Tuesday, November 27, 2018
GM Kills Itself
Yesterday, General Motors announced that it was going to close down five factories in the US and Canada, let 14,000 North American employees go, and cut several car models (including, oddly, the plug-in hybrid Volt and the strong-selling Cruze, a small car). For the second time in a few weeks, I am mad at the same thing that is angering Donald Trump (the first was Mitch McConnell's obstruction of the First Step Act).
Part of my own view has to do with the fact that two of the plants being closed are in Metropolitan Detroit. One of them, in fact-- the Poletown plant-- was built when eminent domain was used to destroy an entire neighborhood. That was just one of the benefits GM sponged from the public, and pales in comparison to the bailout they got from the Obama Administration as the company approached collapse.
The plan is to stop production of sedans to focus on SUVs, crossovers, and trucks while investing in the development of electric cars and car-sharing services. I doubt they will ever get past the "building giant inefficient vehicles" part of the plan. Companies like GM so often get obsessed with short-term profit that they find it nearly impossible to sustain long-term vision. They will just make behemoths until gas prices spike again and they are fully committed to building trucks that use a lot of gas.
GM says they don't want to end up like Sears, which went bankrupt last month after failing to adjust to an online economy. But... there is more to that story.
See, Sears once did something very much like what GM announced today. In the 1980's, Sears joined with IBM to develop the very first online service, which was called Prodigy. It came packaged with a computer I bought in 1988 or 1989, and I signed up for the service. It was really something-- it was, for example, possible to buy airline tickets without a travel agent! It did feel revolutionary. Prodigy then became the first service to provide full access to the World Wide Web.
They did not keep their eye on the ball, though. They sold their stake in Prodigy in 1996 for $200m, and apparently just went on doing what they had always done.
Will GM be able to maintain a sustained vision even when short-term gains pull them elsewhere? I doubt it. And that means that eventually we will have to decide whether we should use tax money to bail them out again, even after they ignored American interests time and again. Will we have the guts to finally hold them to the same kind of accountability that we require for, say, Medicaid recipients?
Comments:
<< Home
Brilliant post! Publish this as an op-ed? I learned a lot from this piece. People need to hear the real effects of GM's decision.
Post a Comment
<< Home
