Why the Big-3 fail – why Sun won’t

In the last several weeks we’ve heard plenty about the Big-3 US automakers, how they are failing, and why they think they need government bailout monies.  There have been some well thought out articles detailing why we should let them fail, arguing that only through the protections of bankruptcy law can they truly get out from under the burdens that have made them fail.  

Jack and Suzy Welch’s thoughts are good, but I think former POTUS candidate Mitt Romney really nails it in his assessment for the New York Times

I love this section from Mitt, and the last sentence in particular.  That’s everything that’s RIGHT about Sun over the last 5 years:

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.


Sun has done the right thing here and just need it to start paying off!  We have such great products now, way ahead of our competitors who didn’t invest in R&D after the dot-com bubble burst.  This is our time.  I just hope our Volume Drives Value, community based strategy catches on before it’s too late!

Go Sun Go!

~ by brianherman on December 2, 2008.

6 Responses to “Why the Big-3 fail – why Sun won’t”

  1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  2. I had read such statemente 7-8 year ago. I think sun should do nothing, so they can really save money. elsewise they are losing money Quarter after Quarter.

    Stop talking nonsense!

  3. I agree with what’s being said, and I’m sure Sun will get stronger again once the markets pick up – but – I do wonder when the R&R investment will pay off. We’ve heard the same things for the last 8 years – investing in R&R will pay off, and I agree you want to protect your R&R , but for how long and to what extend?

  4. The bailout discussions crack me up by what they don’t address – the UAW. No one wants to really go on record and say that this bailout is really there to help the union. So what if GM declares bankruptcy? When United and Northwest were bankrupt, their planes still flew. Their web sites still worked. I kept buying tickets. If GM declares, they will keep making cars. They will keep selling and maintaining cars. All will eventually be good. What WILL happen is the Union will get hammered! Pelosi and Reid don’t want the union to get hammered (or even fail), as that would be bad business for them (how many unions supported Republicans in the 2008 election?).. Look at the airlines – their pilots and mechanics and stewardess unions gave up major concessions or were broken. The UAW is terrified this will happen to them and they are pulling out all the stops and calling in every favor to make this bailout happen.

    Just wanted to point out that other perspective. The carmakers screwed up but bankruptcy won’t kill them (unless you are the CEO who led them there, then you can probably say goodbye). They know this (but won’t admit it).

  5. I agree there’s more to this than just “spend on R&D to survive”, absolutely. But I fundamentally believe Sun can’t make it with a model like IBM and their huge Global Services org nor like Dell who are optimized on providing commodity products on wafer thin margins but at huge volume. For Sun to survive we’re going to have to have compelling products that draw customers in. Without those we’ll become as irrelevant in our market as “the big-3” are in theirs.

    Detroit needs to crank out cars that change the game with innovations that people need and want. They haven’t invested in the R&D to respond to the changing world so they don’t have the products to recover from this financial meltdown.

    Sun on the other hand has been designing and releasing some amazing stuff that performs like crazy and sips power compared to the products our competitors have. We have what we need to go win business, our challenge is to close the deals.

  6. I also have to say that I don’t quite agree with the concepts that the Big-3 don’t spend money on R&D. They built a lot of cars that American’s wanted – really big, gas guzzling, SUV’s. Their problem is really two fold – they never predicted gas going up to $4.50 per gallon so they focused their work on SUV’s. And note that they kept making SUV’s more powerful and they did continue to get better and better gas mileage, so they were doing some significant R&D. Secondly (and probably more important), they never predicted that the US market for new cars would go from 16.9 million units in 2006 to 10 million in 2008. That, tied to ugly contracts with the UAW and their reliance on SUV’s to turn a huge profit, are what has put them in the situation they are in today. They actually had started to turn the corner on some of these issues with the UAW, but they wouldn’t take effect until 2010.

    Just be really glad that Sun is not a Union shop…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: