In 1953, a General Motors executive, Charles Wilson, who was nominated to be Secretary of Defense said, "Because for years I thought what was good for the country was good for General Motors and vice versa." Today, GM filed for bankruptcy. As part of the deal the US Government will have a 60% stake in the company. GM is expected to downsize dramatically. GM subsidiaries in Germany (Opel), the UK (Vauxhall), Sweden (Saab) Australia (Holden), Korea (Daewoo), China (Wuling) and other countries.
Monday, June 01, 2009
The causes of GM's woes are a matter of some controversy. Populist politicians in Michigan (including the mayor of Lansing who was on CNN this morning), blame free trade. I disagree (no surprise to the other Citizens on the blog here). GM executives blame the union and the need for the company to pay pension and health care benefits to an aging workforce. I disagree with that too.
In my opinion, the blame for GM's woes lies with GM's executives. GM makes dozens of models of cars instead of focussing on a few (like Toyota, Honda etc do). GM insists on getting government subsidies (in the form of easier emissions regulations and tax incentives) to market large, gas guzzling SUVs instead of smaller, more fuel efficient sedans. GM's response to a reputation for poor reliability is to offer the same car for less money then blame the unions for reduced profitability. Their reputation for slushy handling and so-so road performance was waved off as catering to different American tastes. At no point did they make major changes to the models they offer. The solution was always to either dismiss the bad news/criticism or look for a government hand out.
The Honda Accord and Toyota Camry are the most popular car models in the US because they are well built, reliable and have good performance on the road.
Posted by Raised By Republicans at 6:00 AM