Tom Stallkamp, chief executive officer of MSX International Inc., delivered a speech titled ``One LAST Time: Can we all get on the same page?'' at the Global Leadership Conference, held in October at the Greenbrier resort near White Sulphur Springs, W.Va. He discussed the speech and his prescription for fixing the industry with David Versical, managing editor of Automotive News, a sister publication to Plastics News. Edited excerpts follow.
Q. Why this speech for this audience?
A. It was an attempt to talk not as much to the Big Three as to the supply base and say, `Look you guys, I think time's running out on fixing this industry.' You gotta say a little bit more than `life is tough.' ''
Q. Do you really believe what you said?
A. Yes. If you look at the margins in this industry, I don't see anything that says we're on the cusp of being able to change it. It's just become so damn competitive and so grindingly cost-oriented that we'll be [like] a railroad or airline.
We've only got two airlines in this country that are making any money: One's an upstart and another's a semi-upstart - Jet Blue and Southwest.
Q. You said the fun has gone out of the business. When did you last have fun?
A. We had fun in the '90s at Chrysler. But the industry has changed dramatically in the last 10 years. We pay people to buy the cars with incentives, and we pressure the supply chain to pay for that in a way, and nobody's making any money.
You can't incremental yourself out of this problem. It needs some big changes.
Q. You called for an original equipment manufacturer-funded consortium to get rid of inefficiency. How would that work?
A. You can't give a speech bitching about something and pointing out all the problems without an answer, and the answer is, somebody's got to spend some thought on this. What happens now is, there isn't enough thought on how it all interrelates, and a consortium that is paid for by the automakers but not influenced by them would show some significant sign that they are ready to change the structure of the industry.
Q. Would you run it?
A. I don't want to run it. There's a lot of thought in academia, in supply chains and in the OEMs on fixing this. But the attempts at collaboration at [the Automotive Industry Action Group] and [the Society of Automotive Engineers] have really been sort of half-hearted. The senior management at the suppliers and the OEMs doesn't recognize that something's got to change.
There's just an enormous amount of isolation and overcompetition in areas [where] we shouldn't compete and not enough in areas where we should.
Q. For example?
A. Everybody is replicating costs at the megasupplier, adding functions when those should be done by some group that cuts across suppliers.
Logistics is the best example. When the Big Three each did logistics, they were supremely efficient. Then they [got] out of logistics and gave the integrator complete responsibility for managing the chain all the way down to the little suppliers.
That's one decision, but then they've got to understand that they've gotten out of that for maybe 10 guys at the megasupplier level. And all those 10 megasuppliers have to add a logistics function. Magna has to add it. Lear has to add it. Delphi has to add it. Visteon has to add it. And when you're all done, they all added a cost. It costs more than the Big Three got out of.
I'm not faulting the Big Three, because it's a responsibility issue that they are trying to push down the chain. My big point is how that's implemented.
Q. Is this an automaker issue or a supplier issue?
A. I was careful to not be anti-OEM. The suppliers have as much or more responsibility for stepping up to the plate. The OEMs shouldn't manage the chain, so they should fund this study of how they can do things more efficiently. Now will they? I don't know. There's still too much competition and secrecy. It's never changed.
Q. Are things this dire?
A. Sure. We could be the next passenger railroads. This should be the most dynamic and exciting industry on earth, and it's sort of sad that computers are maybe more dynamic than this. The computer business is very competitive; lots of people have problems. But there's more thought going on in that business than in this business.
Q. Are you serious about the consortium idea?
A. I don't have another idea. If somebody's got a better idea to get the place working together, I'd be glad to hear it. I don't know how you get everybody working together except providing some forum where everybody can talk about these replicate costs and streamlining the structure.
Q. Won't that take away competitive advantages?
A. Some of this is a strategic advantage. But who cares about some of this stuff? It's hard to believe that buying gloves is a strategic advantage for anybody, to spec on gloves for Ford vs. Toyota. It's pretty hard to believe that an American worker in Mississippi, Alabama or Michigan should have a different glove. Some of the suppliers have told me how they've saved millions standardizing their glove buy. Fine. Let's go the next step and have everybody do that.
Q. Have you seen this work in other industries?
A. In the computer industry there's been more work done on standardizing. Computer assemblers aren't true assemblers. They just plug and play lots of stuff into their computers. If we were the computer industry, we would have different specs for motherboards and analog decoders and all the stuff that's plugged into a computer. We do it all the separate OEM way.
Q. What was your intent?
A. I was trying to shake people up and trying to make them think a little bit. I wasn't trying to attack any individual company or person certainly.
I was just trying to say, `Take a time out here, guys, before we all get so dizzy we can't see straight.' ''