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Jerry York is a Michigan native who built a reputation during his years working at all of the Big Three automakers as one of the shrewdest managers in the business, culminating last year when he served as Kirk Kerkorian’s adviser in the billionaire’s unsuccessful attempt to play an active role in the reorganization of General Motors Corp. Speaking at an automotive industry restructuring finance summit in Dearborn, Mich., Wednesday, the 69-year-old York refused to talk specifically about GM, but his thoughts on where the Big Three stand today and what direction the industry is going give a clear indication of what York might have sought had he remained on the automaker’s board or if Kerkorian had succeeded in buying Chrysler LLC earlier this year. York, who is also on the board of Apple Inc. and enthusiastically gave a reporter a demonstration of his iPhone when asked (he bought 12 for various family members and friends), said the Big Three have closed some of the efficiency gap with foreign nameplates in recent years. In 1998 it took Japanese manufacturers 31 hours to make a car, while domestics took 44. Today those numbers have closed to 30 hours for the Japanese and 34 for the Big Three.
But the domestics are still struggling with quality relative to their foreign foes, and they are making the sales challenge harder on themselves because they are slow to refresh models. New, exciting models bring potential customers to the showrooms. However, on average Asian manufacturers renew their entire product line every 4.5 years, York said, compared to every 6.7 years for the Big Three. “In a business that is part fashion and part technology, I don’t think you can win like that,” York said. “This may be the principal reason the Asians continue to gain market on the Big Three.” The challenges don’t figure to get any easier in the future. While the battlefield is still the U.S. today, tomorrow’s war is likely to be fought in developing markets and over new green technologies. Mature markets are only expected to grow 1.5% annually in the years to come, compared to 7% annually in new markets such as Russia, Mexico, China and India. “For most producers, the only path to long-term success is growth in the worldwide markets,” York said. But those emerging markets will require even lower manufacturing costs, York said, citing plans from Toyota Motor Corp. and Volkswagen AG to eventually offer $7,000 cars and Tata Motors’ announcement they intend to produce a car that will retail for an unfathomable $2,500 in developing markets as examples. Meanwhile green technology demands figure to push costs up. Expensive materials such as composites and tougher steel can bring down vehicle weight and with it engine emissions, but at a cost. York is not a big believer in fuel cells, which interestingly is one area of green tech where General Motors excels compared to its rivals. Given the amount of research and infrastructure development investment needed to refine and distribute hydrogen, York estimated fuel cells will only make sense if oil spikes to $200 or even $300 per barrel. —Lou Whiteman See TheDeal.com story on Kerkorian's retreat from General Motors Tags: Chrysler, Ford, General Motors, corporate restructuring, automobiles Categories Deal Video
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