Monday, June 01, 2009

Thoughts On The Bankruptcy of GM

Being a car guy, I read with some interest the Seattle Times story on the Bankruptcy of General Motors. What I found especially disturbing were the reader comments, and what passes for intelligent commentary. The distainful and polarizing disrespect for opinion seems to be universal, as any reader of the Kitsap Sun blogs already knows.

The obvious fiscal conservatives commenting on this story were quick to focus on President Obama's total inexperience in business, and condem his willingness to take over a major American industrial corporation to further his eco-focused political agenda — as well as bail out the UAW.

The liberals had a field day vilifying their favorite object of scorn, George W. Bush, while going as far back as Ronald Reagan, and blaming him for GM's problems.

In my view, GM has been in a downward spiral since the 1970's — before Toyota, Honda and Nissan began kicking its ass by building cars that were dependable, stylish, and functional, with fit and finish that didn't chip the paint when you closed the door, hood, or trunk, while arguing with customers who complained about such problems. It didn't have anything to do with Bush or Reagan, but everything to do with what the UAW and GM jointly termed "acceptable quality" back in that era. After re-reading the Times posts a couple of times, I came to the conclusion that perhaps many of the posters aren't old enough to have actually experienced any of that, and are simply regurgitating the anti-Republican sentiment their parents indoctrinated them with.

Another poster went on at some length in several posts stating that GM could have solved all its financial problems simply by building eco-friendly hybrid cars, instead of gas-guzzlers. Obviously, he or she is clueless about the law of supply and demand. If gas guzzlers didn't sell in huge numbers, building them wouldn't be profitable. The bottom line is, hybrids don't sell in sufficient enough numbers for an auto manufacturer to be sustainable if that's all they make — a lesson I'm fearful the Obama administration (read, we taxpayers) will learn the hard way once it begins dictating GM's product mix.

Meanwhile Toyota is selling a heck of a lot more Lexus' and full-size Tundra and Tacoma trucks than it is of the Prius. That's why you can get a rebate or other incentive to buy a Prius. Hybrids are simply one component of an overall product mix that addresses the wants and needs of the car-buying public. The main failure of GM isn't that it didn't build hybrids, it's that its product mix was boring, and didn't include a wider variety of cars and trucks that people from all walks of life want and need.

The takeover of GM by the government should scare the hell out every thinking American. GM shareholders were totally wiped out to preserve the UAW's stake in all this — demonstrating the Obama administration's total lack of understanding of how the economy actually works. How many mutual funds do you think held shares of GM for example, and what is the result of their loss of net worth on the economy as a whole? This is the nationalization of a major industrial company by the government. How long before the government starts dictating to Microsoft the functionality of the software it makes?

Finally, according to the Times' story, the UAW will end up owning 17.5 percent of the "New GM." I would have liked to see Obama hand over the entire company to the UAW so it can experience firsthand — and deal with — the economic train wreck it has perpetuated on the American taxpayer.

1 comment:

  1. First time I've read your blog. Saw the link on KPBJ email this morning. You and I seem to think the same way, but you're certainly more articulate than me. Thanks. I'll bookmark your blog and check it regularly now.