Who would have ever dreamed that the once-largest company in the world could fall so far that besides shutting down factories across America (while Japanese automakers are building them) might benefit from an affiliation with Renault, a French automaker?
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I am amazed at how little is out there in the US about this historic turn of events. GM had all of the money in the world, a massive market that believed buying anything besides GM/American was unpatriotic, friends in Washington and state/local governments, big government contracts/corporate welfare and yet they still couldn't find a way to make it all work.
What an amazing fall from grace for GM and no doubt MBA case study material of how to ruin a thriving business, for years to come. Americans love to admire business leaders and give them the spotlight and right now, I think these so-called leaders actually do deserve the spotlight and plenty of it. How in the hell did they screw up so badly?
I don't claim to know the definitive answer, but one can reasonably speculate in several areas, from least to most problematic. One (as I've found in pursuing this project management degree) is that the Japanese manufacturers took to the concepts of quality management (developed by Americans) much earlier and much more seriously than the American companies did. That is not a critique of the American companies, it's just that by the time those postwar concepts were more formally theorized and implemented, they were already larger and more well-established, whereas smaller yet somewhat more diversified Japanese concerns such as Mitsubishi and Toyota were in a position to adapt and grow from an earlier stage. Maybe they were also more well-suited culturally for such concepts.
Second is that in the '90s, while the Japanese automakers kept with making smaller, more efficient vehicles, the American companies found a sweet spot in the profit margin for making SUVs, and cultivating a needless craze among the much-prized smilf demographic. And while I realize it runs contrary to Al Gore's current hagiography (or perhaps he simply had his come-to-Jesus moment a bit late), the Clinton-Gore administration enabled the automakers by keeping the CAFE standards low. I remember reading articles in 1998 or '99, claiming that Ford was making something like $10-12K pure profit on Expeditions. Is it true? Not sure, but I wouldn't be surprised.
Let's put it in terms of basic financial management -- if they weren't making good money off the SUVs, they wouldn't have hung with them for so long, which in turn acted as a financial disincentive (given their obvious short-run mentality) to re-tool and re-engineer for more sustainable and viable product lines. The Japanese companies are ending up being the little engine that could -- they stuck with what they were good at and kept their eyes on the big picture, knowing that wasting a non-renewable, volatile resource is just plain stupid, and that quality and economy are more sensible selling points than a false sense of security.
It also doesn't help that the price of a barrel of oil is about seven times what it was in the mid-'90s. The American companies couldn't have predicted that, of course, but they apparently weren't prepared for any substantial increase, which is inexplicable, given the indisputably toxic geographic distribution of remaining oil reserves.
But what seems to be the final nail in the coffin is health care. Ford and GM, in their most recent waves of layoffs earlier this year, both attested to that fact. The health care costs of their pensioned workers are simply becoming too high. Now, if I were a Democratic lawmaker from a Rust Belt state, I might take that opportunity to have a sit-down with the CEOs of the Big Three and get them to throw their weight behind a comprehensive health-care system now, rather than when the boomers who missed out on the stock market are forced to choose between meds and food.
They used to say that what was good for General Motors was good for America, such was their impact on American society. In this case, it may still be true -- the health-care crisis of the American auto industry is a warning to the society at large. Much is made of the tremendous percentage of Americans who are uninsured, but even the ones who are insured are essentially left to do battle with an industry that measures its success by how little it has to deal with its customers. Put them together with Big Pharma, a crushing deficit and endless adventurism, and the scores of unprincipled (but fully insured for life, of course) legislators who at least are honest enough to stay bought, and you're looking at a very grim scenario.
In the long run, given the coming impact of the baby boomer bubble on the health care/social security system, there will come a time when Americans will have to make a real choice between guns and butter, because we won't be able to afford both for much longer, thanks to the epic mismanagement of the current gang of creeps and thugs. Or the choice will be made for us, if the East Asian central banks decide they want their money back.
Either way, GM's problem is one of several interdependent levels -- organizational, managerial, and political, all of them exacerbated by a culture of golden parachutes and short-run thinking.
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