General Motors has emerged from bankruptcy in only 40 days. The original GM has been divided into two pieces: 1) the detritus GM (now known as Motors Liquidation, it includes closed plants, excess dealerships, bad debt, and four car lines to be eliminated or sold off: Pontiac, Hummer, Saturn, Saab); and 2) the new and improved GM: Cadillac, Chevrolet, Buick, and GMC, far fewer plants and white color workers, a streamlined bureaucracy, and clean balance sheet.
Union greed and intransigence, a bloated bureaucracy, years of management ineptitude and a damaged reputation from the bad quality vehicles of the 1980s and 1990s, all were to blame for GM’s decline.
The New GM is 60.8 percent owned by U.S. taxpayers, with 11.7 percent owned by the governments of Canada and Ontario. The United Auto Workers' retiree medical benefits trust owns 17.5 percent, with the remaining 10 percent owned by Motors Liquidation.
In many respects, GM’s condition parallels Michigan’s. Both have been on a long, painful downslide, attempting to restructure on the fly as damaging events and conditions unfolded around them with deadly speed. Both have suffered from lackluster leadership, and both have been harmed by the often anachronistic mindset of union leaders and rank-and-file members. It’s not just wages and benefits that have been a problem; it’s also the inflexibility and cumbersome union workplace rules that make firing bad workers nearly impossible.
A prime asinine idea was the UAW’s Jobs Bank, which essentially paid unemployed workers 95 percent of regular wages to sit and play checkers or read the paper. This kind of insanity went on for way too long.
But getting back to GM, one of my fears when Uncle Sam agreed to bail out the corporation and keep it going through the dark winter and spring of 2009, was that the Obama administration would meddle in product development and production to promote the “green agenda.” That in exchange for being bailed out, GM would be forced to cut back drastically on production of high profit-margin SUVs and pickup trucks and crank up production of small hybrids and electric vehicles, which have thinner profit margins and limited demand.
However, some indications are that the government wants its money back by hook or by crook. If that includes allowing GM to continue selling a lot of the large vehicles Americans want, so be it. (As long as it remains within compliance of the CAFE standards — no small task.)
Robert Lutz, ex-Chrysler president and Ford V.P., is a legend in the auto industry, known for his styling panache and marketing acumen. (He oversaw development of the popular Dodge Viper and Ford Explorer, among other models.) Lutz, who was quoted as saying human-caused global warming is “a crock,” announced his retirement from GM in February, but last week announced he was un-retired.
You know GM couldn’t have called him back to work without the blessing of the auto task force, so that in itself indicates there must be some pragmatism inside the Beltway. For GM’s and Michigan’s sake, let’s hope so.
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