As I wrote of GM's obsession with the same wrong issues nearly six years ago, "unless lightning strikes the Ren Center in Detroit, sparking a miraculous enlightenment, this move is just one more giant step backwards in what can only be the eventual demise of the company..."
Predicting their eventual bankruptcy, and that government relief of legacy costs would not save them was no great feat of prognostication. It was clear to see then – just as clear to see now. Lightning hasn't struck and it is painfully obvious the bailout did not save GM – it merely prolonged their inevitable, slow, painful death.
The word came out that GM has 122 days worth of trucks on dealer lots, compared to a 'normal' figure of 78 days, and 79 days worth of Ford inventory. It is deja vu all over again.
"We're managing the business to match production with demand in the marketplace. Nothing in the last few months that we have done would indicate any different," said Don Johnson, GM vice president of U.S. sales. Don – no you are not. Don't be stupid … and stop assuming the rest of the world is. If production were matched to demand you would have stopped inflating your sales number by pushing trucks on dealers a month or more sooner. There is no demand pull in GM's thinking – at least none strong enough to overcome GM's obsession with short term financial results.
GM's problem has long been its financial obsession, and the utter failure of management to see themselves as a manufacturing enterprise that will live or die on the basis of its manufacturing management. While Ford turned itself around with the leadership of an operations guy, and Toyota and Honda keep forging ahead under strong operations leadership, GM has gone from bad to worse. A Wall Street focused management team has been replaced with a Wall Street obsessed management team of the government's choosing.
GM is led by a chairman who made his bones – and a lot of money for himself, as well as his cronies on the Street - by growing the top line of telecom companies to staggering heights – but those companies never turned a profit under his leadership. A master of numbers games, but not of of creating anything of lasting value. The Obama administration put a team comprised from top to bottom of financial people over GM – not a manufacturing leader among them. The people in Washington never understood – GM's problem wasn't a lack of clever financial management – it was too much of it. Sending even more clever accountants to Detroit was the last thing needed.
Kevin wrote of GM's obsession with the sales number, regardless of its impact on the profit number or sustainability in August of 2009 … and he referred back to his criticism of them for exactly the same thing in January of 2007 … long before the bankruptcy and bailout.
The most telling part of the story is the explanation for the higher truck inventory – they "require more inventory than the industry standard of about 60 days in order to meet demand for different combinations of weight classes, cab types, engines and trim levels." Small lot sizes, quick changeovers, flexibility and cycle time excellence – are the fundamental lessons for manufacturing Toyota taught more than 30 years ago; lessons lost on the money and marketing men running GM then … and now.
In November of 2005 Obama was less than a year into his senate term, Bush was early in his second term, and the notion of the government taking over GM to get them out from under their legacy costs was beyond anyone's wildest imagination; I wrote, "it would be less frustrating to be one of those Detroiters or Wall Street types who honestly believe that all GM needs to get back on top is a hot new car design or for the government to somehow take them off the hook for the legacy costs. While such dreamers are hopelessly naive, at least they have hope."
Apparently hope is running out in New York, as the Wall Street Cheat Sheet described GM's inventory as "stacking future earnings onto balance sheets this year, in a desperate effort to sustain the belief that their companies are on the rebound."Few outside of Detroit, New York City or Washington DC believe GM is any different now, after all those billions of taxpayer dollars spent to give them a second chance, than it was ten years ago.