Thanks Thanks:  0
Likes Likes:  0
Dislikes Dislikes:  0
Results 1 to 9 of 9
  1. #1
    Who's to Blame for GM's Bankruptcy? 6 Shooter's Avatar
    Join Date
    May 2002
    Location
    Missoura Ozarks
    Posts
    8,602
    Corvette(s)
    Carbon Flash CE 4LT GS Roadster
    Post Thanks / Like
    Rides
    0

    :G Who's to Blame for GM's Bankruptcy?

    By William J. Holstein
    June 1, 2009, 6:11PM

    Who is to blame for General Motors' bankruptcy?

    First of all, management. For most of its existence, GM was not really a centrally unified company in the modern sense. Founder Billy Durant smashed together different companies—Chevrolet, Pontiac, Buick, Cadillac—and allowed them to compete with each other with only the thinnest level of oversight. Alfred P. Sloan, who took over the company in the 1920s, imposed a measure of discipline on these rival fiefdoms by creating more financial controls and a more rational positioning of each brand, with Chevrolet being the car for the masses and Cadillac being the car of the elite. But the company was still very decentralized.

    Following World War II, this lumbering GM dominated the American automotive landscape, reaching 50.7% of the market in 1962. It didn't matter if GM was late to market with a feature or a design because "we had such enormous power that we could always steamroller everybody else," recalls Bob Lutz, the just retired product development chief who first joined GM in 1963.

    Not Ready for Toyota

    Then there was labor, and management's decision over the decades to grant the United Auto Workers higher wages, medical benefits, and pensions with each contract negotiation. This helped to elevate the standard of living for many blue-collar Americans, but health-care costs would emerge as a major burden on GM, as would a confrontational standoff between management and labor.

    Then there was overseas competition. GM simply was not ready to respond to Toyota Motor (TM) and other Japanese manufacturers when they began to gain serious ground in the early 1980s. Toyota, in particular, had developed a lean manufacturing system that was completely different from the mass-assembly-line techniques GM was still using, many decades after Henry Ford perfected them. GM's fractured structure meant that each division had its own manufacturing processes, its own parts, its own engineering, and its own stamping plants.

    Hungry for jobs, U.S. states began to encourage Japanese manufacturers to locate plants, or so-called transplants, in their states. The Big Three figured that would saddle the Japanese with the same labor costs and the same labor problems they had. But they were wrong. The Japanese located in mostly southern and border states that were solidly anti-union. They hired younger, less expensive workers, and they created an entirely new relationship between management and labor. This led to an entirely new auto industry. The net effect was to rachet up the competitive pressures on Detroit, not ease them

    Government Wasn't an Issue

    But GM had to respond to the Japanese challenge without the help of the federal government. The Clinton Administration, as many before it, simply could not figure out how to force the Japanese to open their auto market, so in 1995 after a bout of highly publicized negotiations, it declared victory, even in the obvious face of failure. And the Clinton Administration was also unable to address the absence of a national health-care system. These two failures were huge, seen in retrospect.

    In the ethos of the time, however, government did not matter. Rick Wagoner; as my book chronicled, encouraged the company to absorb Toyota's methods, which it did almost entirely. Wagoner's decision to hire Lutz in 2001 resulted in dramatically improved styling and design. Wagoner invested in innovation once again—again with Lutz egging on the whole organization—as GM decided to attempt to leapfrog Toyota's Prius hybrid with a brand new lithium-ion battery-powered Chevrolet Volt. Wagoner integrated the far-flung global operations. He centralized management into one Automotive Strategy Board and he persuaded the UAW to assume responsibility for its own medical costs. By early 2008, it was credible to argue that GM was on the way to a successful transformation, one of the most impressive in U.S. economic history.

    But then there was the one-two punch of high gas prices and the global economic downturn. Detroit was caught off guard when gasoline prices reached $4 a gallon in the second quarter of 2008. The U.S. consumer, after years of inattention and disbelief, flocked to more fuel-efficient, largely nondomestic vehicles. But at least people were still buying cars. When the economy collapsed, so did car sales.

    A White House Band-Aid

    That was followed by yet another rude awakening last November when the then-CEOs of GM, Ford (F), and Chrysler came to testify in Washington, D.C., and found out that the government wouldn't be bailing them out. Southern Republicans, many of whom represented states with nonunion auto factories, chewed the CEOs up before the cameras. Newly powerful California environmentalists assaulted them. The center of the national consensus regarding the importance of the domestically owned auto industry had shifted, and American media coverage was also thoroughly hostile.

    The Bush Administration gave a Band-Aid to GM and Chrysler in the form of a bridge loan to get them through to the early days of the Obama Administration. But then came the final surprise. Industry observers widely assumed that Obama, a Democrat from Chicago, understood the manufacturing base of the Midwest and would help it. The fact that the UAW had helped deliver five states in the Midwest to Obama deepened that assumption.

    But Obama turned to other members of his political alliance for answers. From New York, he brought in investment banker Steve Rattner, a major fundraiser, to head the government's automotive task force. Rattner arrived on the job with the assumption that Chapter 11 bankruptcy was the right course for GM, and promptly sacked Wagoner when he demonstrated signs of resistance. Wagoner's heir apparent, Fritz Henderson, was elevated into the CEO position. Meanwhile, Obama tilted toward the California environmentalists by pushing through new fuel-efficiency standards, which would add another layer of cost to production.

    And so the mighty General Motors, now nicknamed Government Motors, was pushed into bankruptcy. Rattner and his allies in the investment banking and bankruptcy-law industries insisted it could unfold in 60 days and that a new GM would rise from the ashes, phoenix-style. But the odds were against it working. U.S. bankruptcy law had never applied to a global corporation, one with thousands of suppliers and dealers.

    Yet it wasn't Rattner's fault, nor that of the Obama Adminstration, high oil prices, Toyota, fickle consumers, the recession, or high labor costs. Whose fault was it? The answer: everyone's.

    Return to the table of contents for our special report, General Motors' New Landscape.

    BusinessWeek Article Link

  2. #2
    Administrator Evolution1980's Avatar
    Join Date
    Feb 2002
    Location
    Cleveland, Ohio
    Posts
    4,289
    Corvette(s)
    ZZ4, 700R4, Steeroids rack & pinion, VB&P Brakes
    Post Thanks / Like
    Rides
    0

    Default

    Quote Originally Posted by 6 Shooter View Post
    The Bush Administration gave a Band-Aid to GM and Chrysler in the form of a bridge loan to get them through to the early days of the Obama Administration.
    That's one way to say it. And then there's Dick Cheney's words about it.

    Article

    Celebrity's Choice Award Winner - CruiseFest 2004
    People's Choice Award Winner - CruiseFest 2010
    Blake Yager's MVC Award Winner - CruiseFest 2011

    €vř|µ†ˇ¤ń 1980
    ZZ4 Engine - Hooker Super Comp headers (ceramic coated) - 700R4 - Steeroids - VB&P Brake Kit - Torqlite 17" Wheels
    2003 Victory Vegas (1507cc / 92ci) - Stage 1 Performance Package - Arlen Ness Slashness Pipes...Gone but not forgotten!

    Quote Originally Posted by MaineShark View Post
    I could build a nuke in my basement. They are actually very simple devices. And we have uranium in NH. I could mine it and refine it and build one. The science is simple. The engineering not overly complex.

  3. #3
    Member
    Join Date
    Dec 2001
    Location
    MI
    Posts
    483
    Corvette(s)
    2001 Convertible
    Post Thanks / Like
    Rides
    0

    Default

    This started back in the 60's when GM cared less about quality and had poor management. They just wanted the vehicle out the door and let the dealers worry about the quality. Poor marketing and design are also to blame.

  4. #4
    Administrator Evolution1980's Avatar
    Join Date
    Feb 2002
    Location
    Cleveland, Ohio
    Posts
    4,289
    Corvette(s)
    ZZ4, 700R4, Steeroids rack & pinion, VB&P Brakes
    Post Thanks / Like
    Rides
    0

    Default

    Quote Originally Posted by redvett View Post
    This started back in the 60's when GM cared less about quality and had poor management. They just wanted the vehicle out the door and let the dealers worry about the quality. Poor marketing and design are also to blame.
    Nonsense! Poor quality is part of the plan! It's to help keep the dealer's service centers and aftermarket suppliers in business and profitable! There'd be lots of people out of jobs if our cars never broke!

    (I joke...)

  5. #5
    New Member
    Join Date
    May 2009
    Location
    CA,
    Posts
    3
    Corvette(s)
    2003 Z06 Blk/Blk
    Post Thanks / Like
    Rides
    0

    Default

    The greedy oil company's built and nail it shut the coffin of GM Motors
    as well as the Airlines, as well as a multitude of other american manufactures
    In short "Fuel Fuels The Economy"
    when fuel went to 3,4 and then $5 a gallon the consumer ran back to their little import econoboxes which offer in their minds at least a certain reliability and can be bought at cost.
    Yes it's true and our goverment has warned the japanese regarding building cars and then selling them at cost. Why To put Gm,Ford,and Chrysler out of Business.
    Thus they can corner the market and sell you anything from a leaf blower to a Jet airplane which will be sold by the japanese in the year 2012 Yes, Why to put Boeing out of business. How does it all Happen ? We'll your fellow americans buying their cars,trucks and planes, Looks good in the short run to some.
    But what about our kids future's
    What about their future career's
    Buying foreign cars, motorcycles,Lawnmower's , and soon jet aircraft is like cutting our own throats.
    Not lookin good if this continues
    Bon

  6. #6
    Member jj2k's Avatar
    Join Date
    Jun 2009
    Location
    Florida
    Posts
    43
    Corvette(s)
    2000 pewter conv
    Post Thanks / Like
    Rides
    0

    Default

    I know I've probably got the unpopular opinion here, but I would say that GM brought down GM. Just like Chrysler brought down Chrysler, and Ford hurt Ford. All of these articles are great and in some way eye opening. However, the one thing that they keep overlooking is that we have a free market economy. If you can build a better mouse trap, or an equal mouse trap for a better price, and bring it to the public, let them decide. For years, the American auto companies have relied on the tax payers for bailouts. I for one am sick of it. Build a better product for a better price or go out of business. While the tax payers keep bailing out Wall Street and GM and Chrysler, Main Street is getting foreclosed on and Rick Waggoner is cashing his $20m severance check. Our children and grand-children are not going to be able to pay off the debt that these bailouts are costing. And again, the bailouts are not affecting the "people". They are going to the top 3% CEOs and bankers while blue collar American's are getting canned and evicted.

    But what am I saying...only the upper 3% ever get elected to office so it's all that they will ever really care about. Sing and dance for the masses and then pay off the big execs like they always do with tax payer bonuses and tax payer bailouts while the tax payers get foreclosure notices. Nothing new here folks...just keep on moving...

    Get real folks. This is not Russia or China. Build a better product for a better price. Unions need to wake up. Management needs to wake up. It's not "southern state" plants or anything else. It's good pay for a good job. We don't need Chevy dealerships 5 blocks from each other. Toyo and Hondo outsell GM with less than half the dealerships. It's not the number of dealerships that matter.

    Again, just my two cents.

    JJ

  7. #7
    Administrator Evolution1980's Avatar
    Join Date
    Feb 2002
    Location
    Cleveland, Ohio
    Posts
    4,289
    Corvette(s)
    ZZ4, 700R4, Steeroids rack & pinion, VB&P Brakes
    Post Thanks / Like
    Rides
    0

    Default

    Quote Originally Posted by jj2k View Post
    I know I've probably got the unpopular opinion here, but I would say that GM brought down GM.
    I'm gonna one-up your unpopular opinion and say it that the unions are to hold the most blame. In short, they've outlived their usefulness in the auto industry and they've bankrupted the companies they worked for.

  8. #8
    Member LLC5's Avatar
    Join Date
    Sep 2004
    Location
    Wa.
    Posts
    2,016
    Corvette(s)
    98 black 6spd convert.
    Post Thanks / Like
    Rides
    0

    Default

    Quote Originally Posted by jj2k View Post
    I know I've probably got the unpopular opinion here, but I would say that GM brought down GM. Just like Chrysler brought down Chrysler, and Ford hurt Ford. All of these articles are great and in some way eye opening. However, the one thing that they keep overlooking is that we have a free market economy. If you can build a better mouse trap, or an equal mouse trap for a better price, and bring it to the public, let them decide. For years, the American auto companies have relied on the tax payers for bailouts. I for one am sick of it. Build a better product for a better price or go out of business. While the tax payers keep bailing out Wall Street and GM and Chrysler, Main Street is getting foreclosed on and Rick Waggoner is cashing his $20m severance check. Our children and grand-children are not going to be able to pay off the debt that these bailouts are costing. And again, the bailouts are not affecting the "people". They are going to the top 3% CEOs and bankers while blue collar American's are getting canned and evicted.

    But what am I saying...only the upper 3% ever get elected to office so it's all that they will ever really care about. Sing and dance for the masses and then pay off the big execs like they always do with tax payer bonuses and tax payer bailouts while the tax payers get foreclosure notices. Nothing new here folks...just keep on moving...

    Get real folks. This is not Russia or China. Build a better product for a better price. Unions need to wake up. Management needs to wake up. It's not "southern state" plants or anything else. It's good pay for a good job. We don't need Chevy dealerships 5 blocks from each other. Toyo and Hondo outsell GM with less than half the dealerships. It's not the number of dealerships that matter.

    Again, just my two cents.

    JJ

    Yes.

    Value, product, price, most importantly - "customer service", they all help sell the product and keep the customer coming back. The Big Three had 30+ years to get it right, oh well.
    Master Technician

    25+ year ASE Master Certified Tech

    22+ year Honda Master Tech

  9. #9
    Member njlouc's Avatar
    Join Date
    Jan 2009
    Location
    New Jersey
    Posts
    401
    Corvette(s)
    2000 Black Coupe
    Post Thanks / Like
    Rides
    0

    Default

    I admit that I have been asleep for a few years, but the advertising companies have not been doing their jobs. I recently have been paying more attention to the Pontiac brand (now that is is dead and semi buried). They seem like really nice cars. They have been hiding them for too many years!

Similar Threads

  1. GM shares slump as bankruptcy fear grows
    By Rob in forum GM & Auto Industry News
    Replies: 0
    Last Post: 04-13-09, 03:57 PM
  2. GM Board Not Ruling Out Bankruptcy
    By Rob in forum GM & Auto Industry News
    Replies: 0
    Last Post: 11-24-08, 09:43 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •