Brutal, unforgiving change was inevitable
Years ago, in a fit of organizational zeal, I customized an online stock
chart to get a quick scan of important Michigan companies -- 10 of them
in all, including the three automakers, five auto suppliers, a retailer
and one bank.
Checking the site Thursday for news, as I do several times each day, the
outdated chart caught my eye. I sat there, stunned, mulling what the
confluence of prevailing business culture, the "creative destruction" of
the Great Restructuring and the flight of a few prominent cowards (CMA
and DCX) had wrought in Michigan:
Of the 10, five were listed with a simple red "1.00" and an "NA" for
stock price -- because they're bankrupt or gone, glaring testaments each
to the inability of some of this town's most prominent corporate players
to, first, understand and, second, to respond aggressively to
fundamental competitive threats until it was too late.
There was General Motors Corp. and its spurned parts unit, Delphi Corp.
There was bankrupt Visteon Corp. and Lear Corp., nearly so. There was
Kmart, bankrupt, revived, then decamped to Chicago and absorbed by Sears
No. 6 is DCX, the defunct ticker symbol for DaimlerChrysler AG, the
disastrous German-engineered "merger-of-equals" that fell apart and
shunted Chrysler, like an unwanted foster child, to two subsequent
owners and one bankruptcy. No. 7? Comerica Inc., the regional bank with
a 150-year history in Detroit that bolted for Dallas in a bid to raise
its price-to-earnings ratio.
How's that PE workin' out for you, guys, your financial manifestation of
what some Texans call "all hat and no horse." A Michigan company my eye.
Only three Michigan companies on my nostalgic chart remain unscathed,
for now, by bankruptcy or predation: Ford Motor Co., Compuware Corp. and
American Axle & Manufacturing Holdings Inc., the most likely of the
survivors to take its own turn in the ditch depending on the outcome of
GM's blast through bankruptcy.
Of course, there are others: Crowley Milner, Hudson's and Jacobson's in
retail; NBD and Michigan National in banking; Handleman, which ended up
on the wrong side of Wal-Mart; Upjohn and Gerber among the outstate
stalwarts -- none of them with the financial strength to be acquisitive,
only to be acquired and to disappear.
That was the '90s, mostly. The Great Restructuring of the past year is
creative destruction of a different kind, an indiscriminate force
attacking Michigan's corporate foundation and making all the excuses for
failing to change -- the culture, the unions, the customers, the
competition -- sound so lame, even absurd.
Unintentionally, my useless stock chart holds the results of the
market's referendum on Michigan's prevailing business culture, a
reflection of the Big Three automakers that set the standard 'round here
for executives, salaried and union workers alike.
No need to say what the results are. They're all around us --
communities contracting, schools cutting programs, jobs disappearing,
companies being dismembered in bankruptcy when they aren't preparing to
wipe out shareholders or deny retirees pensions promised to them.
Kmart, with its dirty stores, surly staff and tawdry merchandise through
the '90s, couldn't match Target and simply couldn't grasp Wal-Mart. GM
understood Toyota, economies of scale and common processes, but its
execs couldn't get there fast enough nor were they held accountable for
failing to do so.
The bankrupt suppliers are creatures of the Detroit auto culture.
They're inextricably linked to the companies that pay their bills and
define what they are, from Southfield, Dearborn and Troy to
Ruesselsheim, Shanghai and Sao Paolo.
Could it have been different? Possibly, but not likely. That would have
required a revolutionary leadership to bury the past, embrace new
competition and bridge the chasms of culture blocking change before
real, brutal and unforgiving change became inevitable. Like now.