GM needs to focus on innovation
Chrysler's sliding into bankruptcy, and General Motors might not be far behind. The automaker recently unveiled a new restructuring plan to turn the company around, but commentator Harley Shaiken says GM's going in the wrong direction.
U.C. Berkeley Professor Harley Shaiken (www-gse.berkeley.edu)
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Kai Ryssdal: General Motors may not be far behind Chrysler. It needs billions more in government loans to survive and stay out of Chapter 11. But commentator Harley Shaiken says GM is going about it all wrong.
HARLEY SHAIKEN: The problem with GM's new Washington-mandated restructuring plan is that it steps on the gas in the wrong direction. Washington is at cross-purposes: the stimulus package spends $800 billion to create jobs, while billions in loans to GM are conditioned on eliminating them. GM's plan seeks to save the company by shrinking it.
In the U.S., GM will ax 23,000 factory jobs -- a number the size of Chrysler -- 17 plants, and Pontiac, all in the next three years. What's more, the company plans to build 40 percent of the cars it sells in the U.S. offshore, up from 23 percent today, many in low-wage areas say China. Well, what other options are there?
The auto-task force should press for a bold plan to innovate like accelerating the far-better, more fuel-efficient vehicles already rolling off the assembly lines. How about a Pontiac with the sizzle of a 1967 GTO and the soul of a hybrid? It's easy to forget that GM has some of the most talented engineers, designers, and blue-collar workers in the world. What the company lacked is imagination and effective leadership.
Consider FIAT. When the Italian automaker floundered in 2004, a new CEO, Sergio Marchionne, turned management inside out and introduced exciting, popular new models. The company began making money without closing plants or eliminating workers. GM's accountants then paid $2 billion to sever its ties to FIAT.
Fritz Henderson, the new GM CEO, praised the government for acting like a "private equity firm." A hedge fund wants to make money fast for its client -- in this case, the taxpayer -- without regard to social cost. Unlike most clients, however, the taxpayer picks up the social cost. Longer unemployment lines and more foreclosures are devastating for the victims, not cheap for the rest of us.
In the late 1950s the legendary car maker Studebaker-Packard sought to regain its luster through downsizing. It was so successful it no longer exists. The best use of taxpayer loans is a revitalized GM that creates jobs, not eliminates them.
RYSSDAL: Harley Shaiken teaches labor and the global economy at the University of California, Berkeley.
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05/06/2009
As an owner of a 1969 GTO--the year before Pontiac finally installed a sway bar so it could handle in a corner the power it made--I have to point out an old myth.
The myth is, Pontiac was the first to create the musclecar. Chevrolet was there before, in 1955-57, but they advertised the Corvette engine inside as "hill climbing power!".
The point? Pontiac sold its GTO thru advertising, and a faked report in a car magazine that didn't admit the engine in that particular GTO would never be offered in any GTO. Sort of like how SUVs and their high center of gravity were sold as safer than the minivans the Japanese were copying with better quality--because the Japanese didn't big the big pickups that SUVs are based on.
If you really want to see what a good GM would look like, check out the history of Saturn. Yes, the car company GM is trying to get rid off. THAT was supposed to be the good GM of its time, and studying its history will tell you what happens to a company where employees make their money by showing up, not by making a good product.
America is no longer a manufacturing country, we are a financing country. That's why we bailed the banks without a blink, but we struggle to bail out the manufacturers--and even then, we target not the bondholders and investors, who choose poorly, but we target the employees and sucontractors.
From HI, 05/05/2009
From Fritz Chrysler to Fritz Henderson
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Quo Vadetis? Was it Darwin who implied that only the adaptable species would be allowed to continue its evolution? Whither go our senile automotive dinosaurs? Best adaptation I can visualize is morph into design engineering companies. Best to graduate to higher paradigm before falling victim to mounting international competition. By spinning off auto rental, auto finance, auto parts, and auto assembly our newly graduating class of dinosaurs can then focus on design, auto computer hardware, and the lucrative business of semi-annual software updates for auto computers. Such a nuclear company would have best piece of the non-commodity action. Would you guess that another 55 years of software exponential growth is waiting in the wings for the dinosaur's Bourne again computer shell?
From Boston, MA, 05/04/2009
Shaiken is painfully correct when he says that GM has great talent but has lacked "imagination and leadership." In the eighties, GM developed, manufactured, and leased thousands of the EV1, broadly accepted to have been the world's most advanced electric car, but then almost unbelievably recalled every single vehicle, and crushed and shredded each and every one! It wasn't just lack of leadership, it was negative, almost traitorous leadership. There was some dirty work at the crossroads in those days. If we are really going to fix this industry, shouldn't we discern why this bizarre event occurred, lest it happen again? See the documentary film "Who Killed the Electric Car?"
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