03 Jun GM: Good move or government mistake?
CHICAGO“Now that the government is a major owner in GM, what would you like to see changed at the company?”
Last December, I said that they should have let the market take its course and let GM go into bankruptcy back then.
Nothing is going to change once the automakers get their bailout of billions of dollars. Once they get it, will that change the buying habits of the populace? Is it going to change your buying habits?
Bailouts don’t create customers. They guarantee the status quo to those who should be making drastic changes.
Well, we the taxpayers pumped more money into it to let it gasp a couple of more months. In that time, great strides were made to come to some type of agreed upon deal for its survival, but it really did not come out well.
The company is still shutting down plants and those that thought they were immune to getting laid off are now trying to figure out where they are going to get anywhere near the pay and benefits that they got at GM as many will still lose jobs.
Other union organizations, that have used the auto industry to base their salary and benefits demands on, better see what is happening. The “Gold Standard” of the private sector has become fool’s gold. Salary and benefits have gotten way out-of-hand and deep cuts as well as layoffs have become common because the company can no longer deliver on what was promised.
So do you have your new care on order?
Honestly, how many people are going to go out and buy a GM car to support this renaissance? For that matter, how many people are going to go out and buy any new car to boost the economy?
The economy is still wavering and the key elements that are missing to build a stronger economy are jobs. Without solid jobs that pay a decent wage, no big ticket items are going to be bought. Those that thought the consumer was going to buy our way out of this recession (depression if you are one that has lost a job) are completely wrong.
Stimulus jobs? Those are all short-term jobs in more or less one-shot projects. What happens after the road is paved or the bridge is put up? Some analysts are starting to raise these questions as others still believe that the stimulus will help turn around the auto industry and everyone will start going out buying cars again.
Car markets are stagnant but there are some interesting developments since GM declared bankruptcy. A Chinese company, Sichuan Tengzhong Heavy Industrial Machinery Co., is going to buy HUMMER
This might become a company to watch as China gets a direct foothold into the American car market as well as an established name within the international market.
As for GM, it was also mentioned that they are trying to spin-off Saturn and Saab. Would you go out and buy one right now?
Tranparent urban factories
GM did not run an efficient company. When the comparisons are made, they made twice as many cars as Chrysler, yet had four times as many employees.
If any new plants were built in the United States today, they would look very different and employ a lot less people.
VW’s plant in Dresden, Germany is very different. It looks more like a modern art museum than it does a factory. You have to watch the video on it to get a full appreciation on what could be built in an urban setting no less.
( http://www.youtube.com/watch?v=nd5WGLWNllA )
They began building VW Phaetons there but also build Bentley Continental Flying Spurs which share the same body frame. The Bentleys outsell the Phaetons even though they are double the price. Not many want a $90,000 VW, but many more want a $180,000 Bentley. Go figure.
Could GM build a factory like this in Chicago or Milwaukee? If I saw this being built in an urban setting and quality cars being manufactured, I would gain more faith in GM’ future and the residual benefits promised by the Stimulus/Bailout package.
Carlini-ism: Buying a used car that has already been built saves more energy than buying a new one no matter what mileage you get. More energy is spent building the car – not driving it.
Recent columns by James Carlini
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Watch James Carlini’s interview with the ILLINOIS CHANNEL on Broadband connectivity and economic development which is currently being broadcast to over 1.4 million homes. (http://www.illinoischannel.org/CarliniJames080926.htm)
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.