Three Main Reasons for GM's Slow Decline

U.S. President Barack Obama’s firing of General Motors Corp. (GM) Chief Executive Officer G. Richard Wagoner Jr. may be the beginning of the final act of a long and sad drama - the slow death of GM. The company nameplate may soldier on in some form, but it seems increasingly likely that unless Ford Motor Co. (F) can forever avoid government intervention, the once-unique capabilities of the U.S. automotive industry will be forever lost.

In 1970, GM had nearly 60% of the U.S. automobile market, and imports’ share was below 10%. Today, GM’s market share is little more than 20%, and imports and domestically produced automobiles of foreign brands dominate the market.

There are three reasons for GM’s decline, none of them easily reversible:

The first is notorious - GM has a major cost disadvantage: When foreign automakers had no automobile factories on U.S. soil, GM could - and did - allow the United Auto Workers (UAW) union to ramp up costs ad infinitum. Any cost disadvantage that GM thereby acquired compared to foreign brands produced in cheaper labor economies could be overcome through careful lobbying to provide barriers against excessive imports.

However, the arrival and establishment of foreign-owned manufacturers in America’s less-unionized states - combined with the inexorable aging of GM’s former and current work force, which greatly increased the U.S. automaker’s health and pension costs - shackled GM with an impossible cost disadvantage against its competitors. Some of that disadvantage is now being slowly negotiated away, but without a GM bankruptcy it seems most unlikely that the company’s costs can be brought down to competitive levels.

Second, GM has been bedeviled by government regulation: One great example is the Corporate Average Fuel Economy (CAFÉ) standards introduced in 1975. As a specialist in the traditional large cars that the U.S.-consuming public favored, GM was badly affected by the CAFÉ standards that, by mandating average fuel economy ratings for the entire fleet, enormously benefited Japanese and other makers that specialized in small cars. Eventually, GM and the other U.S. manufacturers found a loophole, and developed the sports utility vehicle (SUV) that, being based on a truck chassis, was not subject to the CAFÉ restrictions. By the time Chrysler, Ford and GM made that discovery, however, the damage - in terms of market share - had been done.

A further round of tighter CAFE restrictions introduced in 2007, this time including SUVs, has once again imposed gigantic development costs on GM, making its entire product range obsolete. A moderate gasoline tax, particularly one introduced over a lengthy period, would have been far less disruptive to the market, and to GM’s operations. It would also probably have achieved rather more in terms of fuel economy and combating global warming. “Cap-and-trade” regulations, as proposed by the Obama administration, will further increase GM’s costs, providing the biggest relative benefits to manufacturers in such low-wage countries as China and India that are not subject to such impositions.

However, the principal threat to GM’s competitive position, one which Wagoner’s departure will intensify, is the “culture war” between the upscale bi-coastal opinion formers and the general U.S. public: In 1970, the standard upscale car for all but the very rich was a Cadillac, a Lincoln, or a Chrysler Imperial. This was as true in New York as it was in Detroit or Dallas; only a small minority of consumers bought top-of-the-line foreign cars, generally with academic pretensions. Equally, for the upper-middle bracket, Buick or Mercury was the choice of the vast majority.

Today on the East and West coasts, consumer tastes are very different. Saloon Cadillacs and Lincolns are rare; the upscale driver generally chooses a Mercedes, BMW or Lexus. Only among those with families (such as the Obamas) is a large SUV sometimes chosen, although generally an imported one. Buick now sells far more cars in China than in the United States; the traditional Buick or Mercury driver on the East or West coast has migrated almost entirely to import models. Before his presidency, then-Sen. Obama himself drove a Chrysler 300C followed by a Ford Escape hybrid, but one has to guess that his choice of U.S. vehicles was strongly influenced by his political ambitions.

This preference for foreign automobiles is reflected in the media commentary (media bigwigs being almost entirely upscale and bi-coastal). GM and other U.S. manufacturers are persistently accused of “poor management,” although there is little or no evidence given, or discussion of what they might have done better.

Objectively, GM and Ford products perform extremely well in quality surveys, and represent much better value for money than most imported brands, yet without support from opinion-formers they are terminally unfashionable, with the upscale models destined to sell relatively poorly except between Pittsburgh and Boise. Even technological breakthroughs like the Chevy Volt electric car seem unlikely to change this.

President Obama’s decision to get rid of Wagoner reflects this attitude. His announcement was full of denunciations of poor management, with no acknowledgement that overblown union contracts are GM’s No. 1 problem (at least, the No. 1 problem that there is any possibility of solving in the short term). There appears to be little recognition in the Obama administration as a whole that recalcitrant unions and media-induced disdain for GM’s product range were far more important causes of GM’s decline than any shortcomings in Wagoner’s management moves.

Over his eight years as GM’s CEO, Wagoner has done about as well as he could have. He has overseen a considerable and successful restructuring of GM’s operations, together with an extraordinary success story in the Chinese market, where GM has emerged as one of the leading competitors in the world’s fastest-growing car market.

With the Obama administration overseeing GM’s operations, the company will move towards producing the cars that opinion formers want it to produce: cramped, dangerous and uncomfortable, but fuel-efficient or powered by subsidized energy sources. However, the “New GM” will reap little reward for its docility; unless it files for Chapter 11 bankruptcy, it still will have excessive costs, and it will find itself competing in a market crowded with foreign producers, but containing only a minority of the U.S. consuming public.

This is bad news for consumers between Pittsburgh and Boise, and for those on the coasts seeking low-cost, high-comfort transportation, but possibly very good news for Ford, if it can somehow avoid being caught in the government maw. If GM is emasculated by the government and Chrysler is downsized and sold to the small-car-oriented Fiat (FIATY.PK), Ford will have a huge market to itself, that of U.S. consumers wanting traditional U.S. automotive qualities.

Wagoner doubtless now wishes that in December he had chosen a GM bankruptcy over government aid. In the long run, the U.S. car-consuming public, its automobile industry and the U.S. economy (let alone U.S. taxpayers) may come to share that view.

In closing, let me offer a personal note of disclosure - and a final thought: Being “bi-coastal” but determinedly not “upscale” I drive an ancient Buick.

It’s a wonderful car …

Original post

Comments

[Mwfontan:]

Martin, most of what you said in your article was true, except I am not bi-coastal, and from Dallas, it is clear to see that GM's quality reputation with the general public is not where it needs to be by any stretch! Consumer reports (despite the fact they HQ in NY) produces some excellent objective reports on quality. GM has never led the way in any particular category, and this has not changed in 30 years. This is the real reason why their product hasn't sold. And they've made a conscious decision not to compete on this issue, even though they've improved their quality over time. People have bought GM trucks and SUVs because nothing else was available from the quality manufacturers to match them. They're getting more competition in this area in the past few years, and this has had a significant affect on their profitability as well.

Mar 31 11:18 AM

[Matt Miller:]

I respectfully disagree Marty. GM's management and marketing decisions lead to their destruction...not the UAW or Obama. Assuming your hypothesis, why isn't Ford as mucked up as Chrysler and GM?

American car companies have built low mpg, poor quality, poor reselling products for years and the chickens have finally come home to roost.

Mar 31 11:29 AM

[Cobra 1:]

I share your points of view. I think it was time for a major change in the auto industry as a whole.

Chrys has been obsolete for the past ten years. With the exception of the 300, what other car has any market following (save the new 2 ton charger that is slower than a 2010 mustang with twice the engine) whatsoever!

GM has 2 or maybe 3 vehicles that have any market appreciation. That might even be stretching it, if anyone thinks that the Volt is going to re-energize the company, just look at the inventories of the Smart, the MINI, the Prius, and a dozen other cars that no one wants! Theirs literally millions of them stacking up at the ports and dealerships nation and world wide!

I read a post earlier that was from a used car salesmen, he stated that as price of gas eased off the $4 dollar level, SUV sales on the used side picked up, all be it slightly, but people want these S UV's.

I drove my parents Ford Escape Hybrid, it is a great car, getting 40 MPG and 12 gallons to fill, I went 400 + miles per tank! If I am going to buy a car for driving back and forth to work, I am going to buy something I can get good mileage and still fit as a 6'5" person.

If we let the BO natzies go unchecked, we are doomed, they want to dictate (yes they want a dictatorship!) every decision via the government. I am going to try and sell a company I own and move to Mexico where I will be a wealthy man with no Government interference in what I drive, or a re-distribution of the wealth I created!

I am just getting angry now! IM OUT!

Mar 31 11:30 AM

[Cobra 1:]

So you believe that the UAW is blameless in this mess?

Do you believe that our government should be directly involved in hiring and firing decisions of any business whatsoever? And for the record, I do believe it was time for Rick to go, it is not the GOV to make that decision!


On Mar 31 11:29 AM Matt Miller wrote:

> I respectfully disagree Marty. GM's management and marketing decisions
> lead to their destruction...not the UAW or Obama. Assuming your hypothesis,
> why isn't Ford as mucked up as Chrysler and GM?
>
> American car companies have built low mpg, poor quality, poor reselling
> products for years and the chickens have finally come home to roost.

Mar 31 11:33 AM

[Jason Z:]

I think the main reason is that most GM vehicles are ugly, they fail at design :)

Mar 31 11:38 AM

[RationaleNo...:]

I disagree in that the broad brush "overblown Union Contracts" does not identify how that lunacy occurred...In an economy where bottom line quarterly profits drive Wall Street EPS and Bonuses, the short term gain WAS always more important to Executives and the Boards...

Instead of a $1 an hour increase in wages, the Unions were given additional medical and retirement benefits...$1 an hour hits the bottom line immediately...Additional deferred compensation and medical were Sweet deals to the Execs...

Not now though with an aging work force and spiraling medical costs!!

But who gets the blame for this short sighted view driven by Executive desire for EPS? The Unions! 6% of America is Unions, but if you were to listen to the America bashing Conservatives, you'd think 75% is Union.

I was a Teamster while I worked my way through College before going off to Detroit to work for General Motors in management. SO I have some insight into both sides of the argument and both sides own their share of blame.

Mar 31 11:42 AM

[msingh5649:]

I find your arguments to be quite honestly 'head in the sand' thinking.

1. The CAFÉ regulations were imposed on all manufacturers selling in the US. That INCLUDES Toyota, Honda, and the rest. Yet Toyota, which also has a high percentage of "SUV" type vehicles continued to thrive against any period that you compare it to GM.

2. The 'Bi Coastal' bias is ridiculous. The reason that people have moved to Lexus, BMW, et el is not some media mafia plan-but quite simply that Cadillac couldn't deliver in the 80's and 90's. Until recent developments with the CTS, the product line has been lackluster at best. Think Cimmaron. Think Allante'.

On top of lackluster product, quality levels are easy enough to measure. Every third party measurement has shown GM quality levels to be subpar. From JD Powers, to Consumer reports. What other 'factual' data do you need to see? Maybe in your theory all of those organizations are 'bi costal' and part of the media mafia. Short of that explanation, and even GM's own admissions quality was a problem over the 80's/90's.

You want examples of mis-management? When GM was making money hand over fist from their SUV sales-where did they invest? Did they do any strategic thinking along the lines of 'Hey this golden goose won't last forever, lets think about something to have on the backburner i.e. HYBRID"? No. You know who did, Honda, and Toyota.

The union contracts were signed by whom? GM management. If I were the representative of a union, my job would be to ask for everything under the sun and as part of 'good management' GM should have argued down the benefits. They did not. So now it’s the unions fault? Oh, and by the way, actual labor rates with everything included is more expensive in Germany than in the US. Using your logic-BMW, Mercedes, Audi, should not be able to survive. Oh right, and BTW the restrictions from a CAFÉ' standard are as strict if not stricter there. How do we then explain their relative success? Bi Coastal Bias again.....

The labor costs are calculated on a per unit sale perspective. As GM's marketshare, and therefore units sales drop, the cost on the remaining units obviously goes up.
Was it the unions job then to anticipate the market decline? Management? or the bi-coastal global media cabal that is out to destroy GM?

Mar 31 11:46 AM

[User 320554:]

Ah, Martin, you make me laugh. User 308376 is right on the mark. Here's another way to think about it: In 1990, GM and Chrysler's target customer was a middle class person born in 1950 who expected X amount of quality and style from their new car purchase. It's now 2009, and they are still aiming for that exact same customer base, 19 years later. They have no idea how to sell to anyone born after 1960, or who has a college degree (oops, those are the "cultural elites"), or who has modern expectations of style or quality. They have willfully ceded that market over to imports. I'm a lifelong Detroit resident who has worked in the industry, and these two have never even tried to produce a car that appealed to import buyers. As national tastes changed, they lost market share - simple as that. Their cars over the last 10 years have either been lowest-common-denominator blandmobiles that only a retiree could love (all Chrysler sedans pre-300, Monte Carlo, Lumina, Impala), or throwback vehicles that don't appeal to anyone under 55 (faux muscle cars, etc.)


On Mar 31 11:46 AM User 386308 wrote:

> I find your arguments to be quite honestly 'head in the sand' thinking.
>
>
> 1. The CAFÉ regulations were imposed on all manufacturers selling
> in the US. That INCLUDES Toyota, Honda, and the rest. Yet Toyota,
> which also has a high percentage of "SUV" type vehicles continued
> to thrive against any period that you compare it to GM.
>
> 2. The 'Bi Coastal' bias is ridiculous. The reason that people have
> moved to Lexus, BMW, et el is not some media mafia plan-but quite
> simply that Cadillac couldn't deliver in the 80's and 90's. Until
> recent developments with the CTS, the product line has been lackluster
> at best. Think Cimmaron. Think Allante'.
>
> On top of lackluster product, quality levels are easy enough to measure.
> Every third party measurement has shown GM quality levels to be subpar.
> From JD Powers, to Consumer reports. What other 'factual' data do
> you need to see? Maybe in your theory all of those organizations
> are 'bi costal' and part of the media mafia. Short of that explanation,
> and even GM's own admissions quality was a problem over the 80's/90's.
>
>
> You want examples of mis-management? When GM was making money hand
> over fist from their SUV sales-where did they invest? Did they do
> any strategic thinking along the lines of 'Hey this golden goose
> won't last forever, lets think about something to have on the backburner
> i.e. HYBRID"? No. You know who did, Honda, and Toyota.
>
> The union contracts were signed by whom? GM management. If I were
> the representative of a union, my job would be to ask for everything
> under the sun and as part of 'good management' GM should have argued
> down the benefits. They did not. So now it’s the unions fault?
> Oh, and by the way, actual labor rates with everything included is
> more expensive in Germany than in the US. Using your logic-BMW,
> Mercedes, Audi, should not be able to survive. Oh right, and BTW
> the restrictions from a CAFÉ' standard are as strict if not stricter
> there. How do we then explain their relative success? Bi Coastal
> Bias again.....
>
> The labor costs are calculated on a per unit sale perspective. As
> GM's marketshare, and therefore units sales drop, the cost on the
> remaining units obviously goes up.
> Was it the unions job then to anticipate the market decline? Management?
> or the bi-coastal global media cabal that is out to destroy GM?

Mar 31 12:09 PM

[Wowser 414:]

# User 386308 said it best so far. I just read through my latest copy of Consumer Reports 2009 auto edition, and GM/Chrysler round out the bottom in almost every category. While some of the data is subjective, most is very objective (including quality and reliability). As a consumer who recently purchased a vehicle, I did my due diligence and researched all vehicles in the class I was buying. GM and Chrysler failed to offer anything I was willing to purchase.

People have simply stopped buying cars just because they are made by an American company, and have started buying cars that are reliable and stylish. The comment Marty makes by referring to imports as, "cramped, dangerous and uncomfortable," is un-true, dated rhetoric. The vehicle I purchased has plenty of room, is 5-star rated in all but one category (4-star side impact), and more comfortable than any GM I test drove. It might be too late for GM to get a clue. But seeing how this is supposedly a economic and market columnist, Marty should get a clue or step aside for a younger writer with more insight into the real world.

Mar 31 12:23 PM

[Gary55981:]

I think you head is in the sand. The Union is primarily responsible for the mess our auto firms are in because the playing field favors the strong arm tactics the unions used to force concessions. Instead of striking the industry, they struck an individual company which then lost market share to their competitors(foreign and domestic) and used union dues from the industry to subsidise the workers on strike.


On Mar 31 11:46 AM User 386308 wrote:

> I find your arguments to be quite honestly 'head in the sand' thinking.
>
>
> 1. The CAFÉ regulations were imposed on all manufacturers selling
> in the US. That INCLUDES Toyota, Honda, and the rest. Yet Toyota,
> which also has a high percentage of "SUV" type vehicles continued
> to thrive against any period that you compare it to GM.
>
> 2. The 'Bi Coastal' bias is ridiculous. The reason that people have
> moved to Lexus, BMW, et el is not some media mafia plan-but quite
> simply that Cadillac couldn't deliver in the 80's and 90's. Until
> recent developments with the CTS, the product line has been lackluster
> at best. Think Cimmaron. Think Allante'.
>
> On top of lackluster product, quality levels are easy enough to measure.
> Every third party measurement has shown GM quality levels to be subpar.
> From JD Powers, to Consumer reports. What other 'factual' data do
> you need to see? Maybe in your theory all of those organizations
> are 'bi costal' and part of the media mafia. Short of that explanation,
> and even GM's own admissions quality was a problem over the 80's/90's.
>
>
> You want examples of mis-management? When GM was making money hand
> over fist from their SUV sales-where did they invest? Did they do
> any strategic thinking along the lines of 'Hey this golden goose
> won't last forever, lets think about something to have on the backburner
> i.e. HYBRID"? No. You know who did, Honda, and Toyota.
>
> The union contracts were signed by whom? GM management. If I were
> the representative of a union, my job would be to ask for everything
> under the sun and as part of 'good management' GM should have argued
> down the benefits. They did not. So now it’s the unions fault? Oh,
> and by the way, actual labor rates with everything included is more
> expensive in Germany than in the US. Using your logic-BMW, Mercedes,
> Audi, should not be able to survive. Oh right, and BTW the restrictions
> from a CAFÉ' standard are as strict if not stricter there. How do
> we then explain their relative success? Bi Coastal Bias again.....
>
>
> The labor costs are calculated on a per unit sale perspective. As
> GM's marketshare, and therefore units sales drop, the cost on the
> remaining units obviously goes up.
> Was it the unions job then to anticipate the market decline? Management?
> or the bi-coastal global media cabal that is out to destroy GM?

Mar 31 12:34 PM

[Mike InMich:]

Martin, you are the first commentator to get thi sright. I agree with your 3 items and their order. Few have mentioned CAFE or the fashion aspect of the problem.

A fourth item, or perhaps a subset of item 1, is that the transplants have exploited ridiculous US law that has uneven union rules. Specifically they have gone to mostly right-to-work states. I find it amazing that the left that loves to hate american cars is choosing non-union over union. Go figure.

I'm a little worried that Ford may not benefit as you have suggested. Now that Ford is competing with Obama Motors I fear that the competition will not be fair, as the success of O-motors will be in part a function of their sales. Also, Ford will not be free to benefit from customer demand for their cars because CAFE will be ratcheted up.

Someone above said Toyota and Honda also had to meet CAFE. True, but they were coming from a small car nitch that easily made CAFE and they used their profits (base don non-union labor) to upsize into bigger vehicles. Ford and GM started from a large car nitch and had to make massive investments to downsize into vehicles no one wanted, and not sell vehicles people wanted. CAFE was massively discriminatory to the US auto makers - see item 3 culture comments for some of rationale.

Note also that Ford's largest selling vehicle, the F-series, has commercial applications. To me it makes no more sense to make Ford meet CAFE with these trucks than to force Mack truck meet CAFE.

Mar 31 12:40 PM

[paulvard:]

Planned obsolescence have finally come to roost. For years GM wilfully manufactured clunky, poor quality cars because that's how they plan it. They are banking that 3 to 4 years down the road the car they make will be replaced by more clunky GM cars and so on and so forth. But they have been misreading the general public. The seething resentment that evolved having spent more time to see their mechanics. The hassle, the time you spent and you are not even sure weather the car is properly repaired or the thing wrong is just the cascading events that will lead the car into the junkyard. Now I heard they making good quality cars which maybe too late to save them.

Mar 31 12:51 PM

[User 386367:]

I agree with the comments that the auto industry failed to see and understand the changing attitudes of buyers. I'm over 50 and I recognized 15-20 yrs. ago that American cars were losing quality and appeal. I buy Toyotas, Hondas and other foreign imports because they are much better than domestics.

Mar 31 12:59 PM

[epeon:]

Hmmm. My wife believes totally in imported cars. If it ain't jap, she won't buy it. So, she has owned Camrys, Accords, and now Lexus. Me? I just couldn't get over the price of the imports. So, I own a Ford fusion. I drive them both and here are my comments:

I find little difference between the Ford Fusion and the Honda Accord. They get about the same mileage, they seem about the sam level of reliability, and they are about the same comfort level. The only difference I really see is that the Honda is about $7000 more. Of course, when my wife went and bought it, the Honda salesman made a big point of "Honda quality." Hey, so would I if I were selling them. But, I figured that with the $7000 difference I could afford a lot of repair services. So, far there have been little. Had them both for about 45,000 miles.

I honestly think that people look at Ford and GM and think Vega or Cimaroon. Both admittedly bad cars. But, that was decades ago. The problem is that people only buy cars every five to ten years so there only data point is years old.

Mar 31 02:05 PM

[tireman63:]

As far as CAFE requirements, Toyota and Nissan do NOT measure up to GM pickups and SUV's. Whether nor not GM offerings are "bland looking" is all in the eye of the beholder. All of the problems started after WWII, when the Japanese embraced Dr. Edward Deming and his statistical quality control analysis. When they married this to "kaizen", or continuous improvement and embraced the idea of the worker as a partner, not a necessary evil, they gained another advantage. Also, the Orientals have enrolled their suppliers in the preliminary design and engineering of the finished product, rather than supplying a blueprint and minimum performance standards for a particular part. All Detroit wanted to know what "how cheap can we buy it", and also to make the poor supplier wait sixty to ninety days to get paid. I also do not feel too sorry for some of the car dealers, as their service departments lived off of the "warranty teat" repairing built in defects under warranty. All of the current car companies are designing vehicles that are increasingly difficult to repair, and pricing the replacement parts at stratospheric levels. Not only that, they have special scan tools or reprogramming devices that on a car dealer can purchase. This takes the competition of the independent repair shop out of the picture. Last, but certainly not least, the car designers have set the tire cost equation back twenty years. With the advent of ultra low profile high performance tires, tread mileage has gone back to where it was with old 2 ply rayon bias tires. Not only that, rim damage is going through the roof, and fuel economy and brake component mileage suffer with 17-20 inch rim diameters. The proliferation of sizes and types of tires also adds unnecessary expense to the poor car owner. I have to stop now, as my blood pressure is going up.

Mar 31 02:18 PM

[mikekrause05:]

The free market has spoken. Especially over the last 35 years.

Nothing more needs to be said

Mar 31 03:24 PM

[mikekrause05:]

The free market has spoken.

Nothing more needs to be said.

Mar 31 03:25 PM

[john s. gordon:]

knowing that oil imports were continually rising after 1973, the opportunity to start raising the federal gasoline per-gallon tax gradually was missed many years ago. blame congress, they pandered to consumers' demand for cheap fuel. if this had been phased in over time, much of the current grief could have been avoided.

you say cattleracks & lincolns are rare on the east coast. when i drive to florida i see lots of both on the superslab. they all have either NY or FL plates. (i drive a 3-liter import, i have no need to travel in excess of 130 mph)
> jack

Mar 31 04:46 PM

[john s. gordon:]

let me tell you folks a true story.

in 1956 i was living in dayton OH. i went into a bar one evening & struck up a conversation with another man.

i said where are you from & what do you do.

he said, i am from detroit & i sell volvos.

what's a volvo i said.

well he explained everything. the winter climate in michigan is not that much different from sweden. they chose michigan as their initial entry point on the basis that if the product sells ok there, it will sell anywhere. the rest is history.

volvo began in about 1928 because two engineers working for SKF decided that the quality & reliability of imported cars available in sweden just couldn't cut it, & they were going to do something about it.
> jack

Mar 31 05:03 PM

[gcalex:]

here are the three main reasons for GM's demise:
1. they build poorly made cars.
2. they make dollar financial decisions about the mechanics of an automobile that cost tens of thousands, in other words the cfo's run the show and not the engineers.
3. if they took the same level of care in all their cars as Cadillac does we wouldn't be having this discussion.

Mar 31 05:50 PM

[Joe I.T. fr...:]

Martin, you missed a MAJOR part of GM's Doom...

My wife and I were shoved into the arms of Toyota back in the 1980's by the abysmal poor quality '81 Chevy Malibu that she bought NEW. A dozen times to the dealer in first year, repair after repair..until we bought our first Corolla, and loved them ever since.

Multiply our experience by 10-20 million buyers who never bought American again, like us.

Frankly, as sad as I am for the employees, the company going under I couldn't care less.

And to the NJ Chevy Dealers who patronized my wife when she brought up problem and (laughed behind our backs)

HEY Dealers

Wanta Laugh NOW???

Mar 31 07:49 PM

[TinyTim:]

So govt interference in mkts messed up GM:
1-careful lobbying to provide barriers against excessive imports.
2-cafe enormously benefited Japanese and other makers that specialized in small cars

Americans became infatuated with big low MPG cars in the 60's. We've been hearing for decades how much more gas costs in Europe & they have small cars as a result.

The smartest thing I've read here is a gradually rising fuel tax should have been inplemented in 1973 instead of CAFE to wean Americans off this infatuation.

Apr 01 07:09 PM

[User 387464:]

You have got to be kidding; Unions, CAFE and MSM elites? This is the Republican Holy Trinity of the 'What is Wrong with America today' argument.
I've lived in southeast Michigan all of my life, and I have worked for the Big 3 as have some of my family and many friends.
Are unions a problem? Yes, sure. Any group, either labor or management, when they get too much power over the other is going to exploit it to the detriment of the other. Did the unions bankrupt GM? No, they didn't. UAW membership has been steadily declining for decades. Pay has stagnated, benefits reduced and new hires are brought in on the third tier and capped below the first tier. Ford & GM have shed many of their employees via Visteon and Delphi. Contracts have been renegotiated to help the auto companies..
It was not long ago that GM & Ford were making record profits on their SUVs. It was $4 gas and the increased cost of raw materials that popped that bubble, not the 3 reasons given in the article. By the way, it really shouldn't had been a surprise that SUVs were not going to last forever, but the execs were blinded by the short term profit. Where is the brilliant thinking, planning and implementation these guys were being paid millions for? Sorry, but if you're making that kind of money and have a nice cushy office with perks, then you are sure as hell more responsible for the fate of the company than a worker on the line who is doing as he is told.
And if that worker on the line is making $75/hr total compensation, which has been shown to be a bogus figure, then so be it. That's capitalism and the power of collective bargaining. There are two groups that don't like the wages of auto workers: Business owners who see employee wages not as cost of doing business, but as potential profits being lifted out of their pockets by people they look down on. The other group are typically white collar professionals who are stuck with low wages and are being needled by the conservative media about the proles making too much money. My answer to them, and I've said this directly to the faces of coworkers , "Go down to MichWorks and get yourself an application. Find out what it's like to work in a factory." There's more to a union than Job Banks and do-nothing jobs, things like mandatory breaks, wages you can raise a family with, healthcare and protection from abuse.
I agree that auto worker unions got too powerful, protected bad workers and became very self indulgent, but these are issues that should had been addressed between workers and owners a long time ago. Demonizing unions in general with thinly veiled attack pieces like this one serve only to advance the meme that 'Unions are bad, unions destroy companies'.

Apr 02 10:31 AM

[zagrebzagreb:]

Sorry, but this is a piss-poor article.

Any bemoaning of GM's fate that starts with the old 'market share' argument is already heading down the road to irrelevance. How about profitability? Duh. Would you rather be a big company losing billions.... or a small company making millions?

All this article does is rehash the same conventioanl wisdom that has been disporven time and time again. And please, blaming gov't regulations!? It's a regulated industry.... If you can't adapt, you have no business being in business. And then - of course - the favorite whipping boy - American labor. Never mind that European labor is more expensive and unweildy, and yet somehow, these same manufacturers have made it work.

What went wrong at GM? Opnions like those expresssed in this article.

Apr 07 11:46 AM