Highlights: 2011 Automotive News World Congress

Top auto-industry executives share perspectives at annual conference in Detroit, including new UAW chief Bob King and AutoNation's Mike Jackson

by James M. Flammang

Bob King, the new head of the United Auto Workers Union,
expresses the labor perspective to executive audience.

DETROIT - Immediately following Press Days at Detroit's North American International Auto Show, top executive and auto-industry leaders gathered at the Marriott Hotel down the street for a session of speeches and panel discussions. Sponsored by Automotive News, a major weekly trade magazine, this year's two-day Automotive News World Congress featured top CEOs (as expected) and the new head of the United Auto Workers - plus some surprising remarks from a woman who owns 74 businesses. The 2011 World Congress theme was "Prospering in the Next Normal." First up: top executives from GM and Nissan Americas.

GM's new CEO looks toward the customer ... Nissan focuses on Leaf

Now that General Motors appears to be back on the path to corporate success, a new face is occupying the top spot. Named chairman/CEO late in 2010, Daniel Akerson began by stating that "there must be a vibrant American auto industry," adding that he was "struck by just how tough the global competition is." Still, he believes there's no reason Americans cannot compete, "and maybe lead the way."

Echoing a theme that many have uttered lately, Akerson warned that "the old ways and the old models are gone." Automakers must now "put customers first." In his view, "you only win by great products, great quality, and great customer service."

Akerson's challenge is a simple one: to get more people to consider GM vehicles, who would not have done so in the past. In many ways, he said, it "comes down to building trust." As GM continues its comeback, "we need to set high expectations."

A key priority is GM's relationship with its suppliers and dealers. Akerson noted the need for suppliers to "engage earlier" in the process of developing new vehicles.

As for Chevrolet's new Volt, "it's not another me-too vehicle," Akerson said. But it's not the solution to fuel and environmental problems, either. Both the Volt and Nissan's electric Leaf "are revolutionary cars," he said. A hatchback Volt and a multi-purpose vehicle using that technology are coming in the next "couple of years," he stated. In its second generation, the "focus is on cost reduction."

Asked about the old way of doing business, which included pushing products onto dealers whether they wanted them or not, Akerson acknowledged that flaw in the company's history. "We overproduced," he admitted. "We had questionable quality." And GM wound up in an "inevitable death spiral." Has GM finally learned from that mistake? "I think we've learned it," Akerson said, "but will we remember it?"

Carlos Ghosn, the global head of Nissan, has become the familiar face of that corporation. But another Carlos - Carlos Tavares - holds the reins at Nissan Americas in his role as chairman. Tavares came to the World Congress mainly to talk about Nissan's new battery-powered Leaf, which went on sale late in December.

"At times, you'd think we were debating candidates for the next presidency," Tavares said, evidently referring to the rivalry that's developed between the Leaf and Chevrolet's Volt. Right now, the Leaf is participating in a cross-country tour, with the goal of providing 50,000 test drives in 23 cities.

Tavares explained that it's "daunting" to replace the conventional engine "with something that doesn't run on gas." The Leaf has no muffler or tailpipe, and suffers no tailpipe emissions. He cited three ways the Leaf can be charged:
Level 1: Using a 110-volt; trickle charger.
Level 2: With a 240-volt charging station, in about 7 hours - the primary home charge method.
Level 3: Using a 440-volt unit for quick charge (under 30 minutes, provided that the battery isn't completely depleted).

Some 15,000 public 220-volt charging stations will be in operation by the end of 2011, Tavares predicted. Within several years, he expects to see more public charging stations than diesel-fuel pumps, though 80 percent of charging will be done at home.

Addressing concerns about electric-car range, Tavares pointed out that two-thirds of households own two or more vehicles. Furthermore, 95 percent of the U.S. population drives under 95 miles per day, and 72.4 percent travel under 50 miles on weekdays. Over a 3-year ownership period, he estimates maintenance cost at one-third that of Toyota's Prius.

Starting in 2013, Nissan will build Leaf cars and battery packs at its Smyrna, Tennessee plant. By 2014, two more EVs will be available: a commercial vehicle and a compact Infiniti model.

Advised by Peter Brown of Automotive News that the "American people don't know what the Nissan brand stands for," Tavares had a single-word answer: "Innovation." Tavares advised that a year from now, in January 2012, Nissan will return to Detroit's North American International Auto Show, following a three-year hiatus.

Surprisingly progressive words from a prominent businesswoman

Nearly all speakers at the World Congress each year fervently represent the business community - specifically, the corporate world. With an occasional exception, their remarks often sound like cheers for the Republican party. That's not much of a surprise, since most speakers function high up in the corporate world, in a region sparsely populated by liberals or anyone expressing views that could be construed as left-leaning.

Now and then, though, the audience of finely-suited executives is in for a surprise. This year, a totally unexpected flurry of words that didn't sound corporate-derived at all stemmed from one participant in a panel discussion on the need for a national manufacturing policy.

Judging by her resume, Lynn Tilton - owner of 74 companies - would seem to fall right into the thicket of business-first rhetoric that pervades this group. Her first words dispelled that notion. Without a manufacturing policy, she asserted, America may become the "populace of the permanently unemployed." There's a "major disconnect" now, she added. Small and midsize companies can't "sprout all over the world," like the giant corporations.

Since 2001, she continued, America has lost 42,000 manufacturing factories, each employing an average of 500 people. Some 6.4 million manufacturing jobs (almost 40 percent) are gone. In this same time frame, 10.1 million jobs have been created - overseas. One in 6 families are below poverty level, while 1 in 4 are losing their homes, and the ability to achieve the American Dream "has been eradicated." As a result, "we are de-evolving as a nation."

Nearly 30 million Americans are unemployed or partly employed, Tilton went on. "Most of what America buys is no longer made here." Why? Because we're addicted to low prices. "Frankly, I'm used to being unpopular," she explained, acknowledging that her views veer far afield from the corporate majority, even though she's the biggest female business owner in the U.S. Her business consists of buying faltering companies and reviving them.

We wouldn't outsource the military, Tilton continued, but "I'm not sure why we're willing to leave our middle class and our workers behind." In her view, "when people are employed, violence and social unrest subside."

Tilton also favors punishing those companies that are causing economic woes. "We need tariffs where people are dumping products," she said. "If you need to sell in America, you have to make it in America." When a product can be made 30 percent cheaper elsewhere, that's not free trade. So, tariffs are needed to equalize.

Her views on labor also contradict the business norm. "I believe in subsidized employment," she said, noting that it's better than unemployment and consequent loss of dignity, as well as loss of skills. "We can't have a country where we do not employ people. We are in a secular shift that I believe is the downfall of America." If we fail to do this, to create a manufacturing policy, "we will be a nation that has left our workers behind." And "no longer the envy of the world."

What's needed is a "new way of working together," Tilton expanded, citing an example of a company she revived that needed a 20-percent cut. After seeing the numbers, the union agreed to that reduction. "It is rarely the worker who is the issue," she added. "We all need to give up something, and rebuild this country."

Looking at the global scene, Tilton explained that "we try to be popular with other countries." But "they laugh at us." In her view, "this whole ‘we've got to make them more like us because we're the best' has to go."

New UAW chief issues fiery appeal

Late in 2010, Bob King rose to the presidency of the United Auto Workers union, succeeding long-time chief Ron Gettelfinger. Despite adopting a more conciliatory tone than most UAW presidents of the past, King came across as one of the more fiery speakers to address the World Congress. At times, it felt like the audience had gone back in time for a few decades, and was listening to a union leader from the era when labor was a dominant force in the nation. King thus delivered a rousing speech to a largely silent group.

King began by lauding President Obama for pushing the automakers' bailout. "Look at the work that we're bringing back to the United States of America," he said, adding that $65 billion is being invested in Michigan alone. More than 10,000 direct auto jobs are begin created in Michigan, along with 60,000 "ripple" jobs.

"I don't believe the American public wants ideologies," King said. "I believe they want results." His view of the UAW's core mission in the global economy is straightforward: to "create, support and sustain a strong middle class."

Union leaders intend to "advocate for a fair deal for all workers," who should be "sharing in the good times as well as sacrificing in the bad times." At the end of a long worklife, they should be entitled to "retirement with dignity."

King acknowledges that UAW leaders in the past took an "us versus them" stance, which is no longer appropriate. "Our mindset is not adversarial," he explained. "Working with the UAW is a smart business decision [because] we have created a culture of trust ... and fairness."

In King's view, the "right to organize a union is a fundamental human right." During negotiations or determinations on union recognition, "neither party should demean or disparage the other." If an employee does not want to join a union, King says the UAW will respect that decision, and hope for change later. But a company cannot claim to respect the union if they "hold mandatory meetings" in opposition. "There cannot be a fair vote when workers are threatened with losing their jobs."

King insists that "unfettered corporate power ... will destroy the middle class." The UAW "will not stand idly by when a company treats American workers as second-class citizens.... We do not want to fight, but we will not run from a fight."

AutoNation chief reluctantly praises Obama Administration

“It’s still important for America to make things,” said Mike Jackson, chairman/CEO of AutoNation - among of the top auto dealers in the country. Jackson praised the results of President Obama’s Auto Task Force, noting that it “probably saved” the auto industry. As an ardent Republican, however, Jackson appended that favorable view with the statement that it “pains me to say this.”

In his opinion, the country was “staring at the end of capitalism” when deciding whether to save Chrysler. If not for Sergio Marchionne, the head of Fiat and now Chrysler, Jackson believes that latter company would have failed.

One primary result of the Task Force is that it finally the “production push,” which had let automakers dictate which cars dealers would be obligated to accept and try to sell. As a result, it’s “given us this new chance,” Jackson said. He also lauded Ford CEO Alan Mulally, who “early on, said production push is insane.” Instead, Ford demonstrated that “this is what can be.”

Some “old-school activities” remain, Jackson lamented, including the “stair-step, or retro-incentive programs.” Where those are in effect, if dealers fail to meet specific targets, they get no vehicles.

As the video screen behind him displayed the slogan, “Be Prepared To Sell a Lot More Broccoli,” Jackson noted that just “5 percent of the marketplace is green.” He favors a gasoline tax, coupled with end-of-the-year rebates. While citing an “unprecedented new dawn in the automobile industry,” Jackson questions consumer behavior when it comes to environmental issues. “Give them illuminated cupholders,” he believes, “and they’ll give up 5 miles per gallon.” Jackson also suggests that small cars need “a lot of flair and personality” to sell in the U.S.

Today’s consumers are the “king and queen of choice,” Jackson claimed, while criticizing the “byzantine sales process” that prevails. “All the hoops we ask customers to go through” aren’t necessary, in his view. Difficulty in obtaining auto loans remains an issue, though. “The Lord above could come down,” Jackson advised, and “I couldn’t get Him financed.”

Note: Additional highlights from World Congress will be posted soon.

© All contents copyright 2011 by Tirekicking Today
Text and photos by James M. Flammang