The astoundingly badly run car maker says it won’t declare chapter 11 because “people won’t buy cars from a bankrupt company.” Given that GM’s sales have dropped 45 percent over the last year, how would this be any different from the current situation?
Not surprisingly the “it’s not our fault” argument is echoed by UAW President Ron Gettelfinger: “We’re here not because of what the auto industry has done. We’re here because of what has happened to the economy.”
This would be more believable if GM had been doing well before the credit markets went to hell. Let’s remember that we’re talking about GM here and what it’s track record is like. This is a company that even when it gets a good idea goes out of its way to kill it.
Quoth this great article from the WSJ:
This situation doesn’t stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit’s woes. As car sales plunge — both in the U.S. and in Detroit’s once-booming overseas markets — it’s becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue.
In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.
Remember Saturn? GM started an authentically different company that attained a beloved cult-like status and then all but killed it by not letting it put out new models. Don’t even get me started about the electric car and where the company would be today if they’d kept developing that program they killed after putting $1 billion into it. And then there’s the decades of lobbying against improving mileage standards that — had they been in effect — would have also saved their asses.
GM is also arguing that it’s basically under new management and that the guys who made all those stupid decisions have been replaced. Even if this is true, then let’s hold them accountable for the stupidity just since Rick Waggoner became CEO. For the last seven years their strategy has been, “we’re going to bet it all on the short-term profits to be made from SUVs.” Thus they launched Hummer et al. I’m supposed to trust a bunch of guys who couldn’t figure out that the price of gas fluctuates? Who couldn’t figure out that there was a difference between short-term profits and long-term viability?
Let’s make one thing clear — the term “US automakers” is a misnomer. When someone says they want to “bailout the US automakers” they really mean GM. Ford has said repeatedly that they have enough credit to get through and Chrysler is no more or less a US company than Honda or Toyota. The Big Three is in fact the Incompetent One.
Wait, I will bow to the Journal on this one: they’re going with “The Detroit Three” and that works for me.