What's bad for General Motors is good for the world

[Oracle of Delphi]

The US gasoline-industrial complex has had its day. In Asia's frontiers of globalisation the green machine is pulling away

Some companies go bust ­because of bad management, and some get crushed by unrelenting ­recession. But once in a while you get a business whose death is about much more than supply chains or sales targets; it sounds the death knell for an entire era. And the funeral bells surely tolled this week when General Motors filed for bankruptcy.

Start talking about GM, and the superlatives soon run out. What's now the largest industrial failure in US ­history was for so many years the biggest company in the world. More than that, the 100-year-old giant was the corporate embodiment of the American Century.

Everyone knows the one about how a former boss of General Motors (nearly) said that what was good for his company was good for America, and vice versa. Today the statement is used for easy irony, but at the time Charles Wilson was voicing a truism. He was speaking a few years after the second world war, during which carmakers supplied the US military with hundreds of billions of dollars-worth of planes, tanks and other military equipment. The management theorist Peter Drucker said it was not the generals but General Motors who "won the war for America". And they were rewarded handsomely, with cosy regulation and ridiculously low taxes on fuel. The gasoline-industrial complex, you could call it, and for much of the postwar period it held up well enough.

Not any more. Of the Detroit Three, GM and Chrysler are now enfeebled, on an IV-drip of government money. Only Ford has avoided the same fate, by taking out a giant loan three years ago and beginning its own painful restructuring.

The official line is that GM is not dead, it's just regrouping. Even as he administered the last rites this week, Barack Obama heralded "the beginning of a new GM". Yes, and I'm sure we all look forward to the continued banking success of Sir Fred Goodwin. If there are no second acts in American life, the world of business is barely more forgiving. Even optimists admit that whatever emerges from Detroit will be a shrunken, modest thing, shorn of its pomp and might.

Just as Detroit's rise was about more than business, so too is its demise. When people talk about the rising economic might of Asia, they normally paint it in genteel, gradual terms – photo­ calls at international summits, say. But sometimes this slow shift of power becomes more of a lurch. Sometimes it's marked by an industrial humiliation.

For Porsche, BMW and other luxury marques, Shanghai is already the second most important market in the world. And this year, for the first time ever, the Chinese are set to buy more cars than recession-hit Americans. But the developing countries of Asia are not just consuming more, they are closing the gap in manufacturing. In doing so, they are on a well-trodden path to industrialisation, following Japan and South Korea. Those countries pioneered cheaper, small cars; this time, the new frontiers of globalisation are leading the way on electric cars.

Yes, you read that right: the green auto, the will-o'-the-wisp of the motor industry, is already being made in smoke-belching Asia. The world's bestselling plug-in car, the G-Wiz, was invented and built by an Indian firm, Reva. The company that has got the furthest in developing a battery-powered auto which can go for long distances is called BYD (short for Build Your Dreams) and is based in Shenzen, southern China. True, the little G-Wiz is a funny-looking thing, more milkfloat than motor. Then again, the Americans used to laugh at Toyota – and now it's the world's no 1. When pleading for Washington aid, GM execs made much of their new electric vehicle, the Volt – but that's still years from going on sale. Such slow-footedness is hardly a surprise from a company whose vice-chair, Bob Lutz, last year reportedly described global warming as "a crock of $h!".

Once a petrolhead, always a ­petrolhead. And that's the other big ­difference about the electric brigade – strikingly few of its leaders are motor men. Reva's founder comes from the solar-power industry; BYD used to make mobile-phone ­batteries, and only got into cars this decade; Shai Agassi, the leading designer of a ­system for ­charging electric ­vehicles, is an Israeli who used to be big in ­accountancy software.

"The car industry is heading for a showdown between discipline and imagination," says John Wormald, a British consultant to auto firms for over 30 years. "The old giants have plenty of discipline and heft; but the start-ups have got far more imagination." Or, as a Chinese car executive put it to the New Yorker not so long ago: "We have no brand name, no recognition, nothing. We are simply aggressive."

Plenty of people will read all this as a triumph of free-market economics: the old overtaken by the new, the public good served by an eager private sector, and creative destruction writ large. I'm not so sure. Anyone who's ever been to India and China knows that what they really need is fewer cars and more cheap public transport, powered as cleanly as possible. And all that is far more likely to come now that America's Big Three have less of a stranglehold on the auto sector. From this week, the car industry is ­living in the AD era: After Detroit.

Link: http://www.guardian.co.uk/commentisfree/20...na-electric-car

[balthazar]

A bit of 'all-over-the-place', no??

>>"Everyone knows the one about how a former boss of General Motors (nearly) said that what was good for his company was good for America, and vice versa. Today the statement is used for easy irony, but at the time Charles Wilson was voicing a truism. He was speaking a few years after the second world war, during which carmakers supplied the US military with hundreds of billions of dollars-worth of planes, tanks and other military equipment."<<

Why 'nearly', why not 'exactly'? Is this information hard to find/ verify ?

No.

"...for years I thought what was good for the country was good for General Motors and vice versa." --Charles Erwin Wilson, 1953.

[Camino LS6]

F this mentality.

[ShadowDog]

A bit of 'all-over-the-place', no??

>>"Everyone knows the one about how a former boss of General Motors (nearly) said that what was good for his company was good for America, and vice versa. Today the statement is used for easy irony, but at the time Charles Wilson was voicing a truism. He was speaking a few years after the second world war, during which carmakers supplied the US military with hundreds of billions of dollars-worth of planes, tanks and other military equipment."<<

Why 'nearly', why not 'exactly'? Is this information hard to find/ verify ?

No.

"...for years I thought what was good for the country was good for General Motors and vice versa." --Charles Erwin Wilson, 1953.

I think because it has been taken out of context in today's world when it was originally applied to the post-war era. This came up in another article here a few weeks ago.

[Robert Hall]

I think because it has been taken out of context in today's world when it was originally applied to the post-war era. This came up in another article here a few weeks ago.

Yes...what was relevant and true 50+ years ago isn't necessarily relevant in the modern world. The US of 2009 is a very different place than it was in 1953.

Edited June 3, 2009 by Cubical-aka-Moltar

[A Horse With No Name]

F this mentality.

+1

Chris

[regfootball]

Yes...what was relevant and true 50+ years ago isn't necessarily relevant in the modern world. The US of 2009 is a very different place than it was in 1953.

true.

[gm4life]

Ahhh screw this, what a piece of &#036;h&#33; article.

[balthazar]

I don't believe anyone is suggesting that 2009 World and 1953 World are the same or even remotely similar (it's painfully obvious that 2009 World and 2008 World aren't even remotely similar).

>>"Yes...what was relevant and true 50+ years ago isn't necessarily relevant in the modern world. The US of 2009 is a very different place than it was in 1953."<<

Wow.

So if General Motors was healthy, highly competitive and commanded a majority of the U.S. marketshare RIGHT NOW, the plants & suppliers were humming full-time and 100s of thousands were employeed ..... how again would this be "bad" in 2009 World ('Good for GM, good for the U.S.') ?????

[Robert Hall]

I don't believe anyone is suggesting that 2009 World and 1953 World are the same or even remotely similar (it's painfully obvious that 2009 World and 2008 World aren't even remotely similar).

Well, some here do live in the past (or view it with rose-colored glasses), so pointing out the obvious was necessary..

So if General Motors was healthy, highly competitive and commanded a majority of the U.S. marketshare RIGHT NOW, the plants & suppliers were humming full-time and 100s of thousands were employeed ..... how again would this be "bad" in 2009 World ('Good for GM, good for the U.S.') ?????

That would be good, but not going to happen given the mistakes GM has made the last 30+ years..

[balthazar]

Plenty of people said that about toyota circa 1965, and look how that turned out.

Plenty of people said that about Ford circa 1905 and look how that turned out.

In a business where a given product usually lasts only a few years, potential is constantly being re-evaluated.

The parallels between automaking & -say- baseball are interesting- the 'team' gets renewed every X-number of years.

Sure; many things are different, but we were talking about one specific statement.

And the point is; time has not eradicated the ideal that Wilson stated in 1953.

WERE General Motors to be performing in 2009 as it was in 1965, 'what was good for GM would be good for the country'.

the mistakes GM has made the last 30+ years

BTW: GM has already 'undone' a huge amount of mistakes it did as SOP decades ago.

Or to borrow from your post, Cubitar:

>>"What was relevant and true 30+ years ago isn't necessarily relevant in the modern world. The US of 2009 is a very different place than it was in 1979."<<

[A Horse With No Name]

Yes...what was relevant and true 50+ years ago isn't necessarily relevant in the modern world. The US of 2009 is a very different place than it was in 1953.

True...and actually I'll get flamed for this but I have faith in the Volt and in GM engeneering. I think GM will adapt to the new world and things will come around.

I think a healthy GM will once again be a healthy addition to our nation.

Pardon me for optomism, but...I can't help myself.

Chris

[Robert Hall]

Oh, I think GM can and will thrive again..but they will have to find a way to thrive with 15-20% market share...I don't see 50% ever happening again.

[A Horse With No Name]

Nor in one sense should it. I enjoy the diversity in the modern auto market...Audi...BMW....VW...Mazda...GM...The Challenger and Mustang...the new Ford vehicles in their fresh lineup...

Chris

[Robert Hall]

Nor in one sense should it. I enjoy the diversity in the modern auto market...Audi...BMW....VW...Mazda...GM...The Challenger and Mustang...the new Ford vehicles in their fresh lineup...

Chris

Ya, product-wise, these are great times. In so many ways, these are best of times for cars and the worst of times simultaneously..

[balthazar]

No; no Co. will ever gain 50+% of the U.S. market again- but that's not necessary on GM's part to contribute to the betterment of the nation.

[A Horse With No Name]

Biggest thing GM can do right now IMHO is keep the brain power employed so we do design work here when the economy picks back up. That knowledge base will be difficult to recover if we loose it.

Chris

[FAPTurbo]

Funny that this is written by someone in the UK. I'll bet the death of their car companies was totally great for their country, right?... right?