February 22nd, 2009 by TNM
General Motors is dying.
We all know it, and we watch with muted dismay as a once great American Icon shrivels before our eyes.
As far as I see it, here are some of the underlying reasons for GM’s demise.
The UAW is the elephant in the room that no-one wants to look at. The Obama administration has said absolutely nothing about the strangle hold the UAW has placed on a once profitable American owned and operated company. Prior to the current Administration, Bush and his GOP party likewise were completely silent on the UAW.
Obama, and other democrats as well as those on the GOP side of the aisle have taken billions over the years from the UAW in campaign contributions, placing them at the mercy of the unions. To confront the UAW, and say the gravy train has come to a screeching halt, that concessions in benefits and compensations for their retirees, as well as the active work force must be made, would be political suicide.
This is not a Democrat or Republican problem, this is a U.S. Federal Government problem with lobbyist and big money influence from the UAW corrupting the outlooks and judgment of the people we elect.
- The media and consumer bias.
The media bears some of the burden for GM’s demise as well as other domestic car makers ills. Especially in the print media. Browse through a Consumer reports, or any other publication that reviews consumer purchased products and it is an endless litany of Asian / Foreign products good, US products are bad.
For years now Car and Driver, Consumer Reports etc, have touted the mantra that import name plates are superior to GM, Chrysler & Ford. They consistently harp that the imports are more reliable, get better gas mileage and are better backed cars. They rate them better consistently, based on nothing more a lot of the times, then some so called “car experts” opinion.
I personally have failed to see this. I’ve owned both Chrysler and GM products all my life. I own both now, A Dodge truck, and a Chevrolet Coupe. One is a year old, the other now 7. These are far from the only vehicles I have owned. I’ve had no less than 4 Chevy trucks, every thing from an S-10 to WT 1500’s, and fully loaded Silverados, that performed flawlessly.
One of them had 129,000 miles on it when I bought it, the Odometer had quick working “oh about a year or so ago” according to the owner I purchased it from, and I put another estimated 50,000 miles on that truck. I sold it, and it is still going strong to the best of my knowledge.
In all I’ve owned some 30 different cars in my life, some new, a majority of them used. I had one Pontiac way back in H/S that gave me some issues, it was a mid 70’s built car, and there is no secret that the cars built then by Domestics…were awful. I will concede that point.
However, moving into 2009, GM, Ford, and Chrysler? Their products are every bit as reliable and good as any import, and I will put my domestic name plates against an import any day.
That’s the impression I get from most people these days, they are more or less convinced that anything an American manufacture puts out is inherently worse than an import.
Another myth that seems to pervade the mass media is that imports get better fuel economy than American made cars, which if you’re comparing a Pirius to a Malibu, I suppose they have a valid point however, if you compare a Honda Accord or Toyota Camry to that same GM produced Chevy Malibu, the Malibu either matches or in some cases exceeds the Mileage ratings of the imports.
Don’t ever hear about this in the press do you? Only research, and careful comparisons will reveal the truth of this. And frankly most consumers are too lazy to be bothered to even care, they accept what they see in print and on TV as gospel and there is no changing of their minds.
I rented a Chevy Malibu not long ago, I drove it from Atlanta to Tampa. To say I was pleasantly surprised is an understatement. Like others in America, I really didn’t put much stock into a Chevy Sedan anymore, I needed transportation, and that is what I wound up with at the car rental counter.
Driving that car was fun, I zipped out of Atlanta, and being a bit of a gear head that I am I decided to let the car prove itself to me, and I was pleased both with the power of it, the comfort and the ergonomics and design. After a 400 mile drive I loved the car, and I’d buy one in a heart beat if I had the need for one.
Americans need to take a second look at the domestic automakers, they need to look hard, and they might just come to find out that the Toyota they are driving isn’t any better than that Chevy Malibu.
- The Government at both State and Federal level
The Federal government and governments in states like Michigan need to reduce corporate taxes on GM and every other Manufacturer. They are simply too high. Michigan with it’s hostile business environment is now turning into a ghost town, Detroit and areas like Deerborne are a mess, and the elected officals wallow around in utter ignorance of how to help fix the problem.
And it all comes back to a simple precept, those that ignore history’s lessons….are doomed to repeat them.
Detroit and Michigan should have looked no farther than their neighbors in Ohio, and the now mostly silent steel industry for a lesson on this. 30 years after the collapse of US Steel And others, the once mighty Steel Valley in Eastern Ohio, is still but a shadow of it’s former self. Again cheap foreign goods, and greed from a powerful union as well as greed from the government did them in.
Sadly, Michigan didn’t and now they are reaping the results of it.
Between state, local, and federal taxes, The US has the 2nd highest corporate tax rate in the world, higher than even Socialist based economies such as Sweden. This simply has to stop.The governments are totally out of control and they must be forced to curb their spending.
GM pays billions in taxes as does Exxon, and other huge producers. This is then simply passed onto you me and every other consumer in the guise of higher prices. It’s double taxation, and it could I suppose be considered Dangerously close to a violation of the constitution, as it become taxation with absolutely no representation.
These draconian taxes damage business, they increase cost of products and in the case of GM, add literally thousands to the price of a domestic car and other products.
Pouring billions of taxpayers dollars into GM is not likely to work, as far as I can see.
In the earlier 80’s Ronald Regan broke the Air controllers strike, and the Union that brought air travel to a screeching halt by demanding unrealistic pay and benefits for their members.
Obama and the Congress should take a page from his playbook, and force the UAW to the table. The simple fact of the matter is, the UAW is not making the moves it needs to make to help GM stem the red ink. They make small but meaningless gestures, and consider that as they are doing their part. Sadly they are not even in the ball park, and like a vampire they will continue to suck the life blood out of GM.
If Obama and the Democrats or Republicans really wish to bail out GM they would issue an ultimatum to the the UAW, Reduce your over head or face the possibility of the same thing that happened to the Air Controllers Unions. It really starts coming down to a simple case of common sense. The UAW is a problem for GM, and you cannot fix GM without first fixing the UAW.
Leadership of the country is a huge responsibility, and thus far Obama, and the Democrats are failing miserably by not getting tough with the UAW and forcing their hand. Instead they pour billions upon billions of the taxpayers dollars into the coffers and it winds up right in the hands of, who else? The UAW.
Again I will state, this is not just a Democrat or Republican party problem, this is FEDERAL GOVERNMENT at it’s very worst, they are in the UAW and other unions grasp, and they refuse to confront them for fear of loosing money they use to get re-elected.
These billions upon billions the Fed is pouring out to GM do not help the employees at idle plants, or their families, they aren’t getting any of this money, the Management of GM is not getting this money. The UAW is, via ongoing demands for unsustainable levels of benefits, and legacy pension costs.
Additionally, other than propping up a few UAW robber barons, and their retiree base, this gives very few dollars back into the economy when compared to what would be input should the tens of thousands of the workers now laid off return to work.
I am reminded of a debate I had with BoBo, one of the contributors to both this blog, and my 454monte.com blog. Who stated in no uncertain terms he would not purchase a GM product for the simple fact that he refused to support a Union like the UAW. Sadly he is correct and I think, a lot of people feel exactly the same way about the UAW and domestic car makers. The perception is out there and it is widespread that low skilled workers are making way too much money and the UAW is the one driving that type of pay structure. How true that is open to debate, but that is the perception.
- We as Americans can help GM
Drive a GM product lately? Or have you been living in the world of “Consumer Reports says an Accord is a better car so I won’t even consider a domestic name plate”.
Go try one if you are in the market for a new car, what does it really hurt to at least do a comparison? Other than maybe having to put up with the annoying car salesman, and some time, you loose nothing. But you do stand a chance to gain a quality product every bit as good as a Honda or a Toyota.
If you have stocks, buck the doom and gloom , and take a gamble, throw some cash on GM stock and let it sit. It’s a bargain at the current prices. You stand to gain a lot and loose very little at this point, and you help to save GM.
I would argue that less than 10 years ago GM was doing a bang up business, profits were good, they made good products and still do, and they can return to a viable company.
One needs to keep in mind, when they think of GM, GM does not just make cars, that they do a lot of finance business, via their GMAC Division. GMAC is one of the largest lenders in the land. In fact GMAC holds my mortgage on my home, and they have been 100% honest, upfront and easy to work with.
I digress, Think about that for a second, GMAC loans money on homes, cars etc, and then the Sub-prime mess starts, what is going to happen? GM is going to get hit just as hard and like every other loan provider out there, including Bank Of America and Citi Bank. I would further argue that GM’s current troubles have very little to do with the automotive products they produce.
In the end, it is my thoughts that, Government bailouts, and spending billions to prop up the UAW via confiscation of taxpayers dollars is an utter waste of time money and effort.
GM can be saved, but we the people need to save them, not idiotic politicians in D.C. with Unions yanking their leashes, and a lust for tax dollars that is unsustainable.
TNM