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1998-05-05 20:24:12


Ford and General Motors: Trucks Only, Says Consultant



How bad could it get at Ford and General Motors? Bad, says the president of a consulting firm. GM and Ford might be wise to plan for a complete shutdown of its automobile assembly plants. The companies should concentrate on trucks: higher profit margins.

If GM and Ford shut down their auto assembly plants, there won't be enough of the economy remaining for people to buy trucks. If it's that bad at GM and Ford, then it's disastrous in every manufacturing organization.

This appeared in the SAN FRANCISCO EXAMINER (May 3).

* * * * * * * *

Now, some consultants believe that when the new millennium dawns, this seemingly innocuous oversight could trigger massive failures in America's power grid and water supply, disrupt manufacturing and distribution of goods, shut down stock markets all around the world, and bring chaos to our banking, transportation and communication systems.

One of those who is convinced this scenario is not just possible but likely is Larry McCarthy, CEO of San Jose-based Ascent Logic, a systems-engineering company that is working with some of the country's largest firms to prepare them for the worst.

For McCarthy, rewriting faulty code, an approach being taken by many companies, is destined to fail. A Ford or a General Motors might just as well attempt to eliminate ants from all of their lunch rooms, assembly plants and employee parking lots.

Instead, McCarthy is advising such corporate clients to decide which parts of their business they want to keep operational no matter what. For some vehicle manufacturers, to take one example, this might mean producing and distributing only trucks - which yield the fattest profit margins - when auto production lines have been hobbled or shut down.

A major player in risk-management technology, Ascent has long worked with aerospace contractors and the military on non-Y2K issues. More recently, the company was retained by two large insurers, Marsh & McClennan and Lloyd's of London, to evaluate applications for Y2K policies.

Some of the biggest and most reputable companies in America have thus far failed to qualify, according to McCarthy, because they still lack a credible Y2K remediation strategy. Moreover, within two or three years it's possible that a few such companies will fail, he says. . . .

From here on out, predicts McCarthy, most companies will be so deeply immersed in unanticipated Y2K problems that spending on new software and hardware will practically cease. . . .

Here are a some other reasons why complacency should not be trusted:

*The embedded microprocessors that run most of our machines are not just hard to find, but too poorly documented to fix.

*Some utility companies estimate that ten to fifteen percent of their generators will blow in the early days of the new millenium, all but assuring triage among business and residential customers.

* Corporate executives really are getting nervous. But with 20 months to go, why risk spooking shareholders by going public so early with their fears?

* Asia and Europe have barely started to address Y2K problems and risk being "locked out" of compliant systems elsewhere - or contaminating them.

* Government lags well behind industry in replacing antiquated mainframes, which harbor most of the buggy code.

* Every law firm in the U.S. of any size has organized a Y2K team in anticipation of legal settlements that estimates put as high as $1.3 trillion.

* Rocket scientists were using two-digit dates in navigation and communications satellites launched as recently as six years ago.

* Software "repair" factories are dying for lack of business. For all their talk about spending hundred of billions of dollars to fix Y2K glitches, companies that are planning to rewrite code evidently have barely gotten started.


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