Osler's Razor

There were a few minutes there where I really was thinking better thoughts about GM. They are taking the Chevy Volt seriously, which is great, and GM does have some great engineers to work on a project like that.

But then I read about what GM management has been up to. Sure, I can see how diversifying their products by moving GMAC into the sub-prime mortgage lending might have seemed like a good idea at the time, but… it wasn’t. It was a terrible idea. Of course, there are federal bailouts for that kind of problem.

What there aren’t federal bailouts for is bad future plans (though I could be wrong about that, as this Republican administration continues to nationalize industries). And how is this for a bad plan: GM, a company suffering from a product line heavy on gas-guzzling SUV’s and a dealer network that is much too large, is considering merging with Chrysler—another company with an SUV-focused product line-up and way too many dealers.

How in the world does this make sense? It could be that GM is unable to obtain credit, and is after the cash Chrysler may have on hand at the moment. If so, that seems pretty short-sighted, given the long-term costs of completing a merger which is going to create a lot of dislocation and almost total overlap.

And the big loser in this plan (besides, in a few years, GM) will be… Detroit. Chrysler and GM both have large plants, engineering centers, and headquarters in and around the city. Sigh. Once again, being from Detroit is like being in love with someone who hurts you the same way again and again, and each time, somehow, you convince yourself that she will be different.