It is an attractive idea that the dull brown moth of the U.S. auto industry can somehow initiate a metamorphosis to become an iridescent butterfly of green technology and electric vehicles. But don’t count on it. History is replete with examples of major firms that went broke and passed out of existence when faced with new technology.
Instead, new firms unburdened by intellectual sclerosis spring up and come to dominate the new technology.
Consider the case of Baldwin Locomotive. It produced its first locomotive in 1832. Over its 124-year existence, Baldwin turned out more than half of the steam locomotives ever produced in the United States. From 1870 to 1940, it was one of the largest and most technologically adept manufacturers in the country. It dominated its market the way General Motors dominated the U.S. auto industry in the mid-20th century.
But despite its strength in engineering design of steam locomotives, Baldwin never contended successfully once technology shifted from steam to diesel-electric locomotives.
The Electro-Motive Company, which became a division of General Motors in the 1930s known as EMD, came to dominate the diesel-electric era. EMD did not invent the diesel-electric. Indeed, existing builders, including Baldwin, had experimented with diesel-electrics more than two decades before EMD brought out its line of mass-produced locomotives for main-line service in 1939.
But while the steam and electric locomotive manufacturers understood the basic engineering principles of the new technology, they couldn’t bring it all together the way EMD did.
Baldwin did produce many diesel-electrics, including some of the most photogenic passenger locomotives of the 1950s. But sales never took off, reliability varied and responsiveness to customer needs was lacking. Even after infusions of capital from Westinghouse, Baldwin went under in 1956.
Studebaker had a similar story. A mining-wagon builder, it grew large making horse-drawn ambulances and wagons for the Union Army in the Civil War. Studebaker, one of the most important wagon and carriage makers for decades, became an auto manufacturer in the early 1900s.
Like Baldwin, Studebaker was important enough that for years it was part of the Dow Jones industrial average stock index. Its engineering often was superb, right up to the end, introducing supercharging and disc brakes on mass-produced automobiles.
But while Studebaker had been a dominant wagon maker, it never was more than a secondary player in the auto industry.
Ditto for Curtis-Wright. With roots in companies founded by aviation pioneers Glenn Curtis and Wilbur and Orville Wright, the company once was the largest manufacturer of piston airplane engines. Tens of thousands of World War II planes had Wright engines. But, despite some experimental models, it got left behind when jet engines replaced piston engines in the 1950s.
Decades from now our children will be tooling around in vehicles not powered by fossil fuels. But those vehicles probably will be manufactured by companies that we have not even heard of yet. Don’t expect to see GM or Ford logos on them.
© 2008 Edward Lotterman
Chanarambie Consulting, Inc.