Could Valley Studio Hold Key for GM?

Hit by falling profits, factory closures and cuts in its workforce, Detroit automaker General Motors’ problems and potential solutions are a long way from the San Fernando Valley. But tucked away near a residential neighborhood in North Hollywood is one of the company’s design centers and within its red brick walls its staff of designers and engineers play their part to come up with designs and products that could be the key to any turnaround of the company. The broader role of the North Hollywood studio is to come up with designs that capture and enhance people’s lives, said its director Frank Saucedo. With a greater emphasis on interiors, the studio this year formed an advance interior group that works side by side with the exterior design group. The studio also works with a branding group based in Detroit to give input on how the eight GM brands are perceived on the West Coast, Saucedo said. The branding group in turn tells the studio how the corporation sees the brands going and vehicles can be developed around that information, Saucedo said. “We can offer a voice based around an environment that is constantly changing,” Saucedo added. “It is very competitive market. We see firsthand who our competitors are.” Like its fellow U.S. automakers, GM has hit hard times. As market share decreases, profits fall. The manufacturer posted a $91 million loss for the third quarter, announced plans to close a dozen factories in the next two years and cut its North American payroll by 34,000 jobs by early next year. Considering all that, Saucedo said any pressure put on his group due to the company’s problems is a “good pressure” because of the importance that design plays in the company’s turn around. “They are looking for product and are more open to leading, cutting edge design considering how competitive the market is,” Saucedo said. “That is why we have all these small satellite (studios) around the world.” GM also has studios in Europe, Latin America and Asia. Designers often rotate between the different locations to get broad training on the company’s products worldwide. As an advanced design studio, the staff in North Hollywood is involved with the beginning of the process of creating new vehicles or modifying existing ones. As the word “advanced” in the name of the design implies, the work is done for future model years. Currently, the staff is working on vehicle designs for 2010 and beyond, Saucedo said. This year alone, the center has come up with 11 full-size models for eight different GM products. In their own way, each model shows a new direction in a particular design scheme or helps to build a brand, Saucedo said. What Detroit looks for from the design center is to put a West Coast and a broader Pacific Rim spin on the vehicle market and to leverage the ideas coming from a primarily young staff. Saucedo stressed an importance for the center staff to understand and spot trends before they happen; to forecast what will be popular with car buyers. The Southern California market can be fickle but buyers also are very open minded and enlightened to new types of vehicles. “We saw the crossover vehicles take off here,” Saucedo said. “You see a lot of vehicles that break the mold a bit.” Having the design studio in the Los Angeles area puts it in the hottest car market in the nation, and arguably the world, said Peter Welch, president of the California Motor Car Dealers Association. “When you look at the manufacturers seeing a percentage increase in their sales Toyota, Honda, and Nissan many of their models are designed and conceived in California or at least with lots of California input,” Welch said. It also doesn’t hurt that Southern California is the center of the nation’s preoccupation with celebrity what they wear, where they live and what they drive. When a movie or television star gets behind the wheel of a certain car that becomes important product placement, Saucedo said. “People watch what celebrities drive and what the buzz is about them,” Welch said. Glamour may attract a buyer’s eye but it’s the functionality and convenience of a vehicle that keeps bringing them back. In recent years, GM has focused on more comfortable, long-lasting interiors as recognition that people spend more time in their vehicles these days. Nowhere is that more true than on the clogged, slow-moving freeways of Los Angeles. If, as a driver or passenger, you spend an hour, an hour and half in traffic then your car better be comfortable, better be pleasing and function to your needs. “You can sell them a pretty package but if it doesn’t fit your lifestyle and it isn’t functionally improving the way you do things, you won’t be back,” Saucedo said. Arguably, when it comes to Californians buying product from the Big 3, they haven’t come back. The CMCDA forecasts a 9.2 percent drop in registrations of new light vehicles made by the Big 3 automakers in 2006 when compared to the previous year. Japanese imports, however, are predicted to rise by 2.7 percent this year, while European imports are expected to go up 2 percent, the association said. Designing a new car involves more than three-dimensional modeling and knowing how passengers will fit inside. The staff also gets out of their red brick building and observes how people use their vehicles. Saucedo calls it a happy accident that the center is located where it is giving access to a mix of the affluent from ritzy areas of Los Angeles and the blue collar, middle class of the San Fernando Valley. “You get that diversity and understand there is that broad range of customers and we’re not just designing for the elite,” Saucedo said.