Friday, March 6, 2009

GM is Dead; Long Live GM

The old General Motors is dead.

Full disclosure. I earned a very good living for a number of years working for various GM advertising agencies. I have owned many good vehicles over the years: Chevrolet Impala, Pontiac 6000, a couple of Saturn models and most recently a number of Saab models including my current vehicle, a 2005 Saab 9-5. Going back even further, my Father worked for the only GM Dealer in Jamaica, United Motors. My first remembrance of GM was from the passenger seat of a really cool Opel 2-door coupe. As a youngster growing up and working for my Dad at his Texaco service station in Trench Town in Kingston we had a couple of Oldsmobile's including my favourite, a 2 door Delta 88.

One day GM died.

I remember the day well. I was about 8. Dad had just taken delivery of an absolutely huge Olds 98. We were at the Texaco station where he was showing the new car off to a couple of his friends. As usual, he popped the hood and as the men stood around looking at the engine, one of his friends casually mentioned that he had actually bought a Chevrolet.

The conversation died. They all looked carefully at the "engine made by Chevrolet" markings on the valve cover. Dad was not amused.

There was much animated conversation (and lots of swearing) for the next few minutes as they debated the reality of an 'Oldsmobile' having a 'Chevrolet' engine. The conversation ended when my godfather, 'Uncle Donovan' popped the hood on his brand new ride, a Ford Torino and proudly showed the blue 'Ford' oval on his engine.

Dad never spoke about that car after that. In fact it dawned on us that driving a left-hand-drive behemoth on the right side of the narrow Jamaican roads was completely ridiculous. And even at that young age, what struck me was that GM jad chosen to export American-made cars to Jamaica when British Vauxhall's and German Opel's would have made more sense. Bad choice: Toyota is now the dominant brand in Jamaica. We did not keep the Oldsmobile very long after that.

So 40 years later, here we are in 2009 debating the pros and cons of keeping General Motors alive. I chuckle when I think about that.

The company of my youth and of my Father is dead. It is time to bury the old GM so that a new company can begin again the task of building business one car and one customer at a time. Here are my suggestions, completely un-solicited of course:
  • The current, old management must be dismissed immediately. It is not acceptable to allow people to run the company who grew up in a culture where Chevrolet engines in an Oldsmobile were OK.
  • Scrap General Motors itself. Delete all reference and identification from all the vehicles. I want to drive a 'Chevrolet'; I don't drive a 'General Motors'.
  • Divide the company into brands: Chevrolet, GMC, Corvette, Opel, Vauxhall, Buick, Saturn, Saab. Define each brand clearly and stick to it.

With my Saab 9-5 lease coming to an end this November, I will be watching with great interest how the story plays out. What happens over the next few months will determine what new vehicle I select next. It should be an interesting summer.

12 comments:

  1. You are right on. Probably have to reduce the number of brands though. Not enough money to do them all properly

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  2. I guess you are not worried about working on GM business anymore (lol). You are correct in that the government has to call the GM bluff at some point and tell them that the current senior management team is out! The current senior regime at GM just does not have the balls to make the drastic cuts that are necessary. As an example, why do they insist on keeping Pontiac and Buick! They sell 5 Pontiac’s a year in the US and the last Buick customer is now on life support. They need to get over themselves and the government needs to administer some tough love. If this does not happen, the government might as well invest in penny stocks as the chances of returns on these are far greater than getting a return on GM. With regards to Chrysler, don’t even get me started….

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  3. Provocative thoughts...the automotive landscape will be very different in short order.

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  4. Great notes and observations Chris. Having being around the track, you know there are a million solutions to the G.M. situation. The complexity of their business compounded by the jurisdictions in which they operate can make your head explode.
    Here's one more observation for the herd to consider. G.M. was managed by the smartest guys and girls Harvard could through at it, right? Does this say more about G.M. or about our business schools?
    If business schools today don't offer G.M. and for that matter through in Kodak, Xerox, Citi Bank and American Express as business cases, what are the next generation paying for and what are we teaching them about management?

    Clearly, we know what business schools taught our august financial engineers and I understand Western is re writing the curriculum as we speak. What are we teaching the new cohort of MBA,s about international business, manufacturing and finance now that the last cohort blew up the workshop?
    Just a thought.

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  5. ? what GM business is there to still be working on? As a consumer, the only business I see them in is Charity and Bailouts---as Recipients.

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  6. I loved the story baout your father's Oldsmobile (oops, it was a Chevy!)
    My mom drove a Buick. OOPS, was it a Chevy?

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  7. I guess Steve Jobs should be fired for putting Intel chips in Apple computers then. Oh wait, I just gave a simple answer to a complicated question. Mybad

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  8. Good article. I even knew at a young age they had too many brands producing essentially the same type of cars. Why have the same cars competing against each other under the same company?

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  9. Wasn't Saturn supposed to be the future of the domestic car industry? Too bad GM couldn't leave well enough alone and "GM'd" it.

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  10. we had a 77 Pontiac wagon with a Chev engine. My dad was actually pleased when he discovered that as he always felt Chevs were reliable. Only problem was that the oil filter was different between Pontiac and Chev engines, so you always had to be sure the mechanic used the correct filter when the oil was changed. It was a great car and a terrific engine and lasted many, many years.

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  11. Thank you all for commenting. This post is not only topical, but personal. And as Denis DesRosiers said in his article in the Toronto Star Wheels section on March 7, after all the bailout money has been paid out, the automotive companies and their suppliers are STILL going to cut hundreds of thousands of jobs. As my son told me once when we had to make the decision about spending money to repair a vehicle that had already cost us lots of $'s, "Don't throw good money after bad, Dad". Good advice then and now.

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  12. Popular article, but not correct. I am a SME for GM in their hybrid and joint UAW/GM work on facility cost improvements.

    The cost cuts within GM were already in process, and it was painful. Unfortunately, with the credit situation, banks had stopped lending and the big three borrow money for the upcoming quarter. The original purpose of going to DC was not to beg for money, but to demand the usual loans that they received that were cut off after the financial bailout $770B fiasco.

    Additionally, the financial industry, in an effort to deflect from their activities, spun the loan issue into a 'bailout' issue.

    So far as job reductions - have any of you actually looked at the loan document? The government demanded the reduction.

    So far as the rest, I have noticed that not too many have caught on that:

    1. GMAC was the first bank to open up their credit requirements upon receipt of an unrequested $1B from the financial bailout;
    2. GM did not require the next installment of $2B because of the change in cashflow from the original loan and will be paying it back starting in April.

    Nor, I suppose, did anyone notice:

    1. Izuzu pulled out of the USA;
    2. Toyota pulled out of building the Prius facility in Mississippi leaving the state $295M in the hole from cash outlays;
    3. All foreign manufacturers received funds, not loans, from their respective governments.

    www.allamericanhybrid.com

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