Tuesday, March 07, 2006

Dear Mr General Motors: essay two

In the last essay I discussed what I think General Motors should do in order to no longer produce the same vehicle five times over. I touched on a few other points, such as quality and naming, and as such I will try not to readdress these issues. I will however point out that in due time those issues will be addressed in due time. For now, I want to speak a little about production of new cars in foreign counties.

Some people I have come in contact with have expressed a concern that the new 2008 (hopefully) Camaro will be made in Canada. I understand that these people would rather have the American Icon built in America, with American tools parts and labor. It should really come as no surprise, however that General Motors (or should I say Chevy if my last essay has any impact) would consider the Canadian plant for future production. The old Camaro was built in that factory so why shouldn’t the new one be built there as well? Unless both of the factories update big time they will be closed, so fret not UAW, the CAW is taking the punches this time.

Why should it matter, in a greater part, if the Camaro is built in Canada if the Aveo is built in Korea, and God knows how many other cars are built in Mexico? Not to mention that many parts in our lovely GM vehicle are produced overseas regardless where the car is assembled. If this is such a major concern of the consumer then maybe they should quite their job and go work for General Motors as a nonunion worker. This way at least they will have the same experience 30,000 people will go through this year.

I am a big proponent of cutting the UAW work force. I do not consider them to be the only factor; however, they are a large factor. In truth, it’s the Management of about 30 years ago that really is to blame for this. A number of years ago, Business Week wrote a three or four page article about this problem, but I will try to sum it up in three paragraphs. Mostly it is just stupid and greedy people who didn’t care about the future after their tenure.

The last time the General Motors/United Auto Workers contract was up for negotiations, GM was making a boat load of money, Honda and Toyota were not even a blip on the screen much less BMW with the famed 2002. The Gas shortage hadn’t happened or was considered a minor upset in an otherwise business as usual world at General Motors. So GM gave with little argument the UAW its demands for very generous wage structure, retirement plan, and health care coverage.

Fast forward to the 1980’s and shit has almost literally hit the fan. Chrysler is in dire straights Ford is trying to figure what went wrong in the 1970’s (remember the Mustang II?) and GM has now noticed Honda, and BMW. Unfortunately for General Motors, nobody cared enough to start, maybe building better more completive cars then, when they had the money.

As a result, cars like the iconic Corvette were unchanged for 14 years, and technology was being used from over 20 years ago. And even with the joy this writer gets when he says that GM’s small block was the best V8 and largely unchanged from the original 1955 short block, it never should have happened. This also set up the proper conditions for major cutbacks in new technology development. One reason is it still works, so why change it, and the other is now GM started losing market share little by little while maintaining the same production. I sometimes hate to say this as it deals with a perfect world and not the real world, but its simple economics. A surplus was created and now efficiency and quality has gone down.

Well what about the CTS, and the G6, these cars seem to do well up against the competition, (the BMW 3series and Honda Accord). Sure they do, but not good enough. My father looked at a Cadillac STS (or Seville Touring Sedan, for the traditionalists) and found the BMW 530i to be the better buy, he leased it for three years, and if he does not a different car, can buy it for less then market due to a low residual after the lease is up. Compare that to the Caddy, with horrible lease deals, and no resale value, he would have to buy the car, all 60,000 dollars worth in cash. I am sorry but very few Americans have that kind of cash on hand.

Why do these cars not make the par? Well mostly due to the ever changing world of automobiles. When the G6 was being developed, a new Accord was also in the works in Japan, so General Motors is playing a game of catch up. They are doing well; don’t get me wrong, but not good enough.

Other concerns are also plaguing the giant that is General Motors. Mostly, and in the fore front of most headlines is the Delphi bankruptcy made innumerably worse by Dana Corp’s announcement last week. I watched in horror as the stocks of both Ford and General Motors tanked and the headlines raced. The current plight of GM is largely as follows:

-A controlling interest of GMAC must be sold to give GM’s checking account the 10 billion dollars it so badly needs to further its restructuring.

-The 2 billion in cash gained from the 17.4% sale of equity in Suzuki added to the hopeful 10 billion gained from a sale of GMAC as well as the cash gained from the sale of other non-core divisions must be spent wisely.

A buyout or early retirement plan should be offered (as it may be soon) to reduce the current labor surplus from the GM job bank.

The job bank must be killed. I’m sorry (not really but I feel I need to say something) but if I am fired from a company, they do not continue paying me for not working.

New technology and models need to be brought into production quicker, do not rush the production as this may result in poor quality control (my friends GMC Envoy was in the shop more than on the road)

I will continue discussing the quality control in my next essay, and let you all know what happened to my 1994 Grand AM.

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