Wednesday, April 29, 2009

General Motors

According to a New York Times article today (http://www.nytimes.com/2009/04/28/business/28auto.html?em ) when General Motors is through with it’s latest restructuring it will have less than 10% of the employees left that it had at it's peak in 1970. And rather than being the largest car manufacturer in the world, or maybe second after Toyota, the current optimistic forecasts are saying that GM will have 18% of the American market. Maybe far less.

So it looks like GM is a corpse. Past tense. Like Studebaker, Hudson, Henry J., Edsel, and so many others.

So what went wrong? I see two main things.

(1) The rest of the advanced industrialized world provides adequate universal health care for their citizens and certainly for their retirees. America does not, and the employee trade unions at GM and the other American car manufacturers tried to remedy that cruel situation.

(2) Since GM’s peak in 1970 more and more people have realized that many of the cars made overseas by Toyota, Nissan, VW, and others are significantly more reliable, and that these primarily Japanese cars get far better fuel economy. Naturally people were willing to pay a small premium in price to get a car that is built to higher quality standards and gets much better gas mileage. Duh…

All of the American car makers, but especially GM, continued to fight this trend. They knew very well what the consumer wanted, but GM tried to ram down the throats of the buyer via fancy marketing, exotic financing, and incentives bigger and bigger morbidly obese cars and pickup trucks which got absolutely terrible fuel economy. Denial - big time.

It really is such a shame. The future health of America depends upon what our country actually makes/produces. And in the last 20 years we have sent more and more of our manufacturing jobs overseas to countries which do not enforce even elementary child labor laws, workplace safety laws, or environmental protections.

Business people did this, because of their greed. And the politicians who received their campaign contributions from these guys were more than happy to pass laws helping them. Pretty much all of American society has played a part in this. A little more accountability can be assigned to the Republicans, but the Bill Clinton Democrats certainly helped the process.

Maybe Obamaism can help get us back on the right course. Yes, maybe….

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