people into the market. Congress and the SEC obliged. By the 1990s, the stock market had again been converted from a stable source of expansion money for corporations into a gambling den for speculators. Now the market was putting tremendous pressure on manufacturing companies to operate as if there would be no tomorrow: pay out the earnings in dividends; don't invest in R&D, plant expansion, etc.; if possible, do the manufacturing overseas where labor is cheaper. Those two factors developed a corporate culture in the U.S. which for the past 30 or 40 years has considered manufacturing to be a low-status necessary evil. That is the kiss of death when U.S. manufacturing-companies have to compete directly with companies from Japan, South Korea, etc., which consider the manufacturing to be the end-all and be-all of a manufacturing company. Unless our manufacturers change their corporate culture, and the Congress reforms the stock market the way it did in the early 1930s, our companies will continue to wither on the vine, no matter how much taxpayer money is shoveled into them.