Sunday, March 29, 2009

GM is Done

First they needed billions of dollars or hundreds of thousands of jobs would vanish permanently (BS!). They got some cash and ran through it quicker than expected. Meanwhile some auditors and analysts announced there was no profitable way forward for the company. Now to get more bailout funds, GM's CEO Rick Wagoner has agreed to step-down immediately at the request of the Whitehouse. Huh? What country are we living in? Caesar has given a thumbs-down and the axe has fallen.

GM deserves this since they're chasing government money after years of poor decisions and low quality (yet another post). But I don't see any concessions from elsewhere. How about also canning Ron Gettelfinger, the head of the UAW, whose organization is responsible for the jobs banks (paying people not to work), higher than average wages, sweet pension deals, and ludicrous labor contracts for un-fireable workers? Understand that the UAW used to refer to GM as 'Generous Motors' because they always caved in contract negotiation. This was in part because GM's business model relied on insane production volumes to make any profit (mistake #96423). Any slowdown meant red ink so the union always had leverage. But the UAW also damaged the other car companies and countless suppliers. Sounds like Ron is a lot more culpable. But I suppose he's too busy playing golf at the UAW's $33M lakeside golf resort at the moment. Nevermind.

So what's next? Obama and various congressional Democrats will probably dictate labor contracts and some product decisions. I guess it's already started, really. Soon anything not 'eco' or not built in a prominent Democrat's state will get canned. But reality will catch up with this scheme eventually. You and I probably aren't going to buy future GM cars for the same reasons we're not buying them now and the product isn't going to improve under the government's watch. If you thought GM's current management made some stupid choices, wait until a bunch of lifetime public-sector people with no business experience make decisions by committee.

How about a $50k hybrid Pontiac Aztec?

(Plastic cladding, odd proportions, ugly details, weird colors, low power, bad handling, and a historic sales flop. NOW WITH HYBRID FUEL ECONOMY AND A HIGHER PRICE! COME ON DOWN!)

What if Obama later voids your factory warranty because it saves the government money? Reference continually erroded Medicare funding and the mismanagment of Social Security.

(We inheritted this minivan transmission failure from the Bush administration who failed to do anything about it. On that basis your warranty claim has been DENIED.)

How about a $40k plug-in electric hybrid? You might as well buy one since we'll be buying a piece of each one via subsidies. This is in addition to the bailout cash.

(Man, the original Volt concept was fugly. Good luck getting more the 20 miles on a charge when it's cold out. Sure hope those low rolling resistance tires haul it down in time to prevent that accident.)

Think design quality will improve under government control? Think quality control will improve under an emboldened union? Don't kid yourself.

(A shining example of a modern leftist government automobile, the Russian Trabant. They still looked like this just before the collapse of communism. No, I'm being serious. They were also not known for being reliable. But only the wealthy mid-level party members could afford a car like this anyway.)

So here's the future. At some point no amount of taxpayer cash and Obama administration proclimations are going to matter if no one buys the cars. Revenue will decrease as overhead stays pretty steady except for what's left of management and engineering, who will be sacrificed. We citizens will be greeted quarterly with news headlines that say "Billions More Than Anticipated Needed to Save GM Jobs". Eventually this scheme will start polling negatively and the floor will drop out. Then we'll get to fund a reorganization that should have happened 4-10 years prior. What a joke.


Annie said...

Nice post. Not looking forward to the inevitable.

matt said...

trabis for everyone!!

Anonymous said...

Man, you get into this the way I do about firearms. Maybe the gub'ment will take my guns and give me a Trabis. What a bargian!


Jason R said...

Yeah, I've got a PhD in cars. Just a few community college classes in firearms.