Rt.66: GM was following an unsustainable business model. Wagoner, the CEO who was ousted by Obama, has repeatedly said as much and one of his primary areas of focus was to try and work with UAW and AFL-CIO on renegotiating the CBA, specifically the health benefits section.
The pension/healthcare liability tail that GM was carrying was massive and resulted in those significant legacy costs that you referenced.
However, how can you be willing to recognize those legacy costs and yet not be willing to admit that they were part of an almost suicidal bargaining approach by UAW and AFL-CIO? I’ve heard you and PaddyOh talk about a “reasonable” wage for auto workers. They weren’t paid a reasonable wage, though. When you calculate salary AND benefits, they were being paid far in excess of “reasonable” and this has been going on since the 1950s, when GM initially folded under union pressure (and pressure from the government). GM could afford those wages in the 1950s, when GM had nearly 60% US market share and no foreign competition to speak of. Unfortunately, time and competition caught up and GM’s domestic market share has eroded to about 28%. To accuse those tens of thousands of Americans of somehow being traitors for buying a foreign car is not only false, it ignores the fact that GM lost those customers by failing to deliver on it’s central premise for existence: Well designed, well made and affordable cars that people would WANT to drive.
You’re almost Stalinist in your demands that we drive American or face the consequences of our misguided actions. This is a free, capitalist society (or at least it used to be) and companies live or die based on their ability to deliver attractive choices to consumers. Simple as that. Great design + great engineering + great construction = WINNAR (sorry, FLU, couldn’t resist). Think iPod.
GM has the design and engineering chops to deliver great products, especially with Bob Lutz on board. However, it has become hidebound, bureaucratic and too slow to keep up with the times.
To ascribe GM’s fall to these nefarious foreigners misses the larger picture and glosses over many of the salient facts in the story. GM could have easily crushed Honda, Toyota, et al in their infancy. It didn’t because, in it’s arrogance, it failed to take them seriously and didn’t deign to compete with cheap “Made in Japan” econoboxes. Then OPEC and the “oil shocks” hit and the game changed and GM was caught completely flat footed. AGAIN, it could have used it’s economies of scale and residual consumer loyalty to put it’s now growing Japanese competitors out of business by designing smaller, more fuel efficient and better designed cars. It didn’t, choosing instead to keep manufacturing large, fuel-inefficient clunkers. You opined once that the 1970s weren’t an automotive glory period for any car maker. That conveniently ignores the fact that GM, Ford and Mopar designed some of the best looking, best produced cars in the world in the 1950s and 1960s. By the 1970s, they had gotten fat, lazy and prideful and their Japanese competitors saw and exploited that opening.
The rest, as they say, is history. And now so is GM. Welcome to capitalism.
