General Motors – The Walls Crumbling Down

General Motors is in a sad state. It is hard to imagine the maker of the Camaro, Cadillac, and Trans Am to be in such a mess. As GM approaches 100 years old, Toyota has recently passed them in worldwide sales for the first half of 2008. Toyota has sold 4.8 million vehicles between January and June, which is up 2 percent from the same period a year ago. General Motors only sold 4.5 million vehicles in the same period. We hear the same diatribe every year when sales fall, economic pressures and labor disruptions in the U.S. market. GM recently posted the second largest quarterly loss in U.S. history, a $39 billion loss.They have also sold off 51 percent of the profitable finance arm of the company. GMAC division was sold, the controlling interest for about 14 billion to a conglomerate of investors headed by Cerberus Capital Management. GM stock has also tumbled this year hitting a 54 year low, it has been as low $8.81 and it has a 52-week high of 43.20. Then we find out they are shopping the Hummer to find a buyer in Russia or China. This is an effort to raise around $4 billion through asset sales. That number seems only like a drop in the bucket compared to the $51 billion they have lost over the last three years. This is a fitting end (if that is true, as most believe federal bailout is coming) to the company that has not been run correctly in years. We point back to CEO Roger Smith from 1980 to 1990. The decisions that were made during this stretch, are what have drove the car company into the ground. We have an unfounded belief that also the creation of ACDelco parts is another reason; GM saw a cash cow in selling parts and no longer was concerned about high quality coming from the factory. When it breaks they could replace it with “Genuine GM Parts.” This made moving manufacturing out of Michigan easier and gave a career to Michael Moore. Out of all this news it is hard to feel sorry for this company even though in 2003 they employed 326,000 people worldwide. The story of the Hummer, which is the car they choose over the EV-1 electric car featured in the movie “Who killed the Electric Car?” is a just another bad choice by poor leadership. In a company with a history of great people like the founder William c. Durant in 1908, great inventor employees like John DeLorean and Charles F. Kettering, it is sad that a board of directors running the company today are no longer car people, but hacks, and have they run the business just that way.

I put the pen to the paper
Because it’s all a part of me

W. Axl Rose 1991