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Buchholz: Listen up, Detroit

Commentator Todd Buchholz

TEXT OF STORY

Kai Ryssdal: General Motors gave reporters a peek at the latest designs for its electric car today. GM said it'll have prototypes of the Chevy Volt ready by the end of the year. The battery-powered car's schedule for a 2010 release. GM says it'll get the equivalent of about 150 miles to the gallon. And that the lithium-ion battery pack should last 10 years or 150,000 miles. You'll be able to replace it when it dies for about $10,000.

Commentator Todd Buchholz says whether their cars run on gas or electric, it's time for the Big Three to catch up to their smaller competitors.


Hot Wheels, Barbie Jeeps or General Motors? Which would you choose? Believe it or not, Mattel Toys, the maker of Hot Wheels and Barbie, has a bigger market cap than GM.

Surprised? Hot Wheels are a lot more reliable than Pontiacs. And that Barbie Jeep? It scores 4.5 out of 5 stars on Amazon. The real Chrysler Jeep? Just 7.5 out of 10 in the Edmunds guide. And the not-so-Big-Three are surprised they've slid to less than half of the auto market?

Detroit is still playing catch-up to the Japanese.

When I was in a kid in the 1970s, I drooled when my teacher drove up in his new Ford Mustang. Now my kids just want the Barbie Mustang. Besides, it runs on batteries!

What happened? The problems of the Big Three predate $4 gas. Trucks and SUVs were a bubble, not much different from the NASDAQ in the '90s and housing in the 2000s. Nannies in Chevy Suburbans were crashing into each other in parking lots, sending shrapnel throughout suburbia.

The whole point of GM was to offer a diverse portfolio of products, not to throw the whole company into one irrationally exuberant SUV tailgate party.

Don't blame the American workers. When those Americans wear Honda jumpsuits, they rivet just fine. And don't blame healthcare costs either. Sure they add an extra $1,500 to a vehicle. That's nasty. But Toyota doesn't steal market share because their cars are priced $1,500 cheaper -- it's because GM cannot seem to build a Camry or Lexus at any price.

The fact is, management has been like a bowl of vichyssoise: cold, thick and hard to stir.

Now those executives in Michigan face a choice: Motown or "No Mo' Town." With its near 10 percent jobless rate and super-high taxes, Detroit is running a going-out-of-business sale. This has been an open secret since the 1970s. And you don't need to hear it through the grapevine. Just ask a kid.

Ryssdal: Todd Buchholz is a writer. He used to be an economic adviser to the first President Bush. His latest book is called "New Ideas From Dead CEOs."

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I love and value your show - been listening for 10+yrs - I recommend it and it has kept me ahead of the curve - that said...

Has anyone figured out that Id'ing a particular song with what I heard on the show is a pain in the butt? Maybe someone could take a look at how NPR does it.

Thanks, (really)
R.

Mr. Buchholtz's editorial commentary on last night's show came close to enraging me. The first responder above, Mr. Flores, did a wonderful job of maintaining a rational, reasoned posture in responding to Buchholz's drivel, so I'll mostly just refer readers back to his recounting of the facts.

As Mr. Flores stated, GM and other domestics have made their share of mistakes over the years, possibly more than their share. By the way, Honda and Toyota have a few skeletons in their closet as well, but you don't usually hear those stories in the American media, and never as front page news. After following the industry for so many years, my belief is that GM's foibles and lapses are generally overstated, for the sake of making a "good story." In fact there were almost always bright spots in GM's lineup, rational pundits have attributed GM and other American companies with practically *creating* the middle class in the 40's and 50's (and does America care anymore?), and once they really started to take the Japanese seriously their quality has been steadily rising and closing the gap, to the point where we're now finally seeing many cases where, objectively by the data, both Ford and GM have products that are legitimately best in segment or at least among the best. And with all the attention on the Olympics these days and Chinese culture, which is terrific, do you hear the general media ever refer to the fact that Buick is the most popular and respected brand in China, with the fastest growing economy in the world? Um, no.

Most people it seems like to talk about the Japanese with a broad brush, but really it's Honda (includes Acura) and Toyota (includes Lexus) that have legitimately set high water marks in the industry for quality over years, and to their credit-- NOT Nissan, Mitsubishi, Subaru, Suzuki, etc. And yet that "import" halo effect seems to randomly extend to anything without a domestic nameplate these days in the USA, quite irrationally. Consider that the 2008 J.D. Powers LONG-TERM (3-year) reliability study puts brands like VW, Land Rover, Kia, Isuzu and Suzuki in the bottom performers, and even vaunted brands like Mercedes and Audi just mid-pack, with the leaders being Lexus, Mercury, Cadillac, Toyota, Acura, and Buick! Just go to jdpower.com and see for yourselves. Please tell me how this information corresponds to what we heard on Marketplace last night? Clearly, the real facts bear almost no relation to the vitriolic rantings of Todd Buchholtz, who apparently is driven to stir popular (pro-import) sentiment into creating a name for himself.

It actually defies my sense of personal integrity and ideals that people like him then consciously chose to spin one of the most significant vehicle press previews of the decade (if not the century,) the breakthrough Chevrolet Volt, to become an all out assault on the domestic auto industry. One truly has to wonder what are the real motivations of such a person.

And so it was well beneath Marketplace to even allow this to take place, and for a while there I seriously considered never listening to your show again. In fairness, I strongly believe you should provide equal time to some other respected commentator, possibly John McElroy, who could give counterpoint. Your audience, the domestic auto industry, and the country just plain deserve that kind of balance.

VR,

Bob Larson
Tinton Falls, NJ

After listening to Mr. Buchholz's commentary, I'm compelled to response as a GM employee.

But first I have a question for Mr. Buchholz. When was the last time you drove a GM product? Have you objectively looked at any product we've make in the last 5 or so years? Based upon his commentary, it's evident to me that it's been a long time. Certainly too long!

Mr. Buchholz's makes several references to the 1970's. It appears to me that Mr. Buchholz is stuck in a time warp, and that's very unfortunate. I might as well be the one to tell him that this is not the 70's, the 80's or even the 1990's. This is 2008 and a lot has changed at GM in the past 30 or so years. Just take an objective look!

First, I'll not deny that GM had issues with vehicle styling, quality and reliability in the 1970's, 80's and into the 90's. We could sit here all day and debate about the mistakes GM made decades ago, but what good would that do for anyone? GM leadership is not driving the business by looking in the rearview mirror. We learn from our mistakes, but we are moving forward.

While we certainly have issues in North America, we've made significant progress in fixing the business, at a time when we have recorded record sales in the three regions outside of North America. We know there's more work to do to make our North American business competitive and profitable on a long-term, sustainable basis.

In 2007, GM finished ahead of Toyota in 9 of the top 10 global markets, while Toyota led only in Japan, its home market.

From a product standpoint, GM is designing and building the best products in the 100 year history of the company. Let's take a look at some of the facts.

The Chevy Malibu was the highest ranking midsize car in this years J.D. Power and Associates Initial Quality Study, better than the Toyota Camry and the Honda Accord. The Cadillac CTS was the 2008 Motor Trend Car of the Year. The CTS offers customers cutting-edge styling, luxurious comfort with world-class performance.

Although rising fuel prices have certainly impacted sales of our full-size trucks, consumers tell us that our full-size trucks are the best in the industry.

This type of product excellence is not happening by accident.

Mr. Buchholz's insistence that GM put all its eggs in the SUV basket is utter nonsense!

Due to the rapid rise in fuel prices, customer tastes quickly shifted from trucks to cars, for improved fuel economy. No one in the industry, including Toyota, could have predicted the extreme rise in gas prices. However, GM began shifting its product portfolio years ago.

Eleven of the last 13 major U.S. vehicle launches have been cars and crossovers. Eighteen of GM's next 19 major U.S. launches are cars and crossovers. This transition has been underway for several years, and our capacity to produce these products is in place and ready to go. GM's shifted focus to cars was not in response to the recent spike in gas prices. Future vehicle decisions are made years in advance.

Beyond that, we are reinventing the automobile. GM is committed to leading in the development of alternative fuel propulsion systems. We are moving from an industry that has been totally reliant on fossil fuels to an industry which will be based on electrically-driven vehicles. And GM is proud to be leading the way!

As proof of GM's commitment to this advanced technology, we've announced plans to build the Chevy Volt, a plug-in electric vehicle that will deliver 40 miles of gasoline-free driving and a total range of approximately 400 miles using a small gasoline engine to recharge the electric battery. This truly revolutionary vehicle will be in the market in 2010.

So when take a look at some of the facts, GM hardly looks like a company that is quietly planning a going-out-of-business sale, as Mr. Buchholz insists.

We are here to stay and proof is in our cars and trucks.

Sincerely,

Dan Flores
General Motors

Mr. Buchholz's well written remarks grabbed your attention, but it's clear he is a commentator, not a reporter with up to date information. He should drive a 2008 or 2009 Chevy Malibu for a while and then correct the statement "... GM cannot seem to build a Camry or Lexus at any price."

Good commentary. I laughed out loud at the "it's because GM cannot seem to build a Camry or Lexus at any price" part.

As someone who worked on GM vehicles at one time, I found them to be poorly designed and clunky compared to Japanese brands. Brake calipers needed at 10,000 miles? Front end steering components blown out of your S10 variant at 40,000 miles? - not on a Nissan/Toyota/Honda. How many special tools does it take to change a strut on a Lumina? All of this was, of course, in addition to actually knowing union workers on the Ford/Chevy lines that would polish off a 12-pack on the way to work.....and laugh about it.

Mr Buchholz presented so many inacurate statements with such authority I am compelled to respond. GM has offered vehicles that are of similiar quality and better value than foriegn producers for several years. Buick ranks with Lexus and Malibu is the segment leader in initial quality. At a substiantialy lower initial and long term investment. Gm offers more vehicles that achieve 30 plus mpg than any other manufacturer. Toyota fought a class action lawsuit on 7 million engines that failed from a poor design, running too hot to get a mpg edge on their American competitors. Gm trucks, Chevy & GMC the combined market leader, achieve 10-20% better fuel economy than the foriegn competitors. Gm offers more for less with almost a $2000 per vehicle higher retirement and medical cost per vehicle than Toyota and Honda. On Toyota's website they brag about doing the final assembly on 600,000 transmissions in KY. Leaving the balance of 4.1 million vehicles with transmissions imported into the US. The most labor intensive component in a vehicle. The subcontractors and temporary employee strategies utilized by foriegn companies in the midwest have substantialy reduced the middle class income in that region. The cost of Mr Buchholz cavalier and inacurate statements effect our entire economy making foriegn vehicles much more expensive than most realize. Japan built Junk in the 60's Detriot built junk in the 80's, it's 2008 and just about everyone offers an excellent vehicle, get rid of the unfounded bias and lets give Detriot an equal media marketplace, allow an unmanipulated public to decide what they like best.

I heard this segment on WDET 101.9 fm today. It was really well-done and well articulated. I know Buchholz has warned the auto industry years ago about this trend. If you post this article in writing can you please notify me? I promote stories which affect metro Detroit business.

Best regards,
Roni

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