Comments on: The Slow Death of General Motors

By: Jack3d

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By: Why Asia Will Supplant Detroit as the Global Center of the Auto Industry

Why Asia Will Supplant Detroit as the Global Center of the Auto Industry — Fri, 15 Jan 2010 21:10:56 +0000

[...] the Chinese market. Given the growth of that market, it will probably make the most economic sense for GM to become Chinese-owned. Politics may delay this, but probably only for a few [...]

By: Why Ford Will be the Last U.S. Automaker Standing

Why Ford Will be the Last U.S. Automaker Standing — Tue, 22 Dec 2009 16:18:04 +0000

[...] GM is a somewhat different proposition, whether it goes through a formal Chapter 11 bankruptcy or not – which we'll know by the end of this month. Unlike Chrysler, GM has a full product development capability and has scored some major successes internationally. [...]

By: Sujay

Sujay — Mon, 27 Jul 2009 11:27:56 +0000

American cars companies have done fairly well in India.. Ford and General motors. I drive an American car in India. In is only in the past one year that sales of American cars have taken a hit.

By: Why Ford Will be the Last U.S. Automaker Standing

Why Ford Will be the Last U.S. Automaker Standing — Mon, 11 May 2009 23:22:59 +0000

By: U.S. Auto Industry Spins Out of Control, as Chrysler Goes Bankrupt and GM Struggles to Reverse Course

Fri, 01 May 2009 09:36:41 +0000

[...] Money Morning: The Slow Death of General Motors [...]

By: Supplier Bob

Supplier Bob — Sun, 19 Apr 2009 23:24:24 +0000

Excellent forum guys.
I can agree with most of the comments as to the possible(or is that imminent?) demise of GM. While i currently don't drive a GM product, i have in the past and am an avid historian of the company.
I am loathed to portion blame as to the main reason for the demise, all of those mentioned previously add up to an insurmountable total. I'd like to add one to the list.
As a supplier to several auto companies, it is GM's purchasing policies/methods/relationship that baffle me most. Why do they have such a hard line with arbitrary , unrealistic cost down targets , hostile take it or leave it type relationships/demands and contract clauses/imbalances that actually stymies improvement and adds cost! The most productive suppler to work with? Toyota. They have a simple partnership approach with suppliers.
GM use a 'best landed cost' benchmark. Essentially this means i have to match that price. On one part i lost to an overseas supplier, the plant takes longer to fit that part and have more defects. Purchasing dept rewarded for lowering the part cost, plant costs go up for more rework, bottom line, it actually costs them more.
I want GM to succeed, its an incredibly iconic brand and provides much needed employment and tax revenue.

By: The Slow Death of General Motors

The Slow Death of General Motors — Thu, 16 Apr 2009 15:13:51 +0000

[...] By Martin Hutchinson Editor, Permanent Wealth Investor Money Morning, Investment News [...]

By: U.S. Treasury to GM: Prepare for Bankruptcy

U.S. Treasury to GM: Prepare for Bankruptcy — Mon, 13 Apr 2009 19:40:42 +0000

[...] Money Morning: The Slow Death of General Motors [...]

By: JIM

JIM — Mon, 06 Apr 2009 23:09:58 +0000

Most of the comments here have good points but as a white collar GM employee I can tell you the main reasons for failure are not mentioned.

By: Paul Fox

Paul Fox — Mon, 06 Apr 2009 20:57:36 +0000

Martin Hutchinson's fawning support for the now departed GM C.E.O., G. Richard Wagoner Jr., seems to missunderstand the function of managment which is to anticipate the markets and to make products that the markets want/need. One of the reasons that Ford hs not as yet required government money is that they already negotiated a better (for them) contract with the U.A.W. To bame the "bicoastal media" is ridiculous since the bicoastal areas represent the largest car market in the U.S. Obviously, GM has not been making enough new cars that the American public wants to buy. Proof enough for this fact lies in Mr. Hutchinson's admission that he drives an "ancient" Buick.

By: DG

DG — Mon, 06 Apr 2009 07:13:39 +0000

When I read this story about poor build quality; subpar materials and a lazy unionized labour force it kind of makes me smile.

This is all a deja vu; just look up the history of Alfa Romeo and the Alfa Sud. The Italian state (majority share holder in Alfa; because of the 70's crisis; sounds familiar?) wanted to address unemployement in the South. So they build this plant and offered a job to all these communist day labourers that were used to a 3 daywork-week in the fields.

Ofcourse the government (they know best!) also mandated exactly what kind of steel should be used for to build the chassis (they ahd negotiated a barter deal with the Soviets).

The factory was the scene of quasi permanent strikes and outright worker's sabotage. It took years before the state decided to confront the situation and wanted stop hemoragging taxpayers money.

What happened? The Alfa Sud was sort of a commercial success (it was cheap, sporty and appealled to the young) but it destroyed Alfa's reputation for building cars that were ahead of the competion in terms of engineering advancements. It lost that reputation forever.

Eventually that state closed the Alfa Sud plant and sold the shared to Fiat. Fiat almost bled dry and went bankrupt in trying to rebuild the Alfa brand.

Now ofcourse the US govt'is hoping the Fiat can also save Chrysler. But Chrysler isn't Alfa. Alfa was never a multi-billion dollar industrial conglomerate. Before the Alfa Sud it was a minor player that build cars for profit to partecipate in races. Chrysler is way to big for Fiat to succesfully digest it. GM and Fiat tried to partner before; and didn't work out either.

By: Jon

Jon — Mon, 06 Apr 2009 05:34:35 +0000

"The success or failure of any enterprise is the direct responsibility of its management".The UAW made not the first decision concerning GM or any other automobile company.It amazes that any with a driver`s license thinks they know how to run a car company.I guarantee Timid Tim and his erstwhile employer haven`t a clue.The so-called labor costs are often less than advertising costs for some models.If the U.S. companies labor costs are so unworkable how did Ford set the profitability record (since surpassed by Toyota) a short ten years ago?One huge problem that is never acknowledged is the at least four different subsidies that foreign competitors enjoy vis-a-vis the domestic industry.Government policy ranging from CAFE to taxation has driven half of the industry offshore with the other half hanging on for dear life.Academia in the future will recognize this as no less than protracted industrial suicide in its case studies.Almost all of the previous comments are clearly made by people who know little of which they write.That never seems to stop rhem.

By: Luther Rankin

Luther Rankin — Sun, 05 Apr 2009 23:36:44 +0000

GM and most large companies are not being run for the benefit of the owners of the company, the shareholders.
They are being run for the benifit of management. The owners have lost control of what they own.

A large portion of FORD on the other hand is still owned or controlled by the ford family who still looks out for their own interest.

This point I believe is the reason why Ford today is in better shape that GM.

By: George Holloway

George Holloway — Sat, 04 Apr 2009 00:20:58 +0000

Lots of interesting comments! I'm surprised that no one has brought up the obscene salaries, bonuses and golden parachutes of the geniuses who "manage" GM. Moreover, a company that cannot sell enough vehicles to generate enough profit to pay the INTEREST on their debt is doomed.

By: Gary Wardell

Gary Wardell — Fri, 03 Apr 2009 02:32:30 +0000

I work in Minnepolis Minnesota. I live 30 mile from work. My trip home is NOT all expressway. The road I live on is gravel.

I will pay to get my old trucks fixed until some manufacture comes out with what I call a Big Green Truck. If I purchase a small "green" car, I might not get home in Minnesota snow storms.

Who is going to purchase a car that might not get them home? Who is going to purchase a gas hog?

By: John King

John King — Thu, 02 Apr 2009 20:53:42 +0000

I drive a 1997 Mercury Grand Marquis with 234,000 miles on the odometer. I drive it by choice, not because I can't afford nearly any car I would want to buy. This car has only ever had four parts installed other than the normal maintenance items like tires and brakes. They are; a power seat swicth, the dash dimming switchtwo, a water pump and a belt idler.
The car still runs like new, looks practically new and the leather interior is still in excellet condition. By the way, it will get 32 to 33 MPG on the highway unless I run gasoline that contains ethanol. Then it drops to about 28.
Foreign car owners, beat that record.

By: MARVIN WILSON

MARVIN WILSON — Thu, 02 Apr 2009 15:33:33 +0000

I have to agree that dealerships are the biggest problem with the American auto companies. The greed and underhanded tactics used by dealerships to get every penny possible from customers is deplorable. Customers almost never get to talk to anyone from the auto companies, they only talk to the dealerships. Wether it's a bad deal on a new car, a rotten trade in deal, after sale service, or excesivly high service charges at dealerships, the customer only talks to the dealerships. When a complaint get to the auto makers their response almost always favors the dealerships. I beleave the reason for that is customers inexperiance againsrt dealerships experiance. A salesman sells up to tewo or three vehicles a day. He knows all the tricks of the trade The service dept also services many vehicles a day. They know all the tricks to uo the total on the bill. on the other hand the average customer buys 1 new vehicle once every 3 or 4 years if not less(inexperiance). How often does he take his vehicle in for service (also inexperiance). Dealerships take advantage of that inexperiance and exploit it to the max. Thua you usually end up with a dissatisfied customer. He will usually not return to that dealership, and eventually will not return to that product. Thus the auto maker looses a customer. How long can this senario go on before an auto maker looses to many customers. But big management continues in their infinate greed, continues to let the sales staff. the service dept and all others in the customer relation positions keep backing the dealerships and ignoring the customer

By: Poonie

Poonie — Wed, 01 Apr 2009 16:00:58 +0000

Everyone talks about market share, but does GM in fact sell fewer cars today than it did 30 years ago? I can't even find this information on GM's website. Granted, 2008 was a really bad year, but I'll bet my Nissan that GM sold more cars in 2007 than it did in 1977. "Market share" is a convenient excuse for explaining why GM is losing so much money. If in fact they are selling more cars but losing billions then GM's management looks even worse.

By: William Puishys

William Puishys — Wed, 01 Apr 2009 12:51:45 +0000

It seems that Mr. Hutchinson has a rather large blind spot-similar to the ones in GM cars. He does not mention the single biggest reason for the consumer migration to foreign cars; domestic automobiles absolutely stunk for a long period of time. They were shoddily made, prone to breakdown & rust, and their performance suffered in comparison to autos made by Toyota, Honda & Datsun (Nissan).
Once you have a reputation for building crapola, it's very difficult to convince people that you no longer do so. Lack of trust is as much of a factor as anything Mr. Hutchinson.

By: Phill Horne

Phill Horne — Wed, 01 Apr 2009 02:31:45 +0000

Martin might know something about banking, but he hasn't a clue about foreign cars. Foreign cars are not 'dangerous, cramped, and uncomfortable Martin, they represent good value, not to mention aesthetics. American cars are basically squared-heavy chunks of CO2 emitting iron. I think you coined the right word, Obsolete!

By: RFDLPA

RFDLPA — Wed, 01 Apr 2009 01:42:02 +0000

American Auto Industry: … "It was killed by everybody and It's diying of natural death"

There are a lot of reasons for the actual state of things in the american auto industry:

Quality issues, and believing that the public is no fool; Greedy and narrow minded management integrating in their products… PLANNED OBSOLESCENSE, as a way to force the american public to buy a new car more often, raising or keeping sales numbers. Hey ! you have to keep selling.

POOR QUALITY MATERIALS; to save or spend less in the manufacture of their products (bottomline), i.e. like using less UV protection agents in the plastics they use in dashboards (and everywere) so they get dry and crack sooner and look shitty so you decide to buy a new car; not to mention the rest of the non cosmetic parts; like the transmission that goes at 100k miles.

SHODY LABOR; performed by lazy workers; pushed and backed by labor unions, as a way to pressure management to get more money and benefits from their employers.

Greedy and dishonest dealers; it has become a second nature tought in the american's mind: if you take your car to the dealer it's going to cost you an arm and a leg.

With the more and more technological advances integrated in todays cars, tens of specialized onboard computers performing specialized tasks, like air bag management, antilock brake systen computers, the engine and powertrain management computers, PCM, ECM or whatever you name it, computers with integrated tradeware, near to impossible to service by no one but the dealer, you are IN THEIR HANDS, defenseless and they will kill you with the bill.

The stupid show off need of the american public, they like to show-off with whatever is at their reach, BIG Cars, Hummers and SUV's, yeah its got to be a FOUR WHEEL DRIVE… they hardly drive a mile in the dust over the life of the vehicle. But it makes them feel SOOO POWERFUL driving sitting 5 foot over everybody else's heads. ah but they can say it's for "safety" reasons, they feel safer when they can kill everybody else, driving those smaller cars in a crash; oh yeah!, and don't forget that they are puting the USA, with the 4 % of the world population to consume 25% of the world's oil production and trash the whole planet's atmosphere in the process… but they love their big gas guzzlers; very intelligent indeed.

Part of that insatiable show-off spirit is the need to drive anything that comes from overseas, a Mercedes, BMW or Lexus or whatever they can afford after selling their mothers, wife and kids to the car loan and credit card companies. That also adds up to the monstruous debt this country is growing; about that, the government should say, OK.. you want to drive a foreign car: a foreign luxury car… that's good, you will pay 100% import tax on your foreign car, as happens EVERYWERE around the world.

Then the government should take measures to force american carmakers to improve their quality, with real 150 K miles no fault guarantees.

Those are only a few steps towards the american auto industry recovery.

By: Doug McMane

Doug McMane — Wed, 01 Apr 2009 01:33:37 +0000

I agree with those who think poor dealerships for American brands are a big part of the cause. That has to be the brands fault; Ford, Chrysler, and GM should have had fewer dealerships and demanded more of them. I could have tolerated the few mechanical failures on my 1994 Crown Vic if the local dealer had done a professional job of diagnosing and fixing them. The dealer could not, and did not, because unqualified people were hired. I dumped a great American car for a Honda.

By: Mark T, Salt Lake City

Mark T, Salt Lake City — Wed, 01 Apr 2009 00:12:13 +0000

Fritz is right on all three points. However, the poster who cited quality issues due to bad attitudes amongst union workers is also right – I grew up in Michigan and heard plenty of stories about lazy, uncaring workers. Not that all of them fall into that category, or even a majority. But those who did undoubtedly caused quality problems. Management should have done more to address it though. Now that it has been addressed, and Detroit is putting out much better cars (Ford and GM, anyway), there has been woefully inadequate recognition of it – as Fritz has said.