Monday, June 01, 2009

Good Riddance, GM. Long Live the "new" GM.

Today, in an event that has been 50 years in the making, General Motors filed for bankruptcy protection

There is one feeling that is overwhelming me right now: Good Riddance. 

Good Riddance to the GM that invented the idea of planned obselecence. This was the absurd notion that a great way to make money on building cars, was to make crappy cars that fell apart in 3 years, thus forcing your customers to buy new ones. This decision haunts the Detroit Three to this day, because even as they have now caught up to Asian automakers in the quality of their cars, their perceived quality is still lower.

Good Riddance to the GM that conspired, along with the oil companies and the tire makers, to buy up and eliminate America's rail-based street car lines, in favor of busses which would sit in traffic with cars and thus drive people into their own cars. These street car lines - essentially light rail lines of the day -- existed in every major Ohio city before 1950, and would be worth hundreds of billions of dollars if they still existed today. 

Good Riddance to the GM that decided to pay its workers less now in exchange for hugely expensive pension and health care benefits in the future simply because those future obligations did not need to be listed on its balance sheet until an accounting rule change in the early 1990s. This short term gain for long term pain has put GM in the difficult position it is in now because those benefits now amount to as much as $1500 per car in expenses, expenses that its competitors need not pay and instead plow into R&D which allows them to build superior cars.

Here's hoping the new GM will be a much better car company. Here's hoping the new GM finally abandons the 1960s-era pushrod technology of its engines for the smaller more fuel-efficent engines its competitors adopted long ago. Here's hoping the new GM can build excellent small cars that not only can compete with the Honda Civics and Toyota Corollas out there, but also be profitable, too. Here's hoping the new GM will build plug in hybrids that will reduce our oil consumption and greenhouse gas emissions.

But for right now, to the old GM, I can only say, "Good riddance."

1 comment:

Bill Oneill said...

Good Post Nick. Let me add another generation to your thoughts. In the 60's if you were in college you either owned a VW bug or knew someone who did. It was fun to drive and a status symbol to own. You made a statement by owning a VW that you were educated, knew something about quality, and could think on your own. How did GM respond? Why with the Corvair of course. A truly worthless piece of junk. Now that my kids are out of college, the pattern has been repeated. In the 90's, a mere 30 years later, anyone who went to college either owned a Honda Civic or rode in one. Fun to drive, high value status symbol. And GM's response? Who could forget the Chevy Cavalier? Everyone. You're right Nick. Goodbye to the old GM....and welcome to the new GM....may you learn from your own past. Bill Oneill