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"What Killed General Motors?"

Another one of those tabloid headlines I saw this morning on msn.com, and had to comment on.

I hadn't realized that GM was "killed." Considering the world-wide distribution powers GM and Ford both have, I doubt either is in that kind of trouble. But they are hurting--and they always bleed more when gas prices go up, as they are doing right now. The USA is a consumption country, and that means gas consumption has been encouraged--with the deliberate demise of public transportation post WWII and the construction of the elaborate highway system which encouraged a large fleet of cars and trucks.

So, what happened to GM and Ford? Well, they weren't prepared for the first gas crunch in the 70s, and the Japanese began to cut a niche in the market with better gas mileage cars and small trucks. And then the American car companies didn't listen to Demmings and his preachings about quality--while the Japanese did--and suddenly the more reliable cars were coming out of Japan.

The latest nail in the coffin, so to speak, has come with the government's failure to put mpg restictions on SUVs and small trucks--especially those used non-commercially. Without such restrictions, the American companies did not place a priority on fuel efficiency for such vehicles, and, once again, the Japanese --always more in tune with the market--gained the advantage.

It is the gas-guzzling SUVs and small trucks in almost every driveway that are fueling the high cost of gas right now--make no mistake. It's about high demand.

So, are GM and Ford dead? Doubt it. But the government will have to get off its duff and get tougher with higher mpg standards. And the American car companies have to become more market responsive. All this business about carbon emissions may be an opportunity for them to leapfrog the market with hybrid or battery cars and trucks. Carpe diem or die.
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Old 04-29-2007, 05:04 AM
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i thought it was about ****ty looking cars oversized cars with pisspoor interiors... but that's just me i guess
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Old 04-29-2007, 05:07 AM
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Why is it up to the goverment to save GM? Why can't GM realize that they need to change their product marketing and sales effort..along with product changes toward vehicles that are smaller? Their marketing efforts has been a major factor as to why every soccer mom has to have a 10 MPG gas guzzling Subarban.
Old 04-29-2007, 05:11 AM
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Here are Lutz's excuses:

GM...sad excuses. How do I get into Lutz's office to get that job?
Old 04-29-2007, 05:12 AM
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Re: "What Killed General Motors?"

Quote:
Originally posted by hytem
And the American car companies have to become more market responsive.
It's precisely the market that they've responded to. The "normal" car a few decades ago was a rear wheel drive, full-sized car like the Chevy Impala, or Ford LTD. It could tow a big boat. It had a big trunk. Space for six people.

As cars got smaller, people still wanted to tow a boat, and occasionally haul six people. Sorry, a Ford Focus is a lousy tow vehicle.

People aren't buying Explorers because that's what Ford builds- Ford is building Explorers because that's what people are buying.

Gas prices, just like the early '70's, are causing a market shift. The car manufacturers will have to respond.

Another thought- I hardly think of GM as being dead. Toyota has taken over number 1, but only by barely squeeking by GM. Number 2 is still selling quite a few cars.
Old 04-29-2007, 05:42 AM
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Actually i believe that GM and Ford are dead..at least the Ford and GM we have known till now. They must be largely re-created wrt how they do the job, what designs they create and how they react to the market as well as government regulations.

Yes Ford builds Explorers because people buy them, BUT the people didn't create the design that is a gas guzzling pig.

The US auto industry is capable of producing efficient designs in general and providing specialized packages for towing, or construction duty or whatever else.

And workforce costs are an issue. Productivity in all its measures must be focused on including excessive bonuses to the bosses and payments to workers who don't work a full day.
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Old 04-29-2007, 05:52 AM
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you can sell as much as you want, in the end, it's pointless if you loose money on it

look at Porsche, sells nothing compared to GM, but buys huge chunks of VW with cash money...
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Old 04-29-2007, 05:53 AM
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*****ty cars perhaps?
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Old 04-29-2007, 05:54 AM
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Hollywood is still a major purchaser of Caprice Classics though
Old 04-29-2007, 06:36 AM
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You underestimate the danger that Ford and GM find themselves in. I recently read an article that measured Ford's debt and compared it to the company's assets and found that it's debts a little bit more than canceled out its value. In other words, if the company was fairly valued the way most stocks are supposed to be, its stock would be worth $0. The only value to the stock right now is the speculative value of the company as an ongoing enterprise. One that is losing billions of dollars per year.

GM is in much the same shape, although not losing quite as much money now. The problem is that the auto industry is very heavy on fixed costs. If you can carry your fixed costs and sell more vehicles than your break even point, every car sold from that point on makes an incredible profit. GM and Ford do not have the products or the market share to hit that magic point of meeting their fixed costs and getting into the sweet spot of profitability.

The danger is that they might have lost critical mass and are no longer able to sustain themselves.
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Old 04-29-2007, 06:40 AM
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I'll second the "s***ty cars" argument. A friend of mine just bought a Ford truck. It's used, sure, but it's only got 60Kmi on it. So he decides that, since he now has a reliable vehicle, he's going to make a road trip. 100mi into the trip, a high pressure junction in the fuel system fails and the truck dies.

So here he is, having just spent umpteen thousand $$$ on a practically new truck that's dead by the side of the road. He gets it towed to the nearest dealer, but the soonest they can get the part in is Tuesday. What kind of a s***ty road trip is this, anyway?

So with an experience like that, what do you tell your friends? "Don't buy a Ford truck, whatever you do, or you'll end up dead by the side of the road 100 miles from anywhere."
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Old 04-29-2007, 07:01 AM
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GM has the bad habbit of getting a car right and KILLING IT

they did it with the corvair
fixed the rear swing axles and then the drum brakes
but killed the car after they added the front disks in 68-69

Fiero same deal better rear set up pluss better brakes in 88
then killed the car 1/2 way thru the year

then got the alloy V8 in the chevy ss and F-cars
and killed both in a short time after
so had a good motor to use ONLY in vett's

and way tooo many others
almost like they are trying to create classic's
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Old 04-29-2007, 07:33 AM
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I have to agree with djmcmath about Ford. A guy I work with recently bought a brand new F150 and I don't know how many times I have had the "Can you pick me up from the Ford dealer in the morning?" question. Part of the problem seems to be that he will take the car in one day and, despite him telling them what the problem is the previous week when he booked it in, they spend one day finding the problem and discovering that they don't have the part in stock. I'll take him to pick it up after work, only to have to drop it off again the next week when they have the part. Then they've ordered the left hand part not the right hand so we get to repeat the charade again.
So, when my dad tells me he's looking for a truck he gets the same response - "Don't buy a Ford".
My ex-wife has had a similar experience with her Nissan, so it isn't just Ford.
As for GM, I recall the recent post that Souk linked. That was just whining and excuses to me. It seems to me, based on the responses and from what Lutz was saying, that they don't know how to make a product that people want.
I have compared this situation to the British motorcycle industry in the 50's & 60's. The British manufaturers thought the Japanese motorcycles were a joke and that nobody would want to buy a Japanese bike. Unfortunately they seemed to stick with this view long after the Japanese started to turn out some great products. By the time they realised that the Japanese bikes were not only better engineered, more reliable, and they were appealing to a majority of the market it was too late. One by one the British motorcylce manufacturers went under. The only one that has made a comeback is Triumph. How did they do that? By studying the Japanese manufacturing methods, studying the market, and making a good product that people want to buy. For sure they don't sell anything like the quantity that Honda, Kawasaki, etc. sell, but they are at least a viable company.
It worries me that the American auto industry could do the same. I don't think they realise why Toyota are doing so well. Even if they do they try to blame it on regulations rather than trying to find a solution. If they don't wake up soon and change it will be too late.
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Old 04-29-2007, 07:39 AM
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Quote:
Originally posted by Flatbutt1
Actually i believe that GM and Ford are dead..at least the Ford and GM we have known till now.
That's right. As far as being the biggest, most successful, industry leading, most influential auto makers in the world (which they were for decades), they are dead and will never rise again.
Old 04-29-2007, 07:51 AM
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I think there will always be a "demand" problem because of those in charge of the supply. So Ford and GM will be the first of the big manufacturers to suffer because of what they make. I don't think the consumers suffer too badly; they get great deals on the vehicles that burn a lot of fuel to offset the higher costs.
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Old 04-29-2007, 08:06 AM
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Ford and GM are dead because they built the cars that the customers wanted? SUVs and trucks the same size, gas milage, etc, are built by ever major car company. People buy american car. Of course, that isn't a lot of us here.

Ford and GM have mismanaged the business side of the business. They spend too much on labor compared to thier competitors. They have huge retirement liabilities. Huge medical liabilities.
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Old 04-29-2007, 08:20 AM
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1) $hitty car
2) UAW - they cut their own throats

I haven't owned an American vehcile since 1971. I've never had a Japanese car leave me stranded, and I've never bought new. Only been to a dealer for service twice - Once for a steering rod recall; once for a timing belt change I didn't have time to do myself.....BUt, my 911 has been on a tow truck a few times....
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Old 04-29-2007, 08:25 AM
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What killed them, GM in particular, can be summed up in 2 words:

Corporate hubris.
Old 04-29-2007, 08:45 AM
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The hubris and arrogance on the Fourteenth Floor of GM HQ is legendary and has been chronicled in many reports and case studies.

Here's some excerpts from one, with some good parts in bold:

The GM “culture”

GM was such a powerful, dominant company that its cars, and its name, were an American institution. The trouble was, the company was managed like an institution. It was highly risk-averse, chronically slow to change, endlessly bur-eaucratic, and contemptuous of competition.

GM employees were expected to display unwavering loyalty to the GM organization, subsuming their personality to that of the corporate giant. Employees were expected to be “team players,” meaning that they never questioned a decision, never contradicted the boss, and conformed with the corporate stereo-type. One author describes a GM employee driving 40 miles each morning to pick up his superior’s newspaper, and saying he didn’t mind the chore because one day he would be promoted and have someone perform the task for him-.[vi] A second writer tells the story of a GM executive who required his morning orange juice to be a certain temperature, so each day an underling would check the glass of juice with a thermometer.[vii]

Risk and creativity were not in the GM lexicon. A memo circulated by a senior GM executive in 1988 said, “Our culture discourages frank and open debate. The rank and file of GM personnel perceive that management does not receive bad news well.”[viii] Automotive analyst and author Maryann Keller quotes one executive who told her, “If you raised a problem, you got labled as “negative,” not a team player. If you wanted to rise in the company, you kept your mouth shut and said yes to everything.” Keller asserts that the guiding principle of GM corporate life was, “Above all, be loyal to your superior’s agenda.”[ix] This culture was matched by the decision-making process. Decisions were shuttled higher and higher up a hierarchy of committees so that if anything went wrong, nobody would ever take the blame. Orders flowed from the top down; ideas seldom percolated up. It was a system in which no one took responsibility for any decision, so no one had any need to be accountable for one. The same 1988 memo pointed out that fewer than 100 salaried workers (out of over 100,000) were dismissed annually for poor performance between 1977 and 1983.[x] Keller points to a 1980s study by the McKinsey management consulting firm that highlighted the accountability problem. The study detailed how an engineer, faced with a defect, couldn’t simply offer a solution to the manufacturer. Rather, “you have to produce 50,000 studies to show that it’s a better solution, then you have to go through 10 different committees to have it approved.” [xi] The stultifying bureaucracy resulted from the fact that GM concentrated more on “making the numbers” than on making cars. This derived from the dominance of the financial wing of the company.

Here's that particular corporate case study. It's a pretty interesting read.

http://www.thecorporatelibrary.com/special/cgii/cases/cs_gm.html
Old 04-29-2007, 08:57 AM
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Old 04-29-2007, 09:05 AM
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