If I Were an American Automaker Part 1

I had just last month, wrote about why the auto makers in US should not be bailed out. I might as well say what I feel can be done (assuming they will be restructuring for the future).

Assumptions

1. I doubt the US’s affection for light trucks and SUVs will ever disappear. It may for now tapper down in demand, considering the difficult economic situations.
2. I feel that the American’s cost base will never be on par with Asia or Asian manufacturers.
3. The US, EU, and Asia are key geographies of growth for any auto manufacturers- further broken down, I would briefly say the following countries are vital:
   a. US- America and Latin America
   b. EU- Russia, UK, and targeted W Europe
   c. Asia Pacific- China, India, Australia, New Zealand, SEA
4. Number of automakers should remain relatively unchanged. Some may fail, others taken over, some may merge, and other smaller makes may disappear- but global demand is there, just waiting for the good times to come.
   

Actions
Human resource

1. Face it, not many Americans know Asia. Asia is no longer the “Far East”- which I was shocked to hear speaking to some American ex-colleagues before. I would probably be hiring and entrusting many more Asians to undertake the key positions of Asia Pacific instead of continuously assuming Americans can do the job in Asia. And please, hiring Asians does not mean hiring in US those Asians who have been there for a decade or more working in American firms.
2. If you ask me, I do not fully agree with the “American” way of rewarding the senior executives of the company. I would like to be in their shoes but it does not make practical sense. Look, history has shown that few if not none of these senior executives performed miracles during economic down times. I would take a serious 30% out of these executive pay and allocate it to finding good resources in developing countries that we are operating in.
   

Geographical concentration

1. Yes, no one can deny the US market is practically one quarter of global demand. But relying on it as heavily as the American manufacturers have shows how vulnerable it can be. I would start to relook at orienting at least 30%-40% of total sales towards Rest of World (ROW) outside of US. This concentration would probably be towards countries mentioned in my assumptions.
2. I am just assuming American automakers are not doing exceptionally well in Latin America, since Latin America is probably like Indo China countries. A small population of “haves”, and a large population of household trying to put food on the table. I would start thinking about manufacturing relevant products in these countries on a smaller scale, and catering to the relevant surrounding countries.

This is article 1 by Ler Hwee Tiong, Managing Director at Tyrepac Pte Ltd in his 2 part-series on what he would do if he was the US Automaker.