How GM Can Fix Itself. Will Wagoner Do What It Tak

[Guest Josh]

Standing under a fading blue sign that says BIRTHPLACE OF THE AMERICAN V6, Allan Taylor gestures at the factory behind him and grimaces. "Everything in there is obsolete," he says of the Buick engine plant. Taylor has spent 30 years there, and at 59 he's nearing retirement. It's a good thing too, since the plant won't be running much longer. General Motors plans to shut it down in 2008, one of nine factories the company aims to close, eliminating 30,000 jobs. Taylor is surprised the plant has lasted this long. "We have to put buckets under the machines to catch the leaking oil," he says. Buick City, where he works, was once a vast manufacturing complex more than a mile in length. It's now mostly a desolate field of crushed stone surrounded by parking lots too big for GM's shrinking workforce. If you didn't know you were in Flint, Mich., you might think you were at an old Soviet factory that made nameless products no one really wanted.

GM CEO Rick Wagoner is acutely aware of his company's decaying state. He may have the toughest job in corporate America--preventing the world's largest automaker from going under. Wagoner outlined his plan last week, announcing a restructuring that will result in GM's producing 1 million fewer vehicles a year and, he hopes, saving $7 billion annually (GM's sales last year: $193.5 billion). Wagoner has been vigorously trying to crush rumors that GM will seek a bailout in bankruptcy court, following the path of troubled airlines and steel companies. "I'd like to just set the record straight here and now," he wrote in a letter to GM employees. "There is absolutely no plan, strategy or intention for GM to file for bankruptcy."

It's a testament to how bad GM's problems are that Wagoner had to write such a letter. GM is a shell of the company that a half-century ago controlled nearly half the U.S. car market and was such a powerhouse that company executives told Congress they didn't want to cut the price of a Chevy because it might drive the competition out of business. With some 324,000 employees worldwide, GM remains a giant, influencing everything from the price of plastics and steel to the market for mortgages, through its GMAC finance division (part of which may soon be sold). Yet GM can't seem to make money in its core business, manufacturing automobiles at home. In the first nine months of this year, GM's North American operations lost $4.8 billion. Its market share has sunk from 40% in 1984 to a low of 26.1% this year.

Full Story: http://www.time.com/time/magazine/article/...1134747,00.html

[Guest buickman]

GENERAL WATCH NEWS How many times did Edison fail before he saw light? What do we remember...that he succeeded. Years ago, a banking organization named Morgan thankfully had enough experience in building railroads and steel companies that when this auto industry came along, they saw the wisdom of a good plan. It was called "The Organization Study". It had been prepared by Alfred Sloan and presented to Billy Durant, our great founder, who was otherwise preoccupied. When Durant lost control for the second time in 1920, Pierre duPont, who had invested heavily in GM, read Sloan's plan, and together with JPM, decided to put Sloan's study into effect. The rest is history (See "My Years With General Motors"). Luck is preparation meeting opportunity. Jim Dollinger Founder www.GeneralWatch.com Edited November 28, 2005 by buickman

[Newbiewar]

What is with all of these comparisons of GM from half a century ago? There are lots of businesses that are smaller now than they were in the 1950's. Get over it people.

[post="49428"]<{POST_SNAPBACK}>[/post]

because from 1920-to about 1970 GM was doing everything right... if a company has its country by the nuts, it shows that the country respects it.. now days most people believe in the darwinism theory for corperatism. Personally GM is more then a company in my eyes... and it didnt take much for me to realize the passion they can put out.

GM has changed the automotive industry every step of the way, GM has required law to make others correct their vehicles...

and to act like the company is obsolete, and has no place in this world is blasphamy...

I have more to say, but believe this is going to turn into a rant so...

[Chicagoland]

So many years GM stuck with the 3800 cuz it was 'good enough' for loyalists and fleets. Now they finally gotta get with the times. Edited November 28, 2005 by Chicagoland

[Newbiewar]

you know its sad that the ls4 and ls2 gets comparable fuel ecconomy to most of GM's v6's.... this is almost shameful for a GM v6... unless that direct injection is really going to improve fuel ecconomy, i'd say start working on v8's for all =)...

[goblue1999]

because from 1920-to about 1970 GM was doing everything right... if a company has its country by the nuts, it shows that the country respects it.. now days most people believe in the darwinism theory for corperatism.  Personally GM is more then a company in my eyes... and it didnt take much for me to realize the passion they can put out.

GM has changed the automotive industry every step of the way, GM has required law to make others correct their vehicles...

and to act like the company is obsolete, and has no place in this world is blasphamy...

I have more to say, but believe this is going to turn into a rant so...

[post="49433"]<{POST_SNAPBACK}>[/post]

were you born yesterday?

GM wasn't "doing everything right" from the 20s to the 70s. The company rode the demographic bubble, making reasonable versions of transportation and expression that the growing American public needed, and wanted......all with no foreign competition. don't get my statement wrong, I am not saying that foreign competition, by itself, is shrinking GM, they have significant help from their own governments in the form of subsidies, bigoted protectionist policies at home, and rampant currency manipulation.

Today's buying public is so fickle, dominant brands cannot hold onto their positions for long. If for no other reason than "I don't want a (car, tv, boat, mp3 player, blue jeans, etc.) that everyone else has, the market naturally fragments.

It is now up to GM to find a way to succeed in this new paradigm, one that has been under way for at least a decade, superimposed on the increased pressures from abroad, mentioned above.

GM has the talent within to rise again, will the leaders begin focusing on developing the "must have" products that they so often mention??

[daves87rs]

Today's buying public is so fickle, dominant brands cannot hold onto their positions for long.  If for no other reason than "I don't want a (car, tv, boat, mp3 player, blue jeans, etc.) that everyone else has, the market naturally fragments.

It is now up to GM to find a way to succeed in this new paradigm, one that has been under way for at least a decade, superimposed on the increased pressures from abroad, mentioned above.

GM has the talent within to rise again, will the leaders begin focusing on developing the "must have" products that they so often mention??

[post="49523"]<{POST_SNAPBACK}>[/post]

Can't tell you how true that is....

[FUTURE_OF_GM]

[quote]Standing under a fading blue sign that says BIRTHPLACE OF THE AMERICAN V6, Allan Taylor gestures at the factory behind him and grimaces. "Everything in there is obsolete," he says of the Buick engine plant. Taylor has spent 30 years there, and at 59 he's nearing retirement. It's a good thing too, since the plant won't be running much longer. General Motors plans to shut it down in 2008, one of nine factories the company aims to close, eliminating 30,000 jobs. Taylor is surprised the plant has lasted this long. "We have to put buckets under the machines to catch the leaking oil," he says. Buick City, where he works, was once a vast manufacturing complex more than a mile in length. It's now mostly a desolate field of crushed stone surrounded by parking lots too big for GM's shrinking workforce. If you didn't know you were in Flint, Mich., you might think you were at an old Soviet factory that made nameless products no one really wanted.[/quote]

Wow, that's a cute way to paint GM as an unreliable, outdated ENEMY-like company.

[quote]Yet GM can't seem to make money in its core business, manufacturing automobiles at home.[/quote]

Along with every other AMERICAN industry... Gee, you think something might be amiss with that statement?????!!! That maybe someone in Congress should do something to level the field?!?!?!?!?!

Gee, I just don't know... (Sarcasm)

[quote]The company's problems run so deep that only a major overhaul could do the job--and then only if a smooth road lies ahead.[/quote]

Yep... That's right. Just give up now GM... According to this article you're just going to, and I quote: "undoubtedly...shrink" into nothingness.

[quote]It may sound obvious that GM needs to sell cars that people want to buy, but that's at the top of Wagoner's list of challenges. Wall Street is uneasy over GM's production plans, heavily weighted toward light trucks at a time when consumers are veering away from gas guzzlers. The overreliance on big vehicles is partly a result of bad luck. GM execs have admitted they never anticipated gas prices rising as fast as they did during the hurricane season, when a gallon of gas cost more than $3 in some regions. Yet GM relied for years on its SUV sales for profits--and underinvested in cars--which seemed smart until the bottom fell out. Says Meyers: "They made a mistake to go with the big guys." Goldman Sachs cites GM's launch of models like the 2007 Chevy Suburban as a "key negative" in Wagoner's turnaround plan, with the market for large SUVs expected to slump 8% next year. GM promises that the new models will be 10% more fuel efficient, be laden with more luxurious interiors and feature a smoother ride.[/quote]

2 comments on this.

1) It should've been PAINFULLY obvious to GM that they NEED NOT forsake the car side of the business.

2) GM has incredibly bad luck... If it can go wrong, it WILL go wrong at the "tubes" hence the sky high gas prices.

[quote] The Japanese companies began developing hybrids in the '90s, when Detroit scoffed at the technology as economically unviable. [/quote]

And to a logical person, READ: not someone who is easily drawn in with the 'happy' marketing, it STILL is unviable and most certainly IS NOT the solution to our environmental or conservation problems.

[quote]"GM's reasoning with hybrids was, Why bother when trucks are selling?" says Matheson.[/quote]

WOW! Vilification at it's best! "We're big bad GM and we don't care about hybrids 'cause we're too dumb to see past profit."

Call me a cynic, but I think there was a stronger business case against hybrids in place than this. <_< I'm sure GM weighed out the advantages and disadvantages and at the time were widely viewed as correct (I remember all of the anti-hybrid editorials in the rags that all the media so often seems to gloss over and forget--but then again, they're the media, they go with whatever side of the argument sells)

I'm tired of the hybrid buzz... Toyota and Honda simply got lucky because fuel prices skyrocketed... End of story. Had that not happened, the Prius would be just a smaller blip than it is now, on the automotive radar screen.

Toyota has good luck; GM bad luck.

[quote]Toyota put hybrids on the market even when the company knew they wouldn't make money right away. "Detroit doesn't think that way,"[/quote]

Umm, yeah.. So?

If I were struggling to make money in the first place, then good business sense would dictate that I not waste my money on a project that automatically meant I would take a loss... You don't have to be brilliant to figure that one out.

AND, I'm sure Wall Street would've held "Detroit" accountable for every penny that program lost constantly smearing their name (Just like they're doing now, in this very article in fact)

[quote]What really scares Wall Street is the prospect of a Delphi strike. Goldman Sachs estimates that a Delphi work stoppage could shut down GM factories at a cost of $2 billion a month, causing GM to burn through its cash reserves at a deadly clip. "A strike could push them over the edge," says Steven Szakaly, an economist with the Center for Automotive Research. Unions representing Delphi workers have described the bankrupt company's latest offer--cutting wages from an average $27 an hour to $10.50 for production staff--as "insulting," and U.A.W. chief Ron Gettelfinger has described Delphi boss Robert Miller as a "rogue." The U.A.W. last week filed a protest in bankruptcy court over a Delphi compensation plan that would award top execs up to $500 million to stay on the job. GM, caught in the middle of the dispute, is likely to try to broker a deal.[/quote]

LOL... Good 'ole UAW... They won't stop until they're ALL out of a job! Heck, why not? Isn't that what unions are for anyway? To stick together? You know, even right up to the unemployment office after they've bankrupted their industry.

[quote](GM is on track to sell more cars overseas than in North America for the first time this year.)[/quote]

Not cool, but not surprising either with GM's conquests in China and Latin America.

[quote]But some analysts think that's overly optimistic, since foreign competitors are coming on strong.[/quote]

That's right GM, just quit while you're ahead <_<

[quote]Buick may be a stodgy brand, but in recent years it has edged Toyota in quality surveys, suggesting that if shoppers can get over Buick's grandfatherly image, they actually enjoy its wheels. "GM is building some of the best-quality cars in its history," notes industry consultant Ron Harbour. Now Wagoner has to make those cars sell--be it with edgier design, more sophisticated marketing or a combination of both, taking a cue from the revival of Cadillac.[/quote]

Amen brother!

And why is it always Harbour that is giving GM props? Is he the only media figure that likes GM? (Don't answer that)

[quote]and to act like the company is obsolete, and has no place in this world is blasphamy...[/quote]

Then I guess 40-60% of america is blaspheming. People simply don't care... "As long as I'm okay, then screw everyone else!" "I don't buy GM, and I'm okay because my job doesn't depend on it" "Toyota, our hero, will make up the lost jobs"

Oh and I agree BTW.

[CARBIZ]

Goblu, you raise two interesting points. 1) GM didn't have any foreign competition in the '60s and '70s, but then Toyota doesn't have any foreign competition on its home turf now. 2) the market is fragmenting for most consumer products, making marketing a nightmare. Just look at how CBS, NBC and ABC enjoyed a virtual stranglehold on television for over 30 years until cable came along. Now look at that market. I think most of us agree that 20% market share is where GM is headed and it needs to get used to the new reality and prepare for it. How it can get there without killing itself in the process will be the challenge.

[drew770]

This has to be the perfect storm for GM. Their bread and better money makers the SUVs sales are tanking and there isn't a worthy Camry Accord fighter out there. We keep hearing that GM has some great next generation cars coming in a few years but it is getting harder and harder to just stay positive. Especially since GM is notorious for screwing things up. Plus, the doom and gloom media is just adding to the fire. The question is why did it take Wagoner so long to start trying to turn this ship around. And why is he still getting the board's support?? WallStreet for years has said that GM has to many brands, to many plants, and to many employees. GM has mismanaged this situation and now there is a need for new blood in the corporate office. I remember why Apple was dead in the water and then they decided to bring back a visionary (Steve Jobs). He had to guts and the vision to cut where he needed to and motivate his design teams to give us something no one else has. Now Apple is profitable and a media darling. GM needs a visionary of it's own!!!

[Angry Dad]

Isn't a worthy Camry fighter? I'm sorry but the Impala is quite capable. The problem isn't product, it's image. I'll say it, the press has got their lips so firmy attached to the Prius exhaust they will need to be surgically removed. But has the same hybrid happy (or sappy) bunch noticed the entire rest of the hybrid populace is in the tank? Toyota is not perfect, lord knows the sludge debacle proves that but their PR capabilty is awfully good. GM's problem is that PT Barnum was completely right, there are suckers born every minute, we are a nation of idiots and the dumber you are, the easier you are to lead. Now this is my politically incorrect closure. The biggest mistake GM has ever made was aligning itself with Oprah. Let's face it, this entire nation has become Oprahized. We are pussies. We let a brainless self centered witch become a social standard. And she has totally emasculated this entire nation. Nobody has any gonads anymore thanks to this person. Now how can this be bad for GM? GM now has no nads. But in a no nad world, Toyota and the other sheep that fall for the phony image think that a completely castrated car company (Toyota) is just fine.

[Guest buickman]

GENERAL WATCH NEWS

Reprinted from NewsMax.com

Monday, Nov. 28, 2005 10:21 a.m. EST
GM CEO Secures $4.6 Million Pension


As General Motors slashes jobs, closes plants and battles to avoid bankruptcy, the company’s CEO has set up a retirement plan that will pay him at least $4.6 million a year – nearly twice his current salary.

G. Richard Wagoner, who the New York Post calls "the greediest, most undeserving CEO since Chainsaw Al Dunlap,” was named GM’s chief financial officer in 1992, when the company had a global payroll of 750,000 employees.

Under Wagoner’s command as CFO and, since 2000, CEO, the carmaker has seen its employees dwindle to 324,000.

Now the company has announced plans to cut 30,000 more jobs and close 12 North American plants, and Wagoner is denying rampant rumors that GM is preparing for file for bankruptcy protection.


The carmaker’s pension fund is under-funded by more than $45 billion, according to the Post. But Wagoner has nothing to worry about. He has a Supplemental Executive Retirement Plan, which allows a company to use after-tax dollars "that rightly belong to shareholders to shower riches on the CEO instead,” the Post reports.

Best of all for Wagoner, this payout comes from funds that are separate from those underpinning the retirement programs of ordinary workers, which means he’ll pocket his $4.6 million-plus a year even if GM files for bankruptcy.

News of the CEO’s big pension payday comes after Delphi Corp., GM’s largest parts supplier, collapsed, jeopardizing the pension fund set up for the company’s 30,000 workers.

But the company’s CEO J.T. Battenberg, like Wagoner, won’t face financial hardship after he departs the firm – he walks away with a $1.6 million-a-year retirement package.


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[FUTURE_OF_GM]

The problem isn't product, it's image.

That's GOSPEL right there!!!

If GM could LEARN to market, they would probably be doing A LOT better right now.

I'll say it, the press has got their lips so firmy attached to the Prius exhaust they will need to be surgically removed. But has the same hybrid happy (or sappy) bunch noticed the entire rest of the hybrid populace is in the tank?

PRICELESS!!

Toyota was NEVER the hybrid leader, Honda had the Insight LONG before the Prius came along. Yet, neither Honda, nor Ford, nor GM get NEARLY the credit that Toyota has milked.

Toyota is not perfect, lord knows the sludge debacle proves that but their PR capabilty is awfully good.

GM's problem is that PT Barnum was completely right, there are suckers born every minute, we are a nation of idiots and the dumber you are, the easier you are to lead.

EXCELLENT and accurate.