3 ms·

It is an interesting narrative but largely untrue. As the article points out, US Steel (and the US steel industry in general) was making enough profit, what the

It is an interesting narrative but largely untrue. As the article points out, US Steel (and the US steel industry in general) was making enough profit, what they were not doing was re-investing those profits into upgrading their steel making. Instead, the "People in Charge" were giving themselves large bonuses and pay upgrades for being bosses of the "big steel." This was especially true through the 80's and 90's in a post "stagflation" atmosphere a lot of industry became more focused on executive pay than product production. The poster child was the auto industry "forgetting" how to make quality cars. They didn't forget of course, they just focused more on shoveling money into the C-suite and less on actually building a quality product. The massive erosion of the car market to Japanese automakers was a direct result of that shift of thinking.

edmundsauto 3y ago
I’m not sure that narrative on “forgetting how to build quality cars” is fair. Germany and Japan introduced a lot of new technologies and processes that would naturally be a little rocky from time to time. It is the nature of immature services. Once those matured, the new stuff quickly caught up. But it needed time. What makes you think it was the increase in executive or shareholder comp that caused the degradation in quality? Do we even know if there was a degradation between a 1960 ford and 1985, or is it because the Japanese and German automakers raised our standards? This is a situation where a lot of narratives fit the evidence.
- mildchalupa 3y ago
  Here's an example, before WWII brake lines were made out of Monel, a corrosion proof material aside from galvanic. Nickel and copper being expensive and needed elsewhere the lines were made then made from painted steel. After the war steel lines became the standard. The cost difference is small but it's indicative of a larger issue of disposability. One of the reasons Japanese vehicles started to dominate was that they lasted longer. This is due to better tolerances, more efficient engines, and more robust component design. The Toyota production method, lean and just-in-time were mostly methods for rationalizing better systems to eliminate waste within production and to minimize inventory. Such methods don't inherently make a better car though they leave more io the table to spend on coatings, quality parts etc.
  - zer00eyz 3y ago
    Japan, Toyota Production System (TPS) is a merger of culture and the work of William Edwards Deming. https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming The wiki has this line that sums it all up perfectly: In 1982, Deming's book Quality, Productivity, and Competitive Position was published by the MIT Center for Advanced Engineering, and was renamed Out of the Crisis in 1986. In it, he offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but also by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved products and services. "Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment."
- wombatpm 3y ago
  Having owned a 72 Vega and a 79 Mustang the quality drop off from earlier vehicles was obvious. No one is collecting late 70’s mustangs. No one is restoring Chevy Vegas. American car companies made crap cars and didn’t care until it was too late. I refer you to the movie Roger & Me.
- dreamcompiler 3y ago
  > Do we even know if there was a degradation between a 1960 ford and 1985, or is it because the Japanese and German automakers raised our standards? I know because I've driven cars from both eras. GM and Ford cars from the late 50s required a lot of maintenance by modern standards and they guzzled gas and they would kill you if you had a crash in one. But they were built like battle tanks: Lots of steel; very little plastic. By the end of the 1970s, US cars were built mostly out of plastic. The issue was not that they required more maintenance. The issue was that they fell to pieces on the highway. If you left one sitting in the sun for a year, it would turn into dust. They were utter, unrepairable crap.
RcouF1uZ4gsC 3y ago
> The poster child was the auto industry "forgetting" how to make quality cars. They didn't forget of course, They didn't just forget. They rejected approaches that would have helped them improve quality. Deming tried to convince US industry for quality, but was rejected. He, however, was embraced in Japan.
AnthonyMouse 3y ago
> This was especially true through the 80's and 90's in a post "stagflation" atmosphere a lot of industry became more focused on executive pay than product production. Really the thing that does this is market concentration. You have only three major companies in an industry and they can play "conscious parallelism" games to avoid competing with each other while pointing to the others as ostensible competition to fend off antitrust allegations. Then because they're not actually subject to competitive pressure, they stagnate, and as soon as anyone else shows up who hasn't forgotten how to satisfy the customer, the incumbents start to crumble. It isn't a coincidence that the article is about something similar happening to US Steel, the infamous former monopolist.
atoav 3y ago
Which is precisely the culture people in Germany and Japan don't have (or at least: had). If there are profits at least a chunk of them should be re-invested into making things better, who knows what the future brings after all.
AtlasBarfed 3y ago
Huh which is what all execs do now Double-huh, almost every market I see is a cartel or monopoly. Hm, the conservatives never talk about free markets anymore. I'm sure it's a coincidence.
manvillej 3y ago
executives forgetting to reinvest into the company and shoving money into the C-suite. Why does that sound so familiar these days.

edmundsauto 3y ago

I’m not sure that narrative on “forgetting how to build quality cars” is fair. Germany and Japan introduced a lot of new technologies and processes that would naturally be a little rocky from time to time. It is the nature of immature services. Once those matured, the new stuff quickly caught up. But it needed time. What makes you think it was the increase in executive or shareholder comp that caused the degradation in quality? Do we even know if there was a degradation between a 1960 ford and 1985, or is it because the Japanese and German automakers raised our standards? This is a situation where a lot of narratives fit the evidence.

mildchalupa 3y ago
Here's an example, before WWII brake lines were made out of Monel, a corrosion proof material aside from galvanic. Nickel and copper being expensive and needed elsewhere the lines were made then made from painted steel. After the war steel lines became the standard. The cost difference is small but it's indicative of a larger issue of disposability. One of the reasons Japanese vehicles started to dominate was that they lasted longer. This is due to better tolerances, more efficient engines, and more robust component design. The Toyota production method, lean and just-in-time were mostly methods for rationalizing better systems to eliminate waste within production and to minimize inventory. Such methods don't inherently make a better car though they leave more io the table to spend on coatings, quality parts etc.
- zer00eyz 3y ago
  Japan, Toyota Production System (TPS) is a merger of culture and the work of William Edwards Deming. https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming The wiki has this line that sums it all up perfectly: In 1982, Deming's book Quality, Productivity, and Competitive Position was published by the MIT Center for Advanced Engineering, and was renamed Out of the Crisis in 1986. In it, he offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but also by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved products and services. "Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment."
wombatpm 3y ago
Having owned a 72 Vega and a 79 Mustang the quality drop off from earlier vehicles was obvious. No one is collecting late 70’s mustangs. No one is restoring Chevy Vegas. American car companies made crap cars and didn’t care until it was too late. I refer you to the movie Roger & Me.
dreamcompiler 3y ago
> Do we even know if there was a degradation between a 1960 ford and 1985, or is it because the Japanese and German automakers raised our standards? I know because I've driven cars from both eras. GM and Ford cars from the late 50s required a lot of maintenance by modern standards and they guzzled gas and they would kill you if you had a crash in one. But they were built like battle tanks: Lots of steel; very little plastic. By the end of the 1970s, US cars were built mostly out of plastic. The issue was not that they required more maintenance. The issue was that they fell to pieces on the highway. If you left one sitting in the sun for a year, it would turn into dust. They were utter, unrepairable crap.

RcouF1uZ4gsC 3y ago

> The poster child was the auto industry "forgetting" how to make quality cars. They didn't forget of course, They didn't just forget. They rejected approaches that would have helped them improve quality. Deming tried to convince US industry for quality, but was rejected. He, however, was embraced in Japan.

AnthonyMouse 3y ago

> This was especially true through the 80's and 90's in a post "stagflation" atmosphere a lot of industry became more focused on executive pay than product production. Really the thing that does this is market concentration. You have only three major companies in an industry and they can play "conscious parallelism" games to avoid competing with each other while pointing to the others as ostensible competition to fend off antitrust allegations. Then because they're not actually subject to competitive pressure, they stagnate, and as soon as anyone else shows up who hasn't forgotten how to satisfy the customer, the incumbents start to crumble. It isn't a coincidence that the article is about something similar happening to US Steel, the infamous former monopolist.

atoav 3y ago

Which is precisely the culture people in Germany and Japan don't have (or at least: had). If there are profits at least a chunk of them should be re-invested into making things better, who knows what the future brings after all.

AtlasBarfed 3y ago

Huh which is what all execs do now Double-huh, almost every market I see is a cartel or monopoly. Hm, the conservatives never talk about free markets anymore. I'm sure it's a coincidence.

manvillej 3y ago

executives forgetting to reinvest into the company and shoving money into the C-suite. Why does that sound so familiar these days.