Fortune: Deepening gloom at GM

[ghughes]

"Our government, unlike the governments of GM's foreign competition, does not seem to have a basic grasp of trade and tariffs. Business owners/managers lack any comprehensive plans for future growth and long range planning, and we have sold out to the highest bidder some of our most complex technology thereby allowing foreign competition to own entire industries, (to whit, televisions, cameras, DRAM chips,etc.), which in turn sell those products right back to us while destroying our manufacturing base." - TRUE, but the key in this industry is that the asian taxpayers have spent many, many billions over the years to directly subsidize their car company technology and exporters. Much more subsidies come with playing with the currency, keeping it artificially low. One mention of this support to our key industry and we scream(yet state and local governments pony up billions for the transplants to build here!!). The other salient factor(s) is the lack of predisposition of the american public to buy their own nations goods, something other nations consumers have in spades. Japanese consumers have never bought US cars, even when their industry was tiny and their cars were crap - mid40's thru the early 1970's. GM and Ford need to merge and the government needs to float them loans, period. This is how much of Europe and Japan and Korea play the game. For e.g. the state of bavaria owns a huge chunk of bmw outright.

[ghughes]

"There are plenty of US industries the out-maneuver the competition, all without the help of the US government. " - OK, name me a large, capital intensive, manufacturing industry that does this? Ag, heavily-subsidized, aerospace , ditto. What is left? where are our big manufacturers, genius?

[mgescuro]

Originally Posted by tgunnd39

It is simple historical fact:

Historical? No. Economic? For the most part.

Originally Posted by tgunnd39

1. When our government opens the doors to free trade to foreign competition, the governments of which impose draconian trade policies and measures of protection on imports, and we do not do likewise, then we have a serious problem.

And when domestic companies make inferior products, you can't expect the consumer to settle for the inferior product. That's the other side of free trade.

Originally Posted by tgunnd39

2. When American businesses sell assets and ideas with no long term vision in order to make a quick buck, or because of poor planning, (see, TV, Cameras, IC chip production; the list goes on and on), then we have problems.

That's a domestic issue and goes towards poor leadership.

Originally Posted by tgunnd39

Please note also, that the big three Japanese manufacturer's also designed and built large trucks and SUVs. Are they being classified as lacking vision and genius as GM invariably always is when these events occur? I think not.

Only Nissan and Toyota built the big trucks. Honda did not because they believed that the big trucks wasn't appropriate for their product portfolio. The Japanese get a pass, despite building big trucks because they didn't put all their eggs in the big truck basket. The Americans did. They have no truly competitive small car product out there, and those that are out there, from an options standpoint, just don't have what it takes.
Historically.... the Big 3 are about big cars....Period. Now that time is over. And the Big 3 are stuck in a pit.

[Duramaximum]

I've had it! I am so sick of hearing about how the Big Three (Yes, the Big Three) are going to tank any day now. I would love to be the president of GM for just one day and show them what needs to be done and what markets to pursue.

First off, if you want to kill brands off, don't kill off the brands everyone has come to know and love as "GM's American Brands." You can kill off the ones that most people don't even know GM owns i.e. Hummer, Saab, and Saturn. Yes, Saturn.

How is it that almost every GM brand has an identity crisis? O wait, I know! It's because every time they come out with a decent platform like the Lambda platform, every brand gets its own version which gives you rebadging because no one wants to feel left out. When Lambda first came out I thought they had done a good job of only giving it to certain brands, GMC, Saturn, and Buick. Now I hear Chevy is getting the Traverse!?!?!?! Why??? You are just watering down a great vehicle with a rebadged reputation. The whole thing should have just been a replacement for Epsilon II, aka Equinox and Torrent.

Chevrolet-Keep up the good work, just stop giving it something your other brands already have. Cough-cough-Lambda-cough!
GMC- Diversify it further away from Chevy Trucks, i.e. possibly a deal with Cat for a HD diesel only in GMC Trucks. Cat has gobs of name-brand recognition among heavy-truck guys. I've even heard die-hard Ford guys tell me they would buy a Chevy if it had a Cat diesel. Make it the only competition to the F-450 with an HD 4500; Chevy wouldn't get either of these things.
Pontiac-Stop kidding around and make it the 'performance division!' Drop the G5, G6 (after the G6 GXP runs its course in the market), Torrent, Vibe, and don't you dare give them a rebadged Aveo! Make the G8 your flagship product, bring the G8 ST (or as I like to call, "The Pheonix") to market, get some form of G8 coupe, GTO, or Firebird in the lineup. You don't see an economy platform in Porchse's lineup do you? With gas prices going up, people are going to be buying cars, they might as well be cool ones.
Cadillac- Carry on! Just shoot to be the 'standard of the world' once more.
Buick- Keep pushing for the 'quiet-luxury' crowd. Give it something similar to the Malibu, just more upscale for the Entry-level professional market. Also, can anyone say 'Gran National?' Who says you can't haul-a$$ in luxury? Just ask anyone who owns a Lexus IS. Zeta or Sigma would work well.
Saturn- Here is the catch-22. When I was younger I didn't even know GM owned it. Then along came the Oldsmobile killing, which teed me off! They should have dropped Saturn, and taken its entire product lineup and given it to Oldsmobile. They basically fill the same market position: a nice safe family car that isn't quite in the luxury catagory. However, I will say this, Saturn has established a reputation of saftey and value I'm not sure Oldsmobile had. Maybe I'm too emotional about these kinds of things, but I would have taken Oldsmobile's brand heritage over Saturn's suburban-safety image anyday.

This is just my two-cents, if someone at GM actually takes my advice they can have it for free, just so long as they turn their business around and continue build quality, american, vehicles that are more than just a way to get around, but truly a statement about the individuals driving them and a testament to American entrepreneurism and resolve.

[tgunnd39]

Originally Posted by mgescuro

Historical? No. Economic? For the most part.


And when domestic companies make inferior products, you can't expect the consumer to settle for the inferior product. That's the other side of free trade.


That's a domestic issue and goes towards poor leadership.


Only Nissan and Toyota built the big trucks. Honda did not because they believed that the big trucks wasn't appropriate for their product portfolio. The Japanese get a pass, despite building big trucks because they didn't put all their eggs in the big truck basket. The Americans did. They have no truly competitive small car product out there, and those that are out there, from an options standpoint, just don't have what it takes.
Historically.... the Big 3 are about big cars....Period. Now that time is over. And the Big 3 are stuck in a pit.

Now we are splitting hairs.

History is that which occurred in the past, thus it is history, whether it is economic or not is beside the point.

I go back to we. WE are all responsible.

Folks seem to be missing the fact that I said that.

[Gm_Tooler]

It's hard to take issue with the article. Pretty much to the point(s) I'd say. What I personally see, at the plant level, is confused manangement. With Detroit calling the shots, no one (locally) seems to understand what's going on.

With Rick at the helm GM has continued its a steady delcine. I used to think his firing would drive the stock down as a vote of no confidence. Now I see opposite may be true. With projected losses thru '09, GM needs more than a glimmer of hope. What responsibility does the Board have to stockholders, to act?

[1487]

Originally Posted by tgagneguam

Ah, the new American way of success: can't find a way to survive, file bankruptcy and have everyone else pay your bills! Unbelievable. Thank God the founders of this country didn't think that way; we never would have become the greatest democracy on the planet.



This is fear mongering, and you know it. There are plenty of US industries the out-maneuver the competition, all without the help of the US government. As the way it should be. Today's events didn't occur in a vacuum; they resulted from Detroit's continued lack of execution of a clear business plan, plain and simple.



There are huge numbers of Americans who won't buy American-branded products because those American companies gave up on their customers and took advantage of them for too long. Now, satisfied by their American-made, foreign-branded cars, they won't return; there's simply no reason to return. As long as Detroit perpetuates a woe-is-me attitude, they will continue to slide into insignificance. And when they do, I will rest the blame squarely on their shoulders, where it belongs; don't blame American citizens for the collapse of American companies.

your last paragraph is one of the stupidest things I have ever read on here. WTF are you talking about? No reason to buy antyhing that isnt Japanese? What about styling, warranty, handling and in 2009 superior mileage in I-4 midsize cars? If I can get a Malibu or Aura that looks better than a Camry, costs less than a camry and has better mileage I would get the GM product. The only people who are still insisting that there are no competitive American products on the market are die hard "everything GM does is wrong and everthing Toyota does is right" folks who are incapable of admitting that GM isnt as bad at the "experts" say and Toyota/Honda arent as good. America is a pile on, kick a man while he's down type of place. This country is all about bandwagons and right now the "buy Japanese if you want a good car" bandwagon is overflowing.

[1487]

Originally Posted by Gm_Tooler

It's hard to take issue with the article. Pretty much to the point(s) I'd say. What I personally see, at the plant level, is confused manangement. With Detroit calling the shots, no one (locally) seems to understand what's going on.

With Rick at the helm GM has continued its a steady delcine. I used to think his firing would drive the stock down as a vote of no confidence. Now I see opposite may be true. With projected losses thru '09, GM needs more than a glimmer of hope. What responsibility does the Board have to stockholders, to act?

will the "fire RIck now" folks ever let us know what will improve when he is fired? Will they ever tell us who will be GM's savior and return the company to profitability in a matter of months? If rick gets the ax and GM continues to lose share due to high gas prices and the collapse of the SUV market what will you folks say next?

[1487]

"This is fear mongering, and you know it. There are plenty of US industries the out-maneuver the competition, all without the help of the US government. As the way it should be. Today's events didn't occur in a vacuum; they resulted from Detroit's continued lack of execution of a clear business plan, plain and simple."

yes this is why America is a leader in the manufacture of steel, ships, computers, clothes, furniture, cell phones, appliances, consumer electronics and all the other things we import from other countries. We dont make squat in the US any more and the government is doing nothing to level the playing field for US producers.

[mobyss]

Other people have already said this, but the reality is that GM and Ford are truck and SUV companies, Chrysler is a minivan, Jeep, and Diesel HD truck company, and Honda, Toyota, and Nissan are car companies. Even though each DOES offer models in the other categories, their primary offerings are perceived to be as I just listed.

When gas was under $2.00 and people were able to borrow funny money out of their houses, everyone wanted trucks and SUVs - from GM and Ford.

Now gas is over $4.00 a gallon and the credit party is over, so they want cars - from the Japanese.

The only way GM survives this is to put EVERYTHING into Malibu, Cobalt, and G6 production. Close SUV factories and retool - I know that's a huge job but they have no choice.

One idea that may spark interest in GM's economical cars (which are definitely playing catchup to Hon and Toy) is to give buyers of a GM car a certificate for $5000 off a GM fullsize truck or SUV that is good for 10 years. They could sell it now to someone else who wants to buy today, or hold onto it in case fuel prices crash again as in the late 1980s - 1990s. Instead of offering big discounts on the cars directly, create a secondary market for truck certificates that the car buyers can sell into, and guarantee at least some sales of trucks later on. GM may have to go into "zero profit" mode on trucks and SUVs - which means they have $8k to $12k of wiggle room on every GMT900 they make. There are people who would still jump at the chance to buy a work truck Silverado for $10k, or a Tahoe for $22k, or even an Escalade for $45k.

[Buickman]

Originally Posted by 1487

will the "fire RIck now" folks ever let us know what will improve when he is fired? Will they ever tell us who will be GM's savior and return the company to profitability in a matter of months? If rick gets the ax and GM continues to lose share due to high gas prices and the collapse of the SUV market what will you folks say next?

it is me.

[Ed Arcuri]

I observed in another post that it is apparent that many consumers don't know that the Saturn is an American car. It just might be a good move for GM to advertise Saturn in a way that minimizes its association with GM. There are people who simply will not consider an "American" car.
Does anyone know whether the negotiations with Toyota re:NUMMI include a GM variant of any hybrid produced there?
Frankly, I hope that GM doesn't just cut brands. Brand equity is expensive to build. Despite my hope to the contrary, I do agree that some may have to be eliminated or, preferably sold, owing to the near term problems.
I watched AMC's death spiral and see some parallels here even though GM is much bigger and the times are different. AMC dumped nameplates such as Rambler and Javelin that had some relevance in identifiable portions of the market. While it is true that "Rambler" was derided as stodgy toward the end, what is not remembered is that the little car was considered a sports car by many when it was introduced in late 1949. AMC would not have been able to survive, in all likelihood, no matter what they did. The company might have been a juicier acquisition target, however, if they had concentrated on building small cars well. They reached a point at which no one cared what they built. No one was buying.
That should not happen to GM. It will not if they don't lose track of the goal.
I like the suggestions I see here on this forum. Thank you all for your spirited discussion.
Cheers,
Ed Arcuri

[Buickman]

looks like sub $12 is gonna happen soon. even $5 is too much if Red Ink Rick remains. here come 'da judge.

[johnny smallblock]

This article is a very fair reflection of what's happening. Yes it ignores some bright spots, but even the bright spots haven't been too bright. For example, the Malibu isn't selling half what the Camry does, Cadillac still doesn't have a 3-series competitor (BMWs biggest seller), Pontiac can't get its portfolio in order, Saturn can't stop its sales slide, SAAB is a non-entity, Buick is still waiting for a relevant car, and let's not forget about HUMMER.

Look, I love GM. But there are serious problems, and it's not because of the unions, the article writers or the present management. We're living in a world where every car is well built, and GM won't win people over by making products as good as the other guys, and it is very very difficult to make the products considerably better.

And by the way, Buickman, you have absolutely no credibility. You rag on GM no matter their successes or failures. You have lost the ability to have anyone take you seriously. Maybe your ideas are fine for the dealership level, but getting rid of delivery charges isn't going to fix anything.

[supermoto]

Originally Posted by mgescuro

Historical? No. Economic? For the most part.


And when domestic companies make inferior products, you can't expect the consumer to settle for the inferior product. That's the other side of free trade.


That's a domestic issue and goes towards poor leadership.


Only Nissan and Toyota built the big trucks. Honda did not because they believed that the big trucks wasn't appropriate for their product portfolio. The Japanese get a pass, despite building big trucks because they didn't put all their eggs in the big truck basket. The Americans did. They have no truly competitive small car product out there, and those that are out there, from an options standpoint, just don't have what it takes.
Historically.... the Big 3 are about big cars....Period. Now that time is over. And the Big 3 are stuck in a pit.

Are the US TV's and radios of the 60's and 70's inferior products than a Japanese counterpart? It was more cheap Japanese labor and lack of government support for the US industry that led to their demise. It wasn't a matter of free trade at all.

GM and Ford invested in Europe with factories, engineers and designers that they couldn't do in Japan. The Japanese didn't invest in this country for decades after getting into our market. Is that the free trade you speak of?

Spending billions on new designs and a new factory is focusing on big trucks and SUV's. Toyota did that here and yet it's the Big 3 that are said to have focused on big trucks. It's more a matter of the Big 3 making a relevant product and Toyota not or is that the term that only gets used to criticize Detroit?

Look at all the investment in new platforms and technology that GM has
made in the last 5 years. Sounds like they have made a serious attempt at the car segment and they have better looking products and the Cobalt and Malibu get better mileage than Toyota's equivalents do. GM has focused on all the product segments. Not all their eggs went into one basket. Ask the average Camry buyer if they think a Malibu could even match Camry mileage, let alone beat it. The answer is where the problem is and better product won't solve that.

Look at what had big sales numbers last month. The Camry, Corolla, Accord and Civic. GM has competitive products there. Toyota didn't sell that many Yaris last month and Honda didn't sell that many Fits. Prius sales were limited by battery production capacity. If Toyota was that smart and could see the future as clearly as some think they can, capacity would have been addressed along time ago.

If some of you were really objective you would be signing a different tune. If the Japanese gave us the same opportunity that they expected from us, the situation would have been a whole lot different. Free trade didn't exist and the Japanese took advantage of an opportunity created by our government.