The Auto Industry Way to Run a Government

The Auto Industry Way to Run a Government image

Text: Tito F. Hermoso / Photos: | posted August 09, 2010 17:07

The auto industry as a model for government

It goes without saying that running a government is far less gratifying than an auto company. There are just too many politicians, pundits and opinion makers to argue the pros and cons of having too many experts from private industries, constituted vested interests, too many political dynasties, too many Abads, too many midnight appointments, too many legitimate salary incentives to counter graft and make working for the public sector attractive to great minds. In contrast, the global car industry, with its different structures and leadership style, continue to rumble along, unharassed, despite administrative structures similar to government. In actuality, a lot of existing auto industries mirror the varying types of governments and administrative regimes.

The ancient and royal

One type is the monarchial dominant family/dynasty. Try something like that in government and you get suspicions of nepotism. But in the auto industry, being over a hundred years old is cause for admiration as the company is perceived to retain some heritage in having the founding families sit at the board and get involved even in operations. Though the degrees of involvement differ widely, having a family member in the company's rolls in Ford, Peugeot, Toyota or Porsche has some cachet. On the other hand, the absence of a Chrysler, Bentley, Ferrari, Benz or Renault in the namesake organization does not seem to hurt the company's image either. Neither does it affect company's stature just because the company does not bear the ruling family's name. Examples are the Quandts of BMW and the Agnelli's of FIAT.


The magical super CEO, like Virgin's Richard Branson does have a type cast. This is the Patriarchal type of company that has a celebrity or star power individual as chief honcho. There was a time when the owner/CEO loomed large in the company that has his surname on its products. Soichiro Honda, Henry Ford, Walter Chrysler, Ransome E. Olds, Louis Chevrolet, Henry Royce and Charles Rolls, W. O. Bentley, David Brown of Aston Martin DB were all "hands on" devoted to the products that bore their name. Hirelings too have their own Imperial tendencies like Lee Iacocca of Chrysler 30 years ago, Carlos Ghosn of Nissan Renault and Bob Lutz of GM. You even have cases when several superstars ruled the roost like when BMW had Bernd Pischetsrieder and Dr. Rietzle together. This led to Dr. Rietzle exit from BMW to work with another superstar, Jacques Nasser of Ford. You see a continuation of this cult of the super boss among the Tata's that now own Jaguar-Land Rover and the new breed of Chinese CEO's, male and female, running China's huge car companies like Geely, Beiqui-Foton and Great Wall.

Social market company

Collectivist plutocrats are large automotive conglomerates like GM, Daimler, Volkswagen, Nissan-Renault, even Hyundai-Kia popularly identified with the Chung family, are owned by faceless large investment funds and banks but they are not averse to being led by individualistic leaders like Zetsche, Piech and Ghosn. On the other hand, the success of brands like Subaru, Suzuki, Mazda, Mitsubishi,Volvo and pre-Akio Toyoda Toyota are not dependent on having a superstar boss either. Instead the success is a shared honor, purposely identifying such success as a corporate thing and not because of the charisma of one person.

First among equals

The National Champion which has the national government backing up a local car manufacturer with its purchases and endorsement to buy national are a form of tilting the consumer away from the competing brand. Not surprising among the Indians, Koreans and the Chinese, the only remnant of this in the western world is Renault where the French state owns a sizable share. Recent statements by the French president exhibit a bias against the globalization of French production resource allocation, which actually squeezed the ability of the professional managers to provide a decent ROI. The Lander of Lower Saxony has a powerful stake in Volkswagen, which actually ties the hands of management when it comes to dealing with expensive laborers from Lower Saxony. Also, governments that coddle national champions are fundamentally judged as being anti-globalist or worse, engaging in industrial apartheid.

Poor government

Alas government can only dream to have the success of the various business models of car companies as governing is full of conflicts. The public says the government, should attract great minds to the Public Sector. Pay them private sector wages with incentive bonuses. But if you do, you'll get investigated for paying too much. You say you want the best minds? By the same token, above, you'll like find most of them in the country's biggest conglomerates, who also happen to be powerful. But if you hire them, you'll get accused of pandering to big business' vested interests and conflict of interest.

With speed comes suspicion

You say government should act faster, be more proactive by anticipating the future? Then make an EO or fill in the vacancies for a bureaucracy to purr smoothly, but then you'll be accused of making midnight appointments and EOs. You want an end to Political Dynasties? But what can you do if the people keep voting them back into power? Indeed, competition isn't a level playing field. Dynasties begin when the first gen, first elect family goes about the work of doing his/her damnedest best to do a good job and win reelection. Putting term limits are easily circumvented as the spouse or the offspring, who had plenty of time to learn the job hands on, are the next candidate. And by knowing how to run the government unit well, the incumbent naturally has an advantage. This just means that to topple an entrenched dynasty, the upstart has to really work hard and be better.


Running a government is thus far less rewarding than a car company as the threshold for the consumer's satisfaction is very high. All a car company has to do is to deliver is a good product and service it well and you have a happy and loyal repeat customer. Government's product is its own smooth functioning, but like any enterprise that we subject to too much scrutiny and conditional trust, it will bog down. Whether Arroyo or P-NOY, government's existence is constantly damned if you do and damned if you don't, but we have to let it get on with its job the way it sees fit. Deng Xiao Ping said it succinctly. It does not matter what color the cat has as long as it catches mice. But public governance is a far more complicated product than the thousands of parts that make an automobile.