General Motors is still too big.
The number of people already put out of work by the Amazingly-Shrinking General is sickening, outrageous; these workers didn’t bring this on themselves, it’s been forced on them and their families and the businesses where they trade by GM’s own shortcomings and the collapse of the credit market precipitated by the sub-prime mortgage crisis through the banks and Wall Street.
Yet if the Obama Administration really feels that this ritual death and resurrection of GM is so crucial to the economic and psychic health of America, the following part of their plan leaves a lot to be desired.
Even with “four core divisions,” as GM likes to call their new quad of Chevrolet, Cadillac, Buick and GMC, the company’s failed recipe for overcapacity, overproduction and waste could continue unabated within what was for almost 100 years the world’s largest manufacturing concern.
For the past three decades, GM has developed an inferiority complex which saw the corporation go so far as to keep its own name and logo off their Saturn and Oldsmobile Aurora products, among others, yet now they’re hanging onto Buick and GMC for no good reason other than, it would appear, corporate ego.
“Never fail to take advantage of a crisis,” is a mantra of this White House, but what has the president’s Automotive Task Force learned during this exercise? Not much, it would seem, as Buick and GMC will now continue to market “their own” versions of existing Chevrolet and Cadillac products, exactly what all involved claim they’re trying to avoid.
GM (and the White House) must honestly answer this question: Even without considering the manufacturing costs for Buick and GMC, are the marketing, advertising, public relations, executive salaries, transportation, supplier and other ancillary costs worth it when the two divisions have only 183 single-point dealerships between them?
In 2008, Buick dealers sold an average of just 52 vehicles per year; GMC dealers moved 167 pieces of iron that year.
GM in 2008 claimed 13,132 dealers in the U.S. (with its seven divisions, including Saab) selling about 163 cars and trucks per store.
Toyota and Scion combined had 1,235 stores moving 1,589 cars and trucks a year with (Toyota luxury division) Lexus’ 226 dealers pushing 1,158 vehicles out the door.
Get the picture? GM makes too many cars, has too many factories and stores, too many employees, and too many executives, and too much of everything else.
The company has been burning through $1 billion a week in recent months, the costs of shutting-down almost as incapacitating to the corporation as the past 100 years of growing “too large to fail” (and isn’t it strange that while “financial services” firms are dubbed by the government as being “too large to fail,” we’ve yet to hear of a company which actually makes tangible products which has that same quality).
Any continued overcapacity on GM’s part is disastrous for the future of the company; Buick and GMC have no involvement in racing, either, which at least allows Chevrolet some modicum of extra promotional activity (especially if my man Tony Stewart keeps working his magic in NASCAR this year).
Rather than searching for reasons and justifications to keep divisions (and, yes, employees), General Motors must be cut to the very barest of its bones and then rebuilt from there, if possible.
That is, if the White House is indeed serious about getting the “heavy lifting” done now so GM can rise again. Perhaps “saving” the company through Chapter 7 bankruptcy wasn’t the best idea; maybe Chapter 11, with the various divisions sold-off to the highest bidder, would have ultimately made more sense.
Steve Parker has covered the world’s auto industry for over 35 years. He’s a two-time Emmy Award-winner who reported on cars for almost a decade at both KTLA/TV5 and KCBS/TV2. He is a consultant to the NBC-TV show Whipnotic and the show’s companion website, www.Whipnotic.com. He created, writes and moderates the only all-automotive blog on The Huffington Post at www.huffingtonpost.com/steve-parker. Contact Steve through his own automotive issues Web site at www.SteveParker.com.