Blog: GM's hard road
Dave Leggett | 8 June 2005
This industry is a strange one isn’t it? Conventional business criteria and logic sometimes appears not to apply. We love the auto industry’s products, its iconic brands and the carmaking groups that are the Big Swinging Dicks of manufacturing and the business world.
And there is an emotional factor at work that perhaps makes it difficult to see the big picture at times. Industrial overcapacity, low margins and low return on investment – so, what’s new? Global scale corporate institutions don’t just disappear overnight. General Motors still makes more vehicles than any other company in the world. Crisis, what crisis?
Rick Wagoner does not have an easy job and I have every sympathy with him. He has lots of interests to satisfy and I wouldn’t want to be in his shoes right now. He does not want to be remembered as the man who led GM into oblivion, or who presided over the beginning of a long, slow death. And he obviously wants to avoid anything that could be perceived as panic or a loss of control. From where he is sitting, maybe his latest statement makes good sense and any rational being would say the same things.
Yesterday’s speech was mainly about manufacturing efficiency measures and has been met with a fairly muted reaction – almost resignation - as far as I can see. It was a case of steady as she goes: pare down NA capacity and jobs a little further, lay out a brand strategy that at least constitutes some sort of strategy (although it is still clearly cluttered) and keep the pressure on the UAW on healthcare. Slowly but surely, things get better.
I guess the concern is that it is still too little too late, that more radical surgery is needed with a much greater sense of urgency. Corporate history is littered with great corporations that disappeared because they failed to grasp some of the macro forces at work (demand and supply side) that other companies adapted to better. Why is GM doing so much less well than Toyota? Does what Rick Wagoner said yesterday fill you with confidence that the tide will turn?
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