Suggestions for Cutting Costs at the Big Three

“We must eliminate every unnecessary cost in every aspect of our business,” Chrysler’s chairman, Robert L. Nardelli, told employees by e-mail on Friday.

In my experience, the devil is in the details. Chrysler has shut down some plant cafeterias and their executive restaurants. (I don't even know what to say to that) GM is shutting down elevators early, but their sales execs are working till 8:00 pm and can't walk the 39 flights of stairs when they are ready to leave. Maintenance and training budgets are being scaled back. What is bailout prone exec to do?!

These are not real cost reductions. In lean thinking, ideally, cost reductions are permanent and can be passed along or shared by all stakeholders. Eventually, Chrysler will open their cafe. Someday, those elevators need to be turned back on. A machine WILL break down. Parts will need to be replaced. These are NOT cost reductions in the context of long term continuous improvement.

I think the first step to understanding is to ask: what does cost reduction mean and how do we make it permanent then? In my opinion, it doesn't mean grabbing a red pen and slashing your way through the budget to make the bottom line look black for a given period; that is a profitability approach and doesn't address the long term. Real cost reduction means involving each and every person in the company, asking and encouraging them to put forth the effort to rethink how they do things everyday - so that the result is better in terms of cost, quality, safety and so on.

So, its your turn. If you were to advise Mr. Nardelli and his counterparts at GM and Ford on this matter: What would you suggest they consider cutting? Keep in mind that everything is on the table: "eliminate every unnecessary cost in every aspect of their business"

Any suggestions? I'll start. How about the time and resources required to purchase a vehicle? Do I need three salespeople working on my sale? Do I really need to resort to bringing my toddler in to the showroom so I can put him and his muddy shoes in the convertible so I can move things along more quickly? Why the unnecessary costs and aggravation? By the way, this was at a Nissan Dealership. We are talking culture here folks! Can we possibly rethink the method of selling cars and weigh it against the actual customer satisfaction index and perceived value of said method that customers are forced to endure?

Your suggestions for Mr. Nardelli, Mullaly and Wagoner, please!

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