Independent Christian Voice

Wednesday

Cuts won't solve GM's fundamental problems

In his post about GM's cuts, Dustbury quotes Matt Rosenberg, who says nothing will change at General Motors:
I've been a Honda guy ever since I grew up. Reliability is what matters. And so I don't expect that GM's big job cuts, announced today, will make a whit of difference. They'll still be out there peddling third-rate product to the public, with the sycophantic hacks of the American auto press still pimping for them, just like always. The main concern at GM will remain the care and feeding of the union and union pensioners, and moving enough product to get some numbers that investors and analysts like. But not making good motor vehicles.

Dustbury's advice is to simplify:

General Motors, if you look at the balance sheet, isn't a car company: it's a finance company (GMAC) that vends motor vehicles on the side. Which is why talk earlier this year that GM might actually spin off GMAC, one of its few divisions that ever turns a profit, was viewed as suicidal; they did eventually sell off three-fifths of their commercial-mortgage operation, then unloaded $55 billion worth of car loans onto Bank of America, perhaps to raise cash during these troubled times.

My own prescription, and if anyone actually follows it, I will be surprised:

  • Sell Saab. It was a lousy deal to begin with, and the result is some very unSaablike vehicles for the sake of economies of scale. People buy Saabs because they're supposed to be unique, even goddamn weird; Saabs are not supposed to be like Subarus (9-2X) and Chevys (9-3) and most especially Chevy trucks (9-7X).
  • Cut back to 2.5 divisions: Chevrolet and Cadillac, with Hummer on the side as a niche product. Buick, Pontiac, GMC, Saturn — all expendable, all way past their shelf date. (Jack up the Solstice's price by $5000 and give it to Cadillac.)
  • And now that you don't have to make three or four copies of the same damn car anymore, you can afford to make one version, and make it excellent.

Then again, there's always Chapter 11.

GM's problems are self-made. Some put the blame squarely on the unions and their demands in past years. Although in the distant past, unions might have overdemanded at times, in recent years the unions have been doing a lot of conceding to help keep GM financial viable. No, the lion's share of the blame lies squarely on the shoulders of GM execs. I stopped buying GM several years ago because their quality didn't live up to their hype. If you put out an inferior product, people will find a better product elsewhere. GM's once-preeminent position in the auto industry and Corporate America, and the resulting arrogance, blinded it to systemic problems that was crippling its future. Execs were paid obscene (and unwarranted) compensation for now-proven incompetent performance. It's a sad chapter in American history to watch an iconic company crumbling and see generational employment coming to an end. And, as usual, these cuts seem to come just in time for the holidays. Thanks, Corporate America, for ruining another holiday season for so many Americans.

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