GM's Problems: Who's To Blame? You Tell Me

[Hurricane]

GM's Problems: Who's To Blame? You Tell Me
By Phil LeBeaucnbc.com
| 28 May 2008 | 08:46 AM ET

It's not often that an e-mail makes me stop and say "Hmmmmm. Do a lot of people feel the same way?"

But, this one from Nathan did just that. He wrote: "They (GM) deserve their tough times, and they deserve to go out of business. As harsh as that statement is, management made disastrous decisions regarding ignoring the car market, ditching electric vehicles, and ramping up truck production."

Nate's comments are strong, direct and got me to thinking, "who really is to blame for the problems at General Motors ?

1) Is it GM's leaders?

On one hand, they have been unable to get North American operations back in the black and the company's stock is at a 26 year low.

On the other hand CEO Rick Wagoner and his team have cut costs in North America by $9 billion and lead a dramatic increase in earnings overseas. Without those profits in foreign lands, GM would be dead in the water right now.

2) Is it the UAW?

On the one hand, the legacy costs of hourly workers, particularly health care benefits, were a drag on GM's bottom line for several years when it was clear the automaker was unable to keep up with foreign rivals.

On the other hand, the union has not received the credit it deserves for making GM's plants more efficient and competitive Yes, whether you want to believe it or not, the UAW has worked with GM to improve the company's operations.

3). Is it America's love affair with trucks and SUVs?

On the one hand, we demanded the big rigs and GM gave us what we wanted. On the other, it wasn't until gas started surging that we moved out of SUVs and into cars.

4) Is it GM's competitors?

On the one hand, Asia's big 3 have picked GM apart by exploiting segments like hybrids and crossovers long before the world's #1 automaker got into those segments. On the other hand, Toyota , Honda , and Nissan are not infallible. They've struggled to crack a pick-up market GM leads with the Chevy Silverado and GMC Sierra.

More here: http://www.cnbc.com/id/24855043/site/14081545

There is a poll on the site, too:

Who is to blame for GM's problems?

__GM's leaders

__UAW

__America's love for SUVs

__GM's rivals

__All of the above

[61BelAir]

GM's leaders are to blame for the sub-standard cars of the past and the UAW is to blame for being greedy. As far as blaming big trucks and SUV's I don't think that has anything to do with it. GM went after these vehicles because there was money to be made, it made good business sense. They ignored the small car market which was obviously a stupid move and are now playing catch-up. GM products are getting better as a result of the competition, unfortunately GM's arrogance of the past led them to believe Americans would buy whatever car the General made regardless of the quality.

[VCDJ]

Who ever is running that company is reason for gm problems. They had 10+ years to make gm profitable and they failed. They lost 10% of market share. Closed down so many factories sold everything that was there to sell and they are still loosing billions. Now gm market cap is 9 billion and toyota is 154 billion. GM focused of truck and suvs for so long and even then they could not make a profit and you would think that they would change their plan and maybe focus on builiding cars so that you have good future. You can not tell me that those two idiots at gm did not expect gas price to rise. Plus gm still is behind in quality. Honda, toyota, ford, nissan they all make higher quality cars then gm. Again another management failure. This is why when gm produces one good car it does not sell well. IT is because gm burned so many people with poor quality cars that people do not trust them any more. Again who is to blame for that? IT is gm management. Those two idiots must go or gm will be history soon.

[VCDJ]

Originally Posted by 61BelAir

GM's leaders are to blame for the sub-standard cars of the past and the UAW is to blame for being greedy. As far as blaming big trucks and SUV's I don't think that has anything to do with it. GM went after these vehicles because there was money to be made, it made good business sense. They ignored the small car market which was obviously a stupid move and are now playing catch-up. GM products are getting better as a result of the competition, unfortunately GM's arrogance of the past led them to believe Americans would buy whatever car the General made regardless of the quality.

They went after trucks and suvs because there was money to be made??? THat is funny. In last ten years how many times did gm produce profit?
I woudl expect it every year since there was money to be made in trucks and suvs.

[LONGHORN]

Originally Posted by 61BelAir

. GM products are getting better as a result of the competition, unfortunately GM's arrogance of the past led them to believe Americans would buy whatever car the General made regardless of the quality.

Bingo............Those GM buyers that left during the late 80s and early 90s are now on their 2 generation Toyota,Honda or Nissan. The Malibu and CTS are on par with the competition and GM is being rewarded with rising sales. So what was GM producing before this? And why would many here expect the American public to buy less than perfect products when GM is NOW producing world class cars?...........Yet many on this site seem suprised.

[Ming]

How they got here...(before the turnaround efforts of the last few years)

GM mentality:

Small Cars - Unprofitable, poor peoples' penalty boxes; throw a few ad dollars at them for PR. Besides, Americans don't want small cars - or at least they don't want them from us. Or at least we don't want them to want them (and for those who do we'll saturate the ad market and stuff their mailboxes with Truck and SUV ads touting them as status symbols until those stingy customers change their minds, too).
SUV's & Trucks - Very profitable; GM's bread and butter; Market, Market, Sell, Sell! Can't survive without them!
Technology and Engineering - Unless it's in a Corvette, no one cares what is under the hood. Market cars like toothpaste or soap; Just keep up with regulations. Reskin, rebadge, resell the same old GM wine in a slippery (or very ribbed, see below) new bottle. Fake hoodscoops and extra cladding trump real performance...unless its a Corvette or a Camaro. Heck, we need at least one performance halo car.



Union Mentality:

Transplants Don't Matter - So Toyota plants aren't unionized, don't want to unionize, and it costs less for non-Union employees to produce reliable cars? So what? I want my 50 bucks an hour that I'm entitled to and GM can eat the cost difference!

[SS3]

Obviously it's GM's leaders. They have been paid millions to manage the other issues mentioned. It is their job to deal with the UAW, to watch the market, to meet the competiton. To LEAD. They have failed to do that, year after year.

[61BelAir]

Originally Posted by VCDJ

They went after trucks and suvs because there was money to be made??? THat is funny. In last ten years how many times did gm produce profit?
I woudl expect it every year since there was money to be made in trucks and suvs.

Obviously you know something I don't. So tell me, how much money does GM lose on every truck/SUV they sell?

[windvale]

I blame GM leadership. Plain and simple.

Until about 3 years ago they consistently took the easy way out, and thought they could cost cut and truck/SUV their way to financial success. They refused to invest in new technologies (calling hybrids a "publicity stunt"), gambled and lost on hydrogen powered cars, caved to the unions every time, and didn't have the balls to deal with their insane 7 brand US structure.

Meanwhile, their competition was busy designing, delivering and learning from advanced cars like the Insight, Prius, Blue Tec diesels, etc. Installing Sat Nav systems and Blue Tooth in family cars. Delivering 5 speed transmissions while GM was stuck at 4 speeds.

Sorry, but that's the way I see it...

[61BelAir]

Originally Posted by SS3

Obviously it's GM's leaders. They have been paid millions to manage the other issues mentioned. It is their job to deal with the UAW, to watch the market, to meet the competiton. To LEAD. They have failed to do that, year after year.

The leaders have definitely made a mess of things, but the union is not guiltless. With multiple threats of strike in the good years, GM had to make deals with the union or lose money in a strike situation. The unions had GM over a barrel and they knew it. They demanded more and more money, more benefits. You can blame the leaders all you want but you have to include the Unions with them.

[Buickman]

one guess who I blame for the Red Ink (....)

[04bonnie]

Basically, all vehicle makes have been the same quality for over 15 years, it's the perception that foreign makes are better. Gm's problems are only the result of false perception that their products are not as good as the competition. The buying public needs to wake up, and support American brands. I don't even fault anyone purchasing a Dodge or Ford, as long as it's American. GM is better, in my opinion, than Dodge and Ford, but there's still nothing really wrong with D and F, just my personal preferance sways towards GM, it's all I've ever owned. Tell you what, with the recent strike, I was wondering if I was going to be able to get an Enclave later this year, or have to buy Ford or Dodge, which I really don't want to do. Hopefully production gets back to where it needs to be on those crossovers.

[tgagneguam]

GM's problems are the result of everyone attached to the corporation: management; the UAW and its members; the dealer network. They share in the success when the company does well, they deserve the blame when it does poorly.

GM's failure is not a result of convenient sources to blame: government; "unpatriotic" consumers; or foreign-branded automakers. In fact, the latter two are what makes GM survive today. Consumers have sent a crystal clear message to GM: give me what I want, or I'll find it elsewhere. Slowly, GM's getting the message. Hence, we now get to choose from top-notch vehicles like the Lambda's, the Corvette, the CTS and to some extent the Malibu. Foreign brands-specifically, Toyota and Honda-have definitely moved GM to up its efforts, too. Hence, we now get to choose from top-notch vehicles like the Lambda's, the Corvette, the CTS and to some extent the Malibu.

[New_Mexico_Sunset_on_Rt66]

Not a simple 'check one box' answer.

But do we really need to go through all this again? OK.

One, we American people are too blame. GM, Ford and Mopar had no competition in the US following the few decades following WWII. Everything GM, Ford and Mopar produced the American people soaked up. In the process, the execs at GM, Ford and Mopar got complacent. And also in the process, the workers at these facilities got used to 'big phat' union contracts. During this period both sides benefited. The companies and the unions.

Two, the 'Oil Crisis' of 1972 hit. Consumers started to look for smaller more economical cars to get around. A small Japanese company, Toyota, fulfilled this need.

Three, as the complacency fully set in in Detroit, the Japanese began to re-engineer American cars and European cars; and offered higher quality than the domestic manufacturers in the 1980's. The "word of mouth" began to spread amongst the American consumer that the Japanese were making good cars that did not break down.

Four, Lexus, Infiniti and Acura changed the landscape foreever, and the real paradigm shift occured in the late 1980's. Execs within Toyota felt the Americans would not buy a "Japanese luxury car" since they had made their mark with small, economical car. But the American leadership of Toyota convinced the execs back in Tokyo that there was still enough 'counter culture' left in the 'Boomer' generation that would buy a Lexus.

Five, the result of these above events has resulted in a positive perception for the Asian producers, but a negative perception for the domestic producers.

This is the position GM, Ford and Mopar find themselves in today.

Strong product is fixing the perception issue.

[VCDJ]

Originally Posted by 61BelAir

Obviously you know something I don't. So tell me, how much money does GM lose on every truck/SUV they sell?

Billions because of those trucks they made crapy cars. SO as a corporation they lost billions and that is something that you know too.
How much money does gm make on new malibu. Transaction price is up 5k and gm was making money on old malibu. So Gm is probably making good profit on malibu. If they produce good cars like malibu instead of just trucks gm would be profitable all the time. SO again who is to blame for this. Should i blame worker who puts together malibu or leadership? ITs leadership.