A Crash in Slow Motion
One of this year's prime spectator sports is GM-bashing, and no wonder. To the ignorant, it is befuddling how the maker of Cadillacs and Chevrolets, the leader of the SUV revolution, the owner of a massive industrial infrastructure could be on the verge of bankruptcy. What folks are gradually coming to realize is that GM, like the other domestic car companies, is (among other things) beset by huge labor and pension costs imposed by an aggressive union with a monopoly on labor. Still, when things go bad, management always takes the blame. That's why they get paid the big bucks.
Nonetheless, GM's management has its defenders. Rick Waggoner's Mom - writing under her pen name "William J. Holstein" - has written a short, sharp op-ed describing the steps that GM has taken in this decade to right its ship. Among other things, GM has:
1. transferred GM's health care costs to a trust controlled by the UAW.
2. created a two-tier wage system
3. cut the union work force in half
4. closed plants
5. spun off Delphi
6. sold its controlling interest in GMAC
7. reorganized the workers at the plants to work in Toyota-style teams
8. increased quality control and extended GM's basic warranties
9. created innovative technologies like On-Star and the Chevy Volt's ion battery
10. Most important, GM has made some well regarded, reliable cars (although they still make about 40 distinct models that are average or worse.)
Sounds good. So why has it been so hard to hear or read such a clear succinct statement of GM's accomplishments? Oh, they mention this stuff, but only after a lot of preliminary huffing and grumping. I have never heard GM's many political patrons - who you would think would have a grasp of what would appeal to their colleagues - say anything about GM's accomplishments, and its realistic chances for survival. They rarely do so, and if they do, it's too scattershot to do any good.
While GM has many, many (many!) problems, surely one of its greatest is its complete disconnect with the American people. It's like they saw how the Bush White House communicated through Scott McClellan and thought, "Wow! That's the way to go!" I mean, did you know that GM developed On-Star? I'll bet most people do not, and assume it's some sort of NASA/US Army/AT&T project.
More important, GM's ads and marketing demonstrate that it has lost the ability to inform customers about their cars. Some of GM's cars get good fuel economy, so how was this advertised? With a repetitive, washed out ad showing GM cars as shot through a gas station security camera (and at an unflattering angle to boot)! Pontiacs are basically low-cost alternatives to BMW's, with the new G8 receiving respectful notices, but GM only makes this comparison by implication and indirection. It should be explicit, and obnoxiously so.
A perfect case in point is the 2009 Chevy Cobalt SS, an unexpectedly powerful sedan and coupe. If Toyota or Honda had a car like this, their ads would be filled with pounding music and laughing twentysomethings filling the trunk up with cases of beer during the day, and filling the back seat with toothsome blonds during the night. Instead, GM's Cobalt ads are limited to group shots with a bunch of other undifferentiated models, or the aforementioned "gas-cam" ad.
The only exceptions to this blah marketing "plan" are GM's pick up truck ads, which are filled with shots of their trucks hauling things, and being dropped out of things, while hearty workin' Joes slam doors and shake hands. All of this is narrated by a voice over with manly bacon-and-gravy vocal chords. Hey, sign me up!
I suspect that in 5 years time, there will still be a GM. The feds might be making a lot of noise about the March deadline, but that is really a deadline for Chrysler to put its affairs in order and make its peace with its Maker. Government ownership of at least part of GM won't be the end of capitalism (20% of Volkswagon's equity is owned by the German state of Lower Saxony, for example). But GM's strength as a going concern will depend solely on its ability to sell cars to someone (anyone!), not on its ability to pay health benefits.
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