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Producing Excellence

Page 6

Government assistance worked, it just needed the right vehicle – literally

By Sandy K. Baruah

What a difference five years makes. During the depths of the financial crisis of 2008- 09, who among us would have guessed that in less than five years the U.S.-based automotive industry would be again flirting with annual sales of 16 million units, making record profits and hiring up a storm of new talent? Not me, and I was in the middle of it. As a member of President George W. Bush’s team, I was one of the federal officials whose role it was to convince Congress and the American people that throwing a lifeline to the U.S. auto industry was critical to our nation’s economic security. As the head of the U.S. Small Business Administration, I had to convince skeptical members of Congress that this was not just about saving two particular companies. It was about protecting valuable intellectual property, a vast supply chain of businesses large and small, small business dealers in every community in the land – and national pride. While it looks like a no-brainer decision today, it was anything but five years ago. In fact, the first time the issue came before Congress in December 2008, it was rejected.

Detroiter.Jan2013.BaruahFive years ago I could have not envisioned how our U.S. auto companies could have gone from zero-to-hero in such a short a period of time.

The sea change that has taken place will be clearly evident at the North American International Auto Show as the Detroit Three roll out some of the finest products the companies have ever created. What you will see on the show floor is that we are truly living in the golden age of the automobile. In America today, it is almost impossible to buy a bad car from any manufacturer. American, Asian and European manufacturers are pumping out amazing products with stellar quality and compelling value, the likes that have never been seen before.

The fact that the U.S. companies are not just competitive with foreign-based competition, but are often considered best-in-class, is the major difference. In days gone by, American products had a “good, but” quality to them. They were good, but not world class, or just good enough for the price charged. Today, the American manufacturers are offering fully competitive products and can now price them on par (or even higher) than foreign competitors. In the past, Americans had best-in-class trucks and large cars. Today, they are fully competitive in every segment. Cars like the Chevy Sonic and Ford Focus are widely considered two of the best small cars available.

There is a lesson here for the city of Detroit. Auto companies and suppliers used the financial crisis (and bankruptcies in some cases) as an opportunity to not just fix their books, but to change the way they did business and the product they put on the street. Detroit must do the same. Yes, addressing the financial challenges of Detroit is critical, but this alone is not sufficient. The city of Detroit must take a page from the auto industry and fundamentally change how it operates and the results it produces. In Detroit’s case, the “product” that it produces is the environment in which its citizens live and businesses operate.
Fundamental transformation is possible, as our local auto companies have clearly shown. From record losses to record profits, from bailout assistance to historic margins, from also ran products to best in- class offerings — the same zero-to-hero turnaround we’ve witnessed in the auto industry is possible in Detroit.

For those who think that Detroit’s reputation can never be turned around, consider this personal reflection. As someone who grew up on the “left” coast and spent most of his career on the “right” coast, not surprisingly, I never owned an American car until 2010. I am the quintessential import car buyer (both Asian and European). Today, I can’t decide between the Cadillac CTS V-Sport, Lincoln MKZ Hybrid, or diesel Grand Cherokee. (Note to Mark Reuss: my wife nixed the idea of a new Corvette.) I need a bigger garage.

Sandy K. Baruah is the president and CEO of the Detroit Regional Chamber.