Good article on GM's design push and Mr. Lutz.
http://www.businessweek.com/bwdaily/dnflash/jul2005/nf2005077_1341.htm?campaign_id=topStories_ssi_5GM's Design Push Picks Up Speed
New, sleeker cars are coming, but Bob Lutz's quest to add pizzazz still faces potholes. Meshing the company's parts remains challenging
When General Motors (GM )launched the Pontiac G6 and Buick LaCrosse sedans to a lukewarm reception late last year, industry watchers were left scratching their heads. Both lacked the originality and flair of the concept cars bearing the same names a couple of years earlier. More perplexing was the fact that the cars were developed at least in part under the tutelage of Vice-Chairman Robert A. "Bob" Lutz, the retired Chrysler whiz who was brought on in 2001 to inject styling zing into GM's boring rides.
After nearly four years with Lutz on the job, GM still isn't cranking out hits. Except for fire-sale successes such as a mammoth month in June, when a discounting program boosted sales 41%, GM has lost market share since he arrived. The carmaker's new vehicles still don't get the respect Japanese models garner, nor have they created the buzz of the new Ford Mustang or Chrysler 300.
Which brings up the inevitable question: What the heck has Bob been doing? In fact, Lutz, 73, has been plenty busy -- exhorting bean counters to invest in styling, leaning on the engineering and design heads to stop fighting each other, and axing bureaucratic rules that have turned sizzling concept cars into showroom snoozers.
STYLING IS BACK. At the same time, Lutz is trying to generate some passion in the ranks -- for the first time, for example, he's forcing design studios to compete in sketch-offs. And with less money to develop new models than many rivals -- 8% of revenues, according to Merrill Lynch (MER ), vs. the 10% industry average -- he is tapping GM's global resources to develop models faster and more cheaply.
Is it working? The first new vehicles won't start hitting dealers until late this year -- and there's no telling how drivers will respond. But Lutz's design push seems to be paying off. In June, GM provided BusinessWeek and other media a peek at the coming lineup. While GM swore attendees to secrecy, it's fair to say that future models will be a lot more inspired than the current ones -- including a Cadillac CTS with at least a family resemblance to the stunning super-luxury Sixteen show car and a boldly styled Chevrolet Malibu (see BW Online, 6/16/05, "Coming from GM: Cars That Can").
"I saw the cars and felt a lot better about GM," says James N. Hall, vice-president of consultant AutoPacific in Southfield, Calif. "If they had those cars right now, they'd be kicking butt."
AUTO FIEFDOMS. Right now, of course, they don't -- and Lutz has spent the past four years figuring out how the maker of hits like the Corvette and Cadillac Escalade lost its way. When Lutz arrived, he found a culture more focused on engineering processes than on generating excitement among consumers. New cars were developed so they could be built at GM's aging and inflexible plants, not to break new ground in the market. As a result, engineers talked and designers listened.
And forget about sharing ideas among the giant's global regions. Each one acted autonomously no matter how much money GM may have wasted reengineering family cars in North America, say, when similar work had already been done in Europe.
The Chevy Malibu typifies the problem. When the car was developed, GM had strict rules on how much it was willing to spend for the big steel stamping dies that press the doors and body panels. Since engineers and accountants wanted the car to be easy and cheap to build -- and GM prioritized roominess over style -- the Malibu ended up being a slab-sided box. And even though it was engineered on the same platform as GM's Opel Vectra and Saab 9-3 midsize cars, GM still reengineered some of the parts in the U.S.
SHIFTING GEARS. One of the first things Lutz did on arriving in September, 2001, was push designers and engineers to stop fighting and start collaborating. Now, when the two sides butt heads, they get together in weekly meetings to hammer out their differences. "It isn't a love-in," says chief designer Ed Welburn. "But in the last two or three years the laws of physics have changed."
One area of compromise: pushing a car's wheels out to the corners and making them flush with the fenders -- a styling trick long used by BMW that makes cars more streamlined. Sounds pretty basic, right? Not at GM, where engineers complained that doing so created costly challenges. Lutz has urged the gearheads to find ways to hew more to designers' drawings.
The results, says Welburn, can be seen in the Pontiac Solstice and Saturn Sky roadsters. Both will be built to their original vision -- and the Solstice already has buyers lining up to get one when it goes on sale this fall. In both cases, Lutz proved he can ram a good project through the system. He ordered sketches of the Solstice from three different design houses and then sent a special engineering team to figure out how to manufacture the cars profitably.
DOLLAR CRUNCHING. Similarly, GM started with hundreds of sketches for the next Cadillac CTS, due out in '07. Then three studios produced full-size models of the car. In the past, Welburn says, GM would assign one design team to work on a car from start to finish.
Lutz has also targeted GM's shoddy interiors, frequently the first place GM money men look for cost savings when a car goes over budget. Lutz's aim is to leapfrog rivals such as Toyota Motor (TM ) and Volkswagen by using more patterned leather and plastics with a richer feel. "Bob has made interiors a priority," says Liz Wetzel, a GM design director, who adds that she and her colleagues meet with purchasing execs regularly to make sure they don't cut corners to shave a few pennies. Still, given the demands by the finance guys that GM reap a specific return on each car, this is one battle Lutz has not yet definitively won.
Indeed, the need to do things on the cheap remains his biggest challenge. Lutz's boss, CEO G. Richard "Rick" Wagoner Jr., is doing his part -- pushing each of GM's global outfits to share engineering work and factory capabilities to cut costs. Part of the plan is to keep sending engineering jobs overseas, including to lower-cost nations. Since 1997, the carmaker has pared its North American engineering staff from 19,000 to 12,000.
ONE COMPANY. Even more important, each region will take the lead in developing platforms and parts for specific vehicle types. North America will engineer luxury cars and most trucks and SUVs. Europe will take the lead on compact and midsize cars. Australia will develop the underpinnings of some rear-drive cars, and GM's Korean Daewoo operations will work on subcompact cars and small SUVs. Says James E. Queen, vice-president for global engineering: "The big change is that these engineers are working on behalf of GM, not their specific region."
That's already happening. Engineers at GM Daewoo Auto & Technology in Korea are working on the next Saturn Vue small SUV for the U.S. market. New virtual-engineering tools let American designers such as Wetzel see a life-size 3-D image of the Vue on a wall-size screen in GM's design studio in Detroit. She makes design changes while talking via speakerphone with Korean engineers who are looking at the same image.
By better meshing its global operations, GM hopes to wring out costs and then pump the savings into better models. Lutz needs all the resources he can amass. For while his revolution is gaining traction, there's still plenty to do. With so many models in need of an overhaul, GM likely will have to keep offering employee discounts to all comers -- a program the carmaker extended into July, prompting Ford Motor (F ) and Chrysler Group (DCX ) to follow suit. But it looks as if Lutz is at least steering GM design in the right direction.