Is General Motors Worth Saving?

[mendeleev 68]

A more interesting question is how can GM be saved?

Ten years ago, GM bought the company I worked for from a major chemical company. A couple years later, we got spun out with the rest of Delphi. I’ve had opportunity to see both GM and Delphi, its bankrupt former subsidiary, close up, on the inside, on a global basis (but mainly US and Europe, not so much east Asia).

GM is a curious organization. They are extremely arrogant and are more abusive toward their supply base than any other major car company. And that’s saying a lot. Customers in chemicals and aerospace (other businesses that former chemical company worked in) were much less abusive than automotive customers. Automotive is an extremely tough industry.

Besides being arrogant and abusive toward their supply base, GM’s style matrix management structure diffuses responsibility and decision making to a point where very large numbers of managers are able to exist just fine without having to contribute. If mediocrity reigned, it would be an increase in competence level across large segments of the engineering and management staff in the company. Delphi has the same problems.

So, GM abuses suppliers who should be their allies and arranges itself so no one is responsible for anything.

Delphi has been bankrupt for a few years now, and press reports indicate they can’t exist because they cannot secure funding. No mystery there. Delphi has managed to “restructure” while retaining the bloated, matrix structure they inherited from GM. Bankruptcy hasn’t been a big enough shock to weed out all that rot. It isn’t clear that Delphi can ever emerge from bankruptcy. GM, with its much larger, even more bloated and entrenched bureaucracy, will have even bigger difficulties inside of bankruptcy. It might have to be carved up, auctioned off, and dismembered. I see little reason for faith that GM management can successfully restructure themselves, even if market conditions were a lot more favorable than they are.

Given that, how can it make sense for government to bail them out? In my view, only if control of the company is taken away from current management and executives successful in turning around other bankruptcies (the CEO of Continental Airlines comes to mind) put in charge. GM, if it receives government funds, needs an associated extremely brutal shock therapy. That goes for the UAW, too.

[spookyturtle 9,466]

While all auto manufacturers are suffering, it's clear why GM is suffering the most. They suck.

No they don't suck. They just underestimated the sedan / medium sized car market. Overseas GM is clearly competing well in both these segments.

Since I don't care how they're doing overseas, it's very clear their GMC Sierra-like mentality is one of the good reasons why they suck ###. And don't get me started again on those pieces of ####### Saturn cars. I've never seen auto mechanics swear so much fixing cars than I ever did see it happen with Saturns.

Toyota and Honda clearly have their ducks in a row when it comes to cars most people drive.

They have the cheap cars, Honda Civic, Honda Accord, which are very good cars, last a long time, and have a very low depreciation rate. Toyota has the long standing Camry, has the Prius which is gaining quite a bit of popularity, as is the Yaris, and even their subsidiaries are seen quite a bit on the road now, such as the Scion xB, Scion tC, Lexus models of all sorts, and I'm seeing quite a bit more Lexus RX400h hybrid SUVs over Ford Escapes, which is surprising given the Lexus hybrid SUV is around $40,000 - $50,000, while the Escape Hybrid is more financially manageable for your average salary.

Quite simply put, there's a reason why Japanese cars are better. The American brands focused far too much on controlling their market versus evolving it. It's the epitome of American business today. Look no further than the broadband infrastructure as to the largest comparable model regarding American-based companies.

Toyota isn't going down. Neither is Honda.

Maybe profits are going down across the board, but those two are still the best sellers. So indeed, they do "get it", while Ford is playing catch-up and GM is clearly left behind.

You and the rest of the anti America sector hope so.

Yet.

SVRT does not understand the concept of no one is buying cars. In such a market the people who have to buy a car will most likely buy the cheapest to get around. Ruling both Honda and Toyota out. Funny that people forget how cheap and ####### the first Toyota's and Honda's were. Their lower price was their initial selling point.

Someone who needs a car yet is struggling, like the majority of Americans, is going to be price conscious. Cheap and Honda does not go together well.

SVRT hates America.

No need to sour just because I stomped all over your freedom fries.

Move to Canada. You don't like it here anyway.

[IAMX 3,055]

The big three made a bad call and we should loan them the money. The other thing is as mawilson said Toyota and other foreign manufacturers, who build cars here, are also struggling and will probably use some of this money themselves. A total collapse of the auto industry will be bad news for America.

Well guess what, sometimes bad news happens. The whole point of failure is to learn lessons. You don't learn lessons if you have someone there to bail you out when you #### up.

[spookyturtle 9,466]

Did any of you American auto industry haters vote for Obama? He wants to save the industry. I agree.

Nope.

You voted in Canada.

[IAMX 3,055]

Move to Canada. You don't like it here anyway.

I like it just fine in California. Do you enjoy being wrong?

[mawilson 2,133]

Quite simply put, there's a reason why Japanese cars are better.

They are not better. If the Chevy Malibu was called the Toyota Malibu, or the Buick Enclave

was sold as the Honda Enclave, GM wouldn't be teetering on the edge of bankruptcy.

GM cars have won rave reviews from motoring press and are every bit as good as

those of its Japanese rivals.

People believe otherwise only because America haters like you have been repeating

the same lies since the '70s.

[spookyturtle 9,466]

Quite simply put, there's a reason why Japanese cars are better.

They are not better. If the Chevy Malibu was called the Toyota Malibu, or the Buick Enclave

was sold as the Honda Enclave, GM wouldn't be teetering on the edge of bankruptcy.

GM cars have won rave reviews from motoring press and are every bit as good as

those of its Japanese rivals.

People believe otherwise only because America haters like you have been repeating

the same lies since the '70s.

Damn straight.

[mawilson 2,133]

Move to Canada. You don't like it here anyway.

I like it just fine in California. Do you enjoy being wrong?

Wrong, like the out-of-date estimate you posted?

[spookyturtle 9,466]

Move to Canada. You don't like it here anyway.

I like it just fine in California. Do you enjoy being wrong?

Let's settle this like gentlemen. You're a #######.

[SMOKE 1,426]

[Empress of Groovy 373]

Quite simply put, there's a reason why Japanese cars are better.

They are not better. If the Chevy Malibu was called the Toyota Malibu, or the Buick Enclave

was sold as the Honda Enclave, GM wouldn't be teetering on the edge of bankruptcy.

GM cars have won rave reviews from motoring press and are every bit as good as

those of its Japanese rivals.

People believe otherwise only because America haters like you have been repeating

the same lies since the '70s.

I'm not so sure about that--30+ years of maintenance and repair surveys suggest otherwise.

[Heracles 417]

Move to Canada. You don't like it here anyway.

I like it just fine in California. Do you enjoy being wrong?

You seem to erroneously believe that California is a self sufficient economy. Where do you think the majority of your beloved google's revenues comes from? the state of California? EPIC FAIL! From the rest of America and abroad.

Actually when you look at it, a significant portion of the top 100 corporations there rely heavily on international trade and as well as trade with the other 49 states in America. I remember you saying the state of California should break off and form their own country. What would the economic impact be for California? Especially if the US then decided to have a trade embargo with this newly formed country.

Point being. You nor your state works in a vacuum. A loss in one industry in America will have a huge impact on every other. EG The Housing mess which impacted CA greatly.

Edited November 13, 2008 by Aficionado

[mawilson 2,133]

Quite simply put, there's a reason why Japanese cars are better.

They are not better. If the Chevy Malibu was called the Toyota Malibu, or the Buick Enclave

was sold as the Honda Enclave, GM wouldn't be teetering on the edge of bankruptcy.

GM cars have won rave reviews from motoring press and are every bit as good as

those of its Japanese rivals.

People believe otherwise only because America haters like you have been repeating

the same lies since the '70s.

I'm not so sure about that--30+ years of maintenance and repair surveys suggest otherwise.

So what you're saying, basically, is that GM will never be able to make a good car.

No matter how good they make it, a 30-year-old survey will tell you otherwise.

[Donna A 4]

Thursday, November 13, 2008

GM: Tick, tick, tick...

by Peter M. De Lorenzo

DETROIT -- So it has come down to this for General Motors: 100 years of living, breathing American industrial and social history is on the precipice of total disaster, with the once-glittering corporate icon facing certain collapse if some sort of government financial aid package is not put together in the next 60 days.

Think about that for a moment.

The company that basically powered this nation through a century of progress and helped this country muster the strength to fight world wars -- while contributing immeasurably to the fabric of America and the development of our vast middle class - is on the verge of filing bankruptcy.

Unbeknownst to the legions of people out there in "fractured" America, the ones who fill the Internet with bile and who project such a level of viciousness and unbridled glee at the thought of the collapse of our domestic automobile industry as if it were -- amazingly enough -- some warped opportunity for celebration, there are countless towns, big and small, scattered all across this nation that have grown up with GM as their main employer and the main source of income for thousands of American families.

I am absolutely convinced that the people who hate "Detroit" and want it to implode have not even the faintest of clues as to what it really means if it were allowed to happen. To those instant experts out there who are reveling at the thought of a major part of our country's industrial fabric collapsing, I say be careful what you wish for -- because if GM is allowed to fail, it will take the entire domestic auto industry down with it -- meaning thousands of suppliers and dealers in towns making up a cross-section of America will go under, too.

For the record, there are around14,000 domestic-oriented dealers in the U.S. employing approximately 740,000 people with a payroll of around $35 billion -- that's billion with a "B." But that's just the dealer side of the equation. When you add in the suppliers and all of the associated businesses that either directly or indirectly depend on Detroit for their livelihoods, we're talking almost three million people who would be out of work in a matter of just a few months, adding up to a $150 billion loss in personal income.

Let's take California, for instance. Judging by our reader mail, there seems to be a large contingent of people out there who adamantly believe that "Detroit deserves to die" etc., etc., and that whatever happens "won't affect me." But GM and the domestic auto industry's collapse will most definitely affect Californians as well. NUMMI, a joint operation between GM and Toyota (the Toyota Corolla, Toyota Tacoma and Pontiac Vibe are built there) and the only San Francisco Bay Area car factory, is already reducing shifts and may even shut down its Tacoma pickup truck line due to the burgeoning economic slowdown. One of our readers who understands the ramifications of a domestic industry collapse passed this interesting local news report along about NUMMI, which said, "There are tens of thousands of additional jobs on the line besides the 5,000 at NUMMI. There are over 1,000 suppliers in California that provide parts. They in turn employ 50,000 people."

That's just one factory. Now multiply that by the staggering totals involved if GM -- which has 22 stamping plants and 26 powertrain plants in North America on top of its assembly facilities -- and the rest of the domestic automobile industry is allowed to fail. The tentacles of this kind of cataclysmic disaster would spread throughout the nation like a virus that could not be contained.

I really don't know why it's so easy for people out there to dismiss the collapse of the domestic automobile industry as being some minor event that won't affect them in the least, because each person who is part of that figure of three million represents a real family and real human story, all across this nation. It's the mom and pop diners, stores and peripheral neighborhood businesses that depend on the workers who toil at these factories and plants for their livelihoods too. There are towns all across America that would simply dry up and blow away if the local GM or supplier plant shut down. That's not an exaggeration, that's a simple fact.

I have been vilified of late by numerous critics for shifting my commentary to a more political tone over this election year, but I don't offer any apologies. This country is not only in the throes of a financial crisis, it's in the throes of a fundamental identity crisis as well. We as a nation have been lulled into thinking that things will work out and that any unpleasantness headed our way will be mere speed bumps on our journey to becoming a state of perpetual consumer bliss.

Well, it just doesn't work that way, folks.

We live in a global economy that isn't big on history or what we as a nation once did or stood for. We have to compete, or else we will arrive at a point when our national future will transition from being one of destiny to one being dictated to us by a unsavory set of circumstances and interests not in line in the least with our hopes, our dreams or our thinking.

In order to compete in this global economy we have to get smarter in our schools and with our educational policies. A high school graduation rate of 50-60 percent should be anathema in our inner cities instead of too often the rule. Remedial classes for kids entering college (who are not able to handle freshman classes) should become a thing of the past. And our teachers need to be compensated realistically and properly so more of our brightest people can sign up to help shape our kids' futures.

Even though we as a nation don't seem to have the stomach for hard work and sacrifice any longer -- hell, I'm not sure those words and their meanings are even in the lexicon of vast swaths of our population -- we must get tougher in the midst of this global economy, and we have to steel ourselves for the kind of battles we'll face. And that means shoring up our manufacturing and supporting our homegrown industries that are so intertwined with communities all across this still great nation. It also means that President elect Obama will not only be President of the United States, he will have to be CEO of America, Inc. too.

And America Inc. not only needs to be rebuilt, it needs to be fortified with new determination because there are far too many talented and creative people in this nation who can do extraordinary things and we need to make the idea -- the idea that we can innovate, create, build and manufacture things that are the envy of the world -- cool again, and take pride in doing so as well.

In short, this nation needs a wake-up call.

Anyone who thinks this country will not be thrown into a full-blown depression if the domestic automobile industry is allowed to fail is simply kidding themselves. We are facing a perfect storm of events that could spell disaster if we as a nation don't act and act fast. And it would take years for this country to recover, too.

As I've said repeatedly the time for all of the idyllic, "let the free market run its course" hand-wringing is over. It's far too late for that. This country's leadership needs to get these loans to GM and the rest of the domestic automobile industry in the next 60 days, or life as we've come to know it in this country -- and I mean every part of this country -- not just here in the Motor City, will be severely and unequivocally altered.

That tick, tick, tick you hear?

It's the time running out on the future of America.

Let's hope that what needs to get done will in fact get done, before it's too late.

Thanks for listening.

After a 22-year career in automotive advertising and marketing, Peter M. De Lorenzo founded Autoextremist, an Internet magazine devoted to news, commentary and analysis of the auto industry. This article first appeared there on Nov. 12, 2008 and is copyrighted material used with the author's permission.

[spookyturtle 9,466]

Quite simply put, there's a reason why Japanese cars are better.

They are not better. If the Chevy Malibu was called the Toyota Malibu, or the Buick Enclave

was sold as the Honda Enclave, GM wouldn't be teetering on the edge of bankruptcy.

GM cars have won rave reviews from motoring press and are every bit as good as

those of its Japanese rivals.

People believe otherwise only because America haters like you have been repeating

the same lies since the '70s.

I'm not so sure about that--30+ years of maintenance and repair surveys suggest otherwise.

Another America hater!