by BILL WADDELL
Reasonable and knowledgeable people can disagree on when the GM bankruptcy process began. I tend to think that they embarked on the irrevocable course when they opted to make Thomas "General Motors is not in the business of making cars. It is in the business of making money" Murphy in charge back in 1974, instead of the Edward Cole. Murphy was a career accountant, while Cole was really the last big time technical guy GM has had.
A GM insider recently wrote to me last week and he pins it in the 1980's when Roger Smith did a lot of things, but the GM exec who wrote said that is when the Ivy League MBA's took control and manufacturing became an after-thought pretty much for good.
Regardless, GM shuffling into bankruptcy court has been a done deal, a foregone conclusion for a long time. Kevin and I have written of it many times over the last several years. Five years ago I wrote in Rebirth of American Industry how sad it was to watch GM slide into bankruptcy because they simply will not let go of their ROI, old-school accounting religion; and their inability to see the Toyota Production System as more than a bunch of factory tricks.
In making those gloomy predictions about GM I have been called cynical, negative and a ranter. We can now add 'accurate' to the list. It was no great feat of prognostication, however. Every manufacturing company that clings to the old Sloan/ROI, rather than embracing lean management principles, either outsources all of their manufacturing to China, or goes belly up. GM could never get away with moving all of their auto manufacturing out of the US (although I am sure they ran the numbers and dreamed of how sweet that would be). So belly up it is.
Now that we are able to cross "File For Bankruptcy" off of GM's to-do list, allow me to make a couple more 'cynical', 'negative' predictions:
1. GM will never make a profit again
2. The UAW will sell their shares as soon as they can find someone crazy enough to buy them. They only knows strong-arming management for more money. They will want nothing to do with the accountability for making sure there is money to fight over that comes with being managers. (Read Teddy Roosevelt's 'Man In The Arena' speech and know why, as bad as management is, they still get more respect than the UAW)
3. Congress will have to bail GM out every year until the American people get tired of it, and the company is broken up and sold piece-meal to Ford, Toyota and Honda. (See the history of Conrail – the last major industrial company the federal government 'saved' to see how this is going to play out.) I give it about ten years until this happens.
4. The squawking about dealer cuts will soon be long forgotten, as thousands of GM dealers get out on their own accord. This will start some time next year.
5. Between now and then, the environmental extremists who understand business only as an academic theory in the Obama Administration (and are now in the GM driver's seat) will use GM to push a bunch of environmentally friendly cars – that cost too much, have poor quality, and that nobody wants. GM's management will go along with this because they – like the government experts who are running GM – would rather listen to themselves than to customers. They also think the problem with GM is lack of great products. The notion that how they manage could be the culprit has never, and will never, occur to them. And government involvement in the GM numbers and paper driven bureaucracy is going to make matters worse.
So there you have it. My latest round of cynical, negative, ranting prognostications. Anybody out there wanna bet against me?
William Matheson says
Hopefully, by some great miracle, GM can turn it around. However, I can’t bet against you. Perhaps enough failure will prove to the powers-that-be that the current system will never cut it again.
Steve Harper says
Ugh. I wish this was not the case, but it’s clearly in the cards. If GM isn’t in Deming “crisis” mode now, you are painfully dead-on with your predictions. But hey, if Hyundai can can turn lead into gold, maybe there is a glimmer of hope for GM too.