June 19, 2005
LAST CENTURY'S MODEL:
What's Bad for G.M. Is . . . (GREGG EASTERBROOK, 6/12/05, NY Times)
Many factors contributed to the General Motors decline - health care costs, corporate bureaucracy and detachment from the market. (Toyota, Honda and others have long focused their marketing research on California, to be close to the pulse of car culture. G.M. does its big thinking in Michigan, which is a little like studying fashion in Toledo.) Company executives bet heavily that gas prices and poor fuel economy would not dampen enthusiasm for G.M.'s S.U.V.'s and pickup trucks; now, that is happening. [...]There is also great pressure to hold prices down, which is bad for companies like G.M. with vast amounts of overhead. According to the consumer price index, new cars and light trucks today cost less in real-dollar terms than in 1982, despite having air bags, antilock brakes, CD players, power windows and other features either unavailable or considered luxury options back then.
This means that during the very period that General Motors has declined, American car buyers have become better off. Competition can have the effect of "creative destruction," in the economist Joseph Schumpeter's famous term, harming workers in some places, while everyone else comes out ahead.
Nothing is more expensive today than it was yesterday... Posted by Orrin Judd at June 19, 2005 12:01 AM
GM needs to have fewer brands and focus instead on offering specific products in the marketplace. It would also be nice if they actually had the merest soupcon of quality control.
Posted by: bart at June 19, 2005 10:12 AMthey need to renounce their pension and health plans and break the union. In other words, they have no future.
Posted by: oj at June 19, 2005 10:15 AMI am a big fan of The Truth About Cars website. Go to their editorial page and read their GM Deathwatch series.
-GM Death Watch XVII: Forgive and forget?
-GM Death Watch XVI: Bob's Culture Club
-GM Death Watch Pt. XV: Branded!
-GM Death Watch XIV: GM vs. the UAW
-GM Death Watch XIII: Steady as she goes
-GM Death Watch: Part XII: The Summer Solstice
-GM Death Watch Part XI: Max Bob's Blog
-GM Death Watch Pt. X: Great Landing, Wrong Airport
GM Death Watch Pt. VII: CPR
GM Death Watch Pt. VI: Petard Hoisting
GM Death Watch Pt. V: The Perfect Storm
GM Death Watch Pt. IV: Thanks I needed That!
GM Death Watch Pt. III: Safety First?
GM Death Watch Pt. II: Dan Neil Takes A Bullet
GM Death Watch I: GM Must Die
GM's major problem is not their pension, health care, or the UAW, it's incompetent management. That GM does not design good cars is not the fault of the guys on the assembly line. If all their board did was fire every executive officer and a good portion of upper management and replaced them with guys from Toyota, GM would turn around within 2-3 years. And that would be true anytime within the past 30 years.
Posted by: Chris Durnell at June 20, 2005 11:52 AM