[DML] Re: DMC's DEMISE Why it failed
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[DML] Re: DMC's DEMISE Why it failed

I certainly agree with the majority of what was written by Matt.
John's motivations were in some cases most likely half determination
to keep the company "safe" so that it didn't fall into the hands of
others. History repeats itself, and I'm sure that JZD didn't want to
be a modern-day Billy Durant and lose control of his company (not that
Durant was quite an honest business man). That could certainly explain
why he formed the American-based Corporation owned by himself to
control the British-owned company in NI. That and I would most
certainly say unchecked pride had quite a bit to do with it as well.
He probably started off with the idea of securing the company, and
then went overboard.

Yes, Roy Nesseth was John's Right-hand man. He is typically painted as
a gruff man, and accused of being a thug of sorts. From what I have
gathered over the years about people who knew him, including his own
children, he was certainly a n-nonsense kind of guy. He was a loving
father who took care of his children, and was himself in his own right
a damn shrewd businessman. He had even taken his daughter meetings
with him when necessary so she could spend the weekend with him. When
some of the first cars were unloaded in New Jersey, his son Jeff was
handed the keys to one and instructed to deliver it to the Irvine QAC.
This was so he could get to know the car better, and have the
experience as well of driving across country.

See now, what you don't know is that John and Roy had big plans. Jeff
Nesseth and Zachary DeLorean were to be the Young Turks as it were to
take over the company in a couple of decades when John and Roy were to
retire. To further this, there was another corporation to be formed
under the DeLorean umbrella. DeLorean Motor Cars of America would have
it's counterpart, "DeLorean Motor Cars of Europe" that would also
serve the Middle East. Roy Nesseth is painted as a thug by people
because people saw this gruff guy standing next to John who didn't
seem to have any other purpose to be their except hired muscle. The
truth of the matter was because of a prior conviction for automobile
fraud (odometer rollback), he wasn't legally allowed to work in the
Auto Industry in America. Roy wasn't just standing there for no
reason; He was passively involved in DMC's operations because he was
being better groomed for the upcoming position. So, sometime about
around 1984 or so when the Twin Turbo option would become available,
DMC-Europe would be formed with Roy Nesseth at it's helm. Just like
Eugene Cafiero was to Chrysler, Nesseth would be to DeLorean.

Nesseth wasn't some thug. In all honestly, the man reminds me of my
own father. Someone who wasn't angry, but gruff and intimidating
because he'd have no problem calling people on their BS, which they
did not like. Someone who went into business meetings with the mantra
of, "We're gonna play your game, but by MY rules." Not someone who was
cutthroat, or mean, greedy, or anything like that. Roy Nesseth was
someone who would rather not play hardball, because he just wanted to
get to the point. But if you wanted to engage him, he'd certainly take
you on.

Yes, I know that Bill Collins created the GTO, the prototype DMC-12,
and many other things. However let's please be clear here. The Collins
prototype was in fact a failure. Even he admitted that. No actual
chassis and only two separate sub-frames for the front and rear
suspension & gas tank/engine cradles coupled with an unproven
fiberglass material (GRP) that had never been used before for an
automotive application. Computer simulations at the time predicted it
to be a catastrophic failure in an accident. The bottom line was that
they had to start over. Stuff like that is fine for experimental
prototypes that will probably never make it into production, but not
for a company who only has one model to offer. That is precisely why
Lotus was brought in. No doubt Collins was hurt, and I don't blame the
guy one bit. Lotus was completely rude to him every step of the way.
But it had to be done.

If anyone however deserves credit for the sole existence of the DMC-12
and the company behind it, it would actually be Roy Nesseth. Nesseth
was the one who got all the dealerships to initially invest in the
company. Not because of any brutal tactics or intimidation, but
because he spoke their language. JZD was a corporate office guy who
knew every step involved in building cars. Roy however was someone who
worked the front lines with consumers and knew every step involved in
SELLING them to people. Financing, customer service, interactions,
marketing, etc. JZD could show a dealership how they could make a
profit by selling his cars. But only Roy could explain how they could
convince consumers to actually buy them in order to realize those
profits. So yes, some recognition is needed. Nesseth too was one of
those vital cogs in the great machine that made it go. Allot of people
have cast the man in a bad light, but let's also consider those
sources and play a little Devil's Advocate and sometimes ask why?

DMC ultimately failed not because of fraud, but because of lack of
sales. Something they could easily have remedied. Yes there is the
missing money that's never been accounted for. Most likely it was lost
to both a source of internal theft and overpaying of vendors.
Pennebaker & Hegedus made a good documentary on DMC while it was still
in operation. And there is this one scene where JZD is in a meeting
with everyone wanting to know why they're double-paying tooling costs
for the PRV? As he points out nothing new really had to be re-tooled
(A310 already used the same oil pan & "sandwich" plate), and yet here
DMC writes a check over to Volvo for the cost @ the Douvrin plant, and
then Lotus another check in the same amount, for the very same cost to
Volvo again. He wants to know why they're double-dipping DMC for these
expenses? Was it a screw-up or deliberate, and how do they get that
money back? He got nothing but dumb stares back, and one dude who
stormed out of the office to try and make some calls about it. DMC
retained some talented people. Lots of whom were passed over for
promotions at other automobile companies for probably some really good
reasons. If I suck at one job, and then go to a competitor to do the
same job, but then try to get my job back at that other employer later
on, it's pretty east to claim they're black-balling me. Just sayin'...

Mismanagement by lots of people played a hearty role in DMC's ultimate
failure, but by no means the biggest. No, the biggest was lack of
sales. But the reasons have been misplaced for so long. People didn't
stop buying DMC-12's because they were bad cars, had bad reviews, or
anything else. No, they stopped buying them because there was no one
there to finance them.

See, like I said before, JZD was not a car salesman. The consumer
buying experience beyond perhaps consumer confidence was not a
priority in his mind. And as we know, most people finance their cars.
The initial wave of successful sales were almost entirely cash buyers.
People who had cash in-hand and were ready to pay & drive. The 2nd
wave were lots of people who financed their cars. And just who was the
primary financier? GMAC. Now before I go one, realize that there is no
conspiracy theories involved here. GMAC was the primary lender who
financed these car sales since they are in fact the biggest. But these
were new cars by a new manufacturer, so neither's reputations had yet
been cemented in as being reliable. This tends to worry lenders. Prime
example: the Yugo. Crap cars (good drive trains, but poor vehicle
construction). GMAC saw the problems arising, and stopped financing
them. Lots of owners had vehicles with problems, and started having
problems with getting their warranties honored for their cars. Problem
is that people have this attitude that if their car doesn't work, then
they're not going to pay the note on it. People ignore their financial
obligation, and then the car gets repo'd and sold to try and recover
losses. And on a car with a soiled reputation, you can bet it's not
going to fetch much at auction. GMAC was most likely trying to avoid
having this situation with a bunch of cars people owned like $30K on.
Is this a GM conspiracy? I don't know. But some food for thought is
that GMAC like many others have done this same thing with Daewoo cars,
refusing to finance them. And GMAC's parent company OWNS Daewoo. So
where is the conspiracy there?

Bottom line: Had DMC started their own financial corporation (which
they could have done, but opted to create more stocks in DMC to retain
more power), they would have remained in business for quite a long
time to come. Buyers were there! They just didn't have the money, nor
lenders to get those cars into their hands. And had they have started
their own Financial Division, they could have gotten the same amount
of cash, not maxed out their credit, sold the inventory, and retained
all the capital with it earning them interest on monthly payments made
by owners. They would have survived then.

Even so, in the end JZD did not do all he could. I have it somewhere
around here, but it was an article on the British Govt. making a final
offer to JZD. If, *IF* he came up with $20M of his OWN money to invest
to secure his own commitment by tying his success to the company, they
would give DMC about another $80M in financing to total $100M
combined. In addition, British Leyland was to be split up. The TR7/8
plant & tooling was to be literally given to DMC to be re-badged as a
DeLorean product sold within the Dealer Network. JZD had the paperwork
for a $10M loan on his desk the day he was arrested. Match that with
the $12M Bedminster Estate, the $5M apartment in NYC (that Christina
did NOT want to give up), a $300K estate outside of San Diego, and
another $12M corporation called Logan Manufacturing. He had more than
enough money to make the deal go through. But, we know what option he
chose in the end.

I will agree that mismanagement was a big part in DMC's downfall,
because it led to so many squandered opportunities. But I don't
believe that outright fraud was the culprit. I agree that death
doesn't equal automatic sainthood, but nor can a failure of this
magnitude simply be because of a single person. JZD is a scapegoat for
lots of things. Let's not forget the Lotus employees who themselves
were convicted and did hard time for embezzlement of DMC/Government funds.

vin 6585 "X"

--- In dmcnews@xxxxxxxxxxxxxxx, DeLorean Archive <deloreanarchive@...>
> John wasn't forced to increase production.  He insisted on doing
this in order to make the public stock offering (IPO) more appealing
to investors.  You see, his plan (which was incredibly complex and
surely assisted by Thomas Kimmerly--his lawyer)  was to make all
outstanding partnership shares in DMC worthless.  John's shares were
the only convertible shares, so by going public, he would convert his
partnership shares to the new issue and all other partners' shares
become worthless.  He stood to make millions on this deal alone.
> He constantly blackmailed the British Gov't. by demanding more funds
with the threat of pulling out, which would cause a backlash of
workers in Northern Ireland.  
> He chose to produce in Northern Ireland because the British Gov't
offered him the best deal, not out of the goodness of his heart.  He
had offers from Detroit and Puerto Rico and played these against one
another as any good businessman would.  But don't kid yourself, he did
NOT set up there to help anyone but himself.
> People speak of his personal investment which, if memory serves, was
about $10,000.  A far cry from even the $25,000 DMC dealers were
required to invest let alone the millions the British Gov't invested.
> Don't forget the missing $16 MILLION he and Colin Chapman of Lotus
spirited away.  To this day, $16 MILLION IS MISSING!
> CTC (Compostie Technology Corporation).  What was its purpose?  To
perform R & D that the parent company was already performing????  DMC
would pay CTC for work that was already done by DMC?
> Let's not forget about Roy Nesseth, John's thug.  I know a few
people whom he 'met' with and it wasn't a nice event.  Nesseth is
always swept under the rug and rarely spoken about.  He was John's
muscle.  If you didn't do what John wanted, you'd get a visit from
this man who would threaten you and or your family.
> DMC wasted substantial money on numerous trips via the Concorde,
providing cars for John's friends and family, etc.  These things add
quickly, especially for a small start-up company.  The gold faucets in
the house in Northern Ireland were just colored gold.  They were NOT
24 kt. gold plated as those crazy rumors stated.  I actually met a
woman whose mother sold DMC the faucets and she (as well as others
including Nick Sutton) confirmed this rumor false.
> John destroyed many people in his wake, both professionally and
emotionally.  Why do you think DMC went through 3 CFOs and so many
other executive changes?
> Another issue was having the two companies:  DMCUSA & DMCL.  His
idea was for DMCUSA to import the cars, sell them here, and book the
income.  DMCL was to produce the cars and keep all of the debt on
their books in Northern Ireland.  This would make DMCUSA even more
attractive to investors and spur on the IPO.  
> And once and for all, can we PLEASE give credit to Bill Collins who
had the idea for the GTO???!!!   As well as the DMC logo, for which
John took credit?  I have the DMC logo doodles in Bill's own
hand-writing and showed some at the museum.  
> I didn't put this item out, but I have a memo which actually states
that John took Zachary to the March 1981 press junket at the factory
(where the leather jackets were given) in order to show the media that
John felt that Northern Ireland was a safe place.  He used his own
child as a prop.
> I realize this has become a John bashing post and I apologize, but
people must remember these things and not change history.  My goal
with the museum and the collection as a whole is to preserve as much
of the history of the car and the company as possible.  Just remember,
that often times events aren't 'pretty' and don't always have a happy
ending like a tv show.  Also, just because someone has passed away
doesn't entitle them to sainthood.
> Thanks for listening.
> Matt


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