New Camaro spy shots
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To some comments in earlier posts Chevrolet has never been a luxury car. Chevy has always produced the cheap economy cars of GM's divisions. If you wanted the interior build quality you went Cadillac. But still I know people who have their Chevy trucks and have put 400,000 to 600,000 miles on their truck and it is still a good truck. As for build quality I've seen the build quality and quality of design on various vehicles including Porsche, VW, several Chevys, Fords, Dodge, and Toyota and recently acquired my first BMW. And the older GM vehicles especially their trucks were built with far better materials than Toyota, or Honda ever has been. And in reality the only vehicle that might surpass the quality of parts is on the BMW. This is from the perspective of someone who has restored and refurbished older vehicles. It's true that the newer Detroit vehicles aren't made as nice but. Think back to the last Gas crush when Toyota and Honda became popular. GM was forced to make things cheaper to compete with the foreign companies. So before slamming GM or Detroit in general think back to what forced the US companies to make a cheaper product. There were a lot of companies who died over the years because they couldn't keep up. And I've driven new Chevys, a newer Hyundai, a Honda and I think a Toyota it's been a while since the Toyota. The Honda drove nice but I like the Chevys better at least when it has a bigger sized engine. As for dependability GM is great as long as they are maintained.
"If you wanted the interior build quality you went Cadillac."
Good joke
and the "cheaper parts" wasn't because of the economy, it was because of greedy bitches in detroit. Doesn't seem BMW had any problem in the 70's, hell, they were just rebuilding the company then. GM was already established.
My dad's grand prix has a larger engine than my m3. Why does engine size matter?
Good joke
and the "cheaper parts" wasn't because of the economy, it was because of greedy bitches in detroit. Doesn't seem BMW had any problem in the 70's, hell, they were just rebuilding the company then. GM was already established.
My dad's grand prix has a larger engine than my m3. Why does engine size matter?
![[hihi]](/images/smilies/icon_smile_hihi.gif "Hi Hi [hihi]"){kind=icon}
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![[:p]](/images/smilies/tongue.png "Stick Out Tongue [:p]")
Caddy has had some really nice dependable cars in the past unless your going European luxury I can't see any reason to turn you nose up at them. As for BMW having problems with the seventies, they were never competing on that end of the market in the first place. As for engine size certain engine types seem to be designed better and just be better. and for GM their best most dependable engines were V8's they later developed some smaller engines which were also good but at the time the smallest engine GM really offered was a inline 6 which was a good engine, infract one of the better ones.
When the gas crises hit Both GM and Ford had no little engines in their lineup and that is what did them in. Ford may have had a four cylinder design for other applications but GM didn't offer any designs and this is what killed Detroit they had to completely design, build, rush into production and then discover all the little problems the cars had in order to compete so it wasn't till the 80's that the big three had a relatively dependable small engine vehicle and not until the 90's that they had found all the little problems with them. by that time they had suffered and let Honda, Toyota, and Datsun into the market who had always produced small engines and never graduated up to a larger size. But really I don't see why people have a problem with GM after that point most new GM cars will go easily 200,000 miles before any significant problems unless the car isn't maintained. 300,000 in some cases if it is well maintained, especially their trucks.
When the gas crises hit Both GM and Ford had no little engines in their lineup and that is what did them in. Ford may have had a four cylinder design for other applications but GM didn't offer any designs and this is what killed Detroit they had to completely design, build, rush into production and then discover all the little problems the cars had in order to compete so it wasn't till the 80's that the big three had a relatively dependable small engine vehicle and not until the 90's that they had found all the little problems with them. by that time they had suffered and let Honda, Toyota, and Datsun into the market who had always produced small engines and never graduated up to a larger size. But really I don't see why people have a problem with GM after that point most new GM cars will go easily 200,000 miles before any significant problems unless the car isn't maintained. 300,000 in some cases if it is well maintained, especially their trucks.
seriously this is why GM hasn't needed to change practices
General Motors Corp. (NYSE: GM), the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries. In 2005, 9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall.
http://www.gm.com/company/corp_info/profiles/
General Motors Corp. (NYSE: GM), the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries. In 2005, 9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall.
http://www.gm.com/company/corp_info/profiles/
HAHAHAHA Good joke.
The last GM's built that will consistantly see over 125k miles is the trucks from the early 90's, and cars from the early 80's!! My dad has owned several GM's in the past 20 years, putting 70 miles on every day. They just simply DO NOT last, even with proper maintainence. The problem is by the time they hit 100k miles, they are worth absolutely nothing and the repairs will start to add up. Sure you probably could hit 200k miles, but the car is going to be quite LITERALLY falling apart, and nearly undriveable. I also highly doubt GM's past 10-15 years worth of V6 engine designs, sans the 3.8 liter, will last terribly long without major engine maintainence.
They aren't necessarily bad cars, they just simply aren't designed for longevity anymore. Either that, or their "cost cutting engineers" just had more say in the design than before.
Sadly, this pretty much goes for ANY car you buy now-a-days, so if GM brings out some cars that aren't so embarrasing to be seen in (for a non-embarrasing example...this new Comaro), they will make a come-back!! I just don't see that happening.![[screwy]](/images/smilies/icon_smile_screwy.gif "Screwy [screwy]")
The last GM's built that will consistantly see over 125k miles is the trucks from the early 90's, and cars from the early 80's!! My dad has owned several GM's in the past 20 years, putting 70 miles on every day. They just simply DO NOT last, even with proper maintainence. The problem is by the time they hit 100k miles, they are worth absolutely nothing and the repairs will start to add up. Sure you probably could hit 200k miles, but the car is going to be quite LITERALLY falling apart, and nearly undriveable. I also highly doubt GM's past 10-15 years worth of V6 engine designs, sans the 3.8 liter, will last terribly long without major engine maintainence.
They aren't necessarily bad cars, they just simply aren't designed for longevity anymore. Either that, or their "cost cutting engineers" just had more say in the design than before.
Sadly, this pretty much goes for ANY car you buy now-a-days, so if GM brings out some cars that aren't so embarrasing to be seen in (for a non-embarrasing example...this new Comaro), they will make a come-back!! I just don't see that happening.
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Apparently the "cost cutting engineers" have been making major design changes, stuff like redesigning new cars to fit into old manufacturing processes, etc.
I did my final research paper for last semester's Comp. class on why GM's going down the pooper. I'd summarize it, but I don't really remember the details of everything (and I never even really read through the thing), so I'll just post the whole thing here since you guys may be interested.
----------
In the past twenty to thirty years, the American automotive industry has been steadily declining. In 1985, the American Big Three had a 74% share of the American automotive market. In twelve years, it dropped to 61%, or 48% if sales to commercial fleets are not considered (Kerwin par. 4). Many ascribe the U.S. auto industry’s demise to an image of the American workforce, an image that portrays stubborn unions demanding exorbitant wages and benefits and shorter hours at the same time. While it is indeed true that unions are part of the problem, this view of their control over the workforce is not, and the whole of the blame does not rest on their shoulders. With nearly all situations in history, an event has more than one cause. In the case of the U.S. automotive industry, the variant causes of the industry’s downfall may be discovered through a study of General Motors Corp.’s situation. GM is facing many of the same issues that other companies are, or will, face, but with more urgency, so the outcomes with respect to General Motors have potential for setting precedents for the rest of the industry. A brief look into the situation reveals that the problem’s main causes are not rooted only in the workforce, but also in bad management and superior competitors.
Among the most popular blame-carriers for General Motors’ current financial strife are the United Auto Workers. Labor is among GM’s highest costs, and incumbent in maintaining a workforce is the cost of health care. GM spends $5.6 billion each year on health care alone (Durbin par. 4). With the rising costs of healthcare in America, that number is not going to go down any time soon, unless employee and retiree benefits are reduced. In October of last year, leaders from GM and UAW met to negotiate changes to the health care plan. Durbin reports that this attempt to revive GM resulted in approximately $1 billion in cuts from retiree health care benefits (par. 9). Now instead of paying nothing, former GM UAW employees will pay $370 or $752 for individual or family health care, respectively (par 10). But $1 billion is a modest amount when set beside the nearly $6 billion GM spends annually on health care, and especially when compared to the $10.6 billion GM recorded in losses last year (par. 1). More than the current cuts will have to be made to cut health care costs for GM to be able to stay afloat.
In addition to the monumental health care bills, GM must also provide wages for its active, and even some inactive workers. GM’s UAW factory workers make $25 per hour, which is 50% better than the average factory worker’s pay in America (Welch “What My Dad Taught Me About GM and the Auto Workers” par. 5). With 325,000 workers worldwide, the costs of labor really mount up (Webster par. 1). In the October negotiations, UAW did concede to give up a $1 future pay increase, the money from which will be contributed to health care for retirees (Durbin par. 11). Even so, this concession hardly helps GM’s financial situation. Though it keeps the wage burden from getting that much worse, it does not really relieve any burden, since GM still must produce that extra $1 per hour, which will amount to approximately $2,000 per year per worker (Durbin par. 12), to give it to the retirees. What is even worse for GM is that a system is in place that ensures pay for workers, even when they are not working. GM’s current contract with the UAW provides for a “jobs bank,” which “pays salary and benefits to laid-off workers” (Durbin par. 16). This system is especially hurtful because it is an expense for something that will not generate any revenue. Wages are a cost of any business, but with GM’s over inflated workforce and union members’ above average wages and benefits, it is an especially heavy burden for General Motors to carry.
The worst part of GM’s labor situation is that they simply have too much. They employ more workers than they need or can even afford. According to analyst Erich Merckle, GM has the operating costs of a company with a 33% market share, but they in fact only have less than 25% (Durbin par. 13); their costs are disproportionate to the amount of vehicles they are selling. These excess costs do not only include employees, but labor is a large chunk of it. As a result, GM has made plans to cut twenty five thousand jobs by the year 2008, and this move indeed appears to be a necessity (Durbin par. 15). In an attempt to make these cuts, General Motors has announced plans to offer buyouts to employees of $35 to $140 thousand to not only its own employees, but also to employees of spin-off company Delphi (Newman par. 1). The buy out plan faces two problems, however. First, takers of the highest offer will lose their health care benefits, and with health care costs so sky high, it is likely that only few will take the offer (Newman par. 3). On the other hand, those who leave without giving up their benefits will just add to the number of retirees for whom General Motors must provide health care and pensions (Newman par. 4). GM’s union obligations make it so that even reducing the work force may not solve the problem of surplus labor that they face. If that solution can not work, it makes it extremely difficult for any other solution to the problem to exist.
GM’s problems do not lie solely with wage workers, however, as GM’s products do poorly in the market anyway. The inability to adapt to changing market forces is especially damaging in the current industry. General Motors’ forte has for the past twenty years been large sport utility vehicles and trucks, but with current fears of gas crises and astronomical prices, many consumers are looking for more efficient vehicles. Small cars went from a 13.6% population on America’s streets to 18% in 2005, while SUV sales dropped 33% for September; even Hummer sales have suffered a large drop of 32% despite the ubiquity of advertisements on television (Jackson par. 4). In spite of these trends, GM is still pushing the gas guzzlers. Says Jeremy Peters, “Much of GM’s survival rests upon its new line of large SUVs and pickup trucks” (par. 6). GM’s new cars, such as the Pontiac G6 and Buick LaCrosse, have not created much excitement (Welch “GM’s Design Push Picks Up Speed” par. 1). The 2007 Saturn Sky and Pontiac Solstice are expected to do quite well, however, and may be just the type of small, exciting car that GM needs to produce to help turn themselves around.
Consumer perceptions of GM are also contributing to its financial trouble. According to Kelley Blue Book, consumers give General Motors vehicles low marks in areas such as value, fuel efficiency, safety, and style, areas which are important factors in purchasing decisions. GM is taking steps to improve its image, however, and perceptions are getting better. In an attempt to improve style and marketability, General Motors hired Bob Lutz, a former Chrysler “whiz,” in 2001 (Welch “GM’s Design Push Picks Up Speed” par. 1). In 2003, a brief advertising campaign was launched that essentially admitted the poor quality GM has had in the past, then explained how it is much better now (Halliday par. 5). The strategy was controversial, and marketing consultant Al P. Ries believed it to be a bad idea, saying, “It’s like picking a pimple. It only aggravates things” (qtd. in Muller “Road to Redemption” par. 2). But Lutz believed that GM’s reputation was bad enough anyway that bringing up the past would not be detrimental (par. 3), and the statistics agreed with him. A survey by J.D. Power and associates showed that the percentage of buyers who overlooked GM based on quality is greatly declining (Halliday par. 6). GM has also been using other marketing techniques to try to get consumers to reconsider their stance on GM quality, such as the 24 hour test drive (Muller “Road to Redemption” par. 4). Muller also reports that the problem is indeed a perceptual one, as GM has less problems than the other big American companies, and U.S. quality is swiftly approaching that of foreign makes (“Road to Redemption” par. 5). GM’s focus on consumer perceptions is essential for staying competitive, and their realization of that fact is a first step in the right direction.
Some of GM’s perceptual problems may be due in part to poor managerial decisions, which have caused problems in addition to a poor image. In “GM’s Design Push Picks Up Speed,” David Welch relates how Lutz’s attempts to reemphasize design in the GM development process have revealed flaws in GM’s management system. For starters, only 8% of GM’s earnings are devoted to research and development; the industry standard is 10% (par. 3). But Welch also points out that there has been little drive in the company’s design branches. Design decisions have in the past been made by engineers based on ease and cost of construction (par. 6), and studios did not have to compete with their designs (par. 2). Lutz is trying to change all this; for the new Solstice, for example, three studios submitted designs (“Shifting Gears” par. 3). Lutz is also working to improve interior quality, an area where GM has cut corners to try to save costs in the past (“Shifting Gears” par. 4). According to a study conducted by the National Institute of Standards and Technology, the United States auto industry loses $5 billion every year because of “poor supply chain infrastructures” that cause inefficiency and redundancy (“Poor Supply Chain Infrastructure Costly” par. 3). This is another area that GM could stand to improve. Perhaps the most damaging managing strategy GM uses, though is described by William Levinson. He explains that GM “pushes” cars to the dealership, a practice which creates surpluses that must be gotten rid of with big discounts at the end of each model year (par. 6-7). GM is forced to sell its cars with added incentives, virtually eliminating profit.
One of the most smothering factors for GM’s rehabilitation, however, is the rampant success of the Asian companies in the U.S. market. Honda and Toyota especially are growing in popularity. Peters reports that in February, Honda’s sales increased by 8.7% and Toyota is used to seeing gains of over 10% per month (par. 2). GM’s sales decreased by 2.6% (par. 3). Honda’s market share is increasing as well, from 7.8% to 8.5% last year, says Peters, while American companies are losing ground on their home turf (par. 9). Honda’s newest version of the Civic increased sales 37.6% from the old one and helped Honda post record sales in February (par. 9).Nisan is also bearing down on US makes. CEO Carlos Gohsn has promised to boost global sales by 24% by the end of 2007, and new products and fresh spins on old ones in the U.S. are expected to help that goal be reached (Muller “Just What GM Doesn’t Need” par. 2) Merrill Lynch analyst John Murphy comments on GM’s loss of market share saying, “This is not sustainable. The company will not survive if it does not improve that” (qtd. in Peters par. 10). But with the rising popularity of Asian manufacturers in America, it sometimes looks as though General Motors may be doing well to just hold on to its current market share.
Much of the Asian car companies’ success lies in their management strategies and philosophies. Toyota has been especially successful in creating the Toyota Production System, or TPS, a model which many Japanese companies use for its wide range of applications that are not limited to the automotive industry (Monden 1). John Gross explains that the basic goal of TPS is to “pull value through the system” (par. 1), as opposed to GM’s “push” mentality. The concept of pull is another way to express what Yasuhiro Monden describes as “Just-in-Time,” one of the two most basic concepts on which TPS was formed. The other, “Autonomation,” simply means that defects are found in the process in which they were created and not allowed to continue into other processes (5). Monden writes that the basic goal of TPS is to reduce costs by eliminating waste, be it created by “excessive production resources, overproduction, excessive inventory, or unnecessary capital investment,” each of which can be attributed to the cause of waste preceding it (2). This main goal is supported by three secondary and codependent goals of “quantity control, quality assurance, and respect for humanity” (3). A comparison of this model to the way in which General Motors is run reveals part of why the Asian companies are becoming so successful in America’s automotive market. TPS is a model of efficiency. This helps companies like Toyota to operate at lower costs than their American counterparts and increase competitiveness.
With help from their management strategies, Asian manufacturers continue to pump out cars that Americans prefer over their own domestic brands. According to data from the McGraw-Hill Companies, Inc., 45.8% of Baby Boomers and 49.4% of Generation X’ers prefer to buy Asian cars, while 44% and 41.1% buy domestics, respectively (in Kerwin “America’s Taste in Cars”). Kathleen Kerwin and Keith Naughton write that “baby boomers and the generation just behind them favor reliable Japanese sedans…or upscale German cars” (par. 3). That is especially damaging since baby boomers are approaching the age at which Americans spend the most money on cars (par. 4). A number of reasons why Americans may prefer Asian makes to American ones are presented in Kerwin’s and Naughton’s article. One hypothesis is that the pre-war generation holds on to domestic brands because of a war-induced grudge against Japan and Germany; ensuing “rebellious generations” have no such aversion to imported brands (“Beetlemania” par. 3). Import cars also portray a certain image that buyers prefer over the connotations carried by many domestic marks (“Beetlemania” par. 7). More importantly, however, is the earned perception of quality, which is instrumental in hooking buys for generation after generation of automobile. As Stella Otto, owner of seven Toyotas, says, “I’m inclined to stick with something that’s proven good” (in Kerwin “Hard Mentality” par. 2). Asian companies have earned themselves a much better reputation than American companies, and that is one of the biggest obstacles GM will have to overcome in order to turn itself around.
It is clear that competition from foreign companies, especially Asian ones, and errors in GM’s products and management are very valid reasons to be considered with GM’s problems with its workforce as causes of its current financial difficulties. The most debilitating and hardest to correct elements may be those which GM has created for itself over time. The most important aspect of GM’s situation for setting examples and precedents for the industry and other companies to follow, however, is its dealings with labor costs and the United Auto Workers. Ford and Chrysler are expected to follow suit with UAW negotiations (Durbin par. 6), and the whole thing has large scale implications for the future of health care in the United States. GM CEO Richard Wagoner is disgruntled with the amount of the U.S.’s economic output that is spent on sub par health care (Webster par. 2-3). These costs encourage U.S. companies to send many manufacturing jobs to Canada, where a health care system funded by tax payers’ dollars allows GM to save $1380 on each vehicle produced (Webster par. 4). The United States may not be ready to make a move to a centralized, tax funded health care system, but the GM situation certainly illustrates that the issue needs to be considered. One thing is sure, though, and that is that the status quo can not be maintained much longer.
Works Cited
Durbin, Dee-Ann. "GM workers approve health care proposal." Ventura County Star 12 Nov 2005. LexisNexis Academic. 11 April 2006. <http://web.lexis-nexis.com/universe>.
Gross, John. "Implementing successful KANBANS." Industrial Engineer: IE 37.4 (2004): 36-39. Academic Search Premier. 24 April 2006. <http://search.epnet.com>.
Halliday, Jean. "Extended warranty heats up auto sales." Advertising Age 75.44 (2004): 12-12. Academic Search Premier. 22 April 2006. <http://search.epnet.com>.
Jackson, Derrick Z. "GM workers approve health care proposal." The Boston Globe. 19 Oct 2005. LexisNexis Academic. 11 April 2006. <http://web.lexis-nexis.com/universe>.
Kerwin, Kathleen, and Keith Naughton. "Can Detroit make cars that baby boomers like?" Business Week (1997): 134-148. Academic Search Premier. 23 April 2006. <http://search.epnet.com>.
Levinson, William. "On the road again." Industrial Engineer: IE 38.1 (2006): 28-28. Academic Search Premier. 24 April 2006. <http://search.epnet.com>.
Monden, Yasuhiro. Toyota Production System. Norcross, Georgia: Engineering & Management Press, 1998.
Muller, Joann. "Just What GM Doesn't Need." Forbes 177.9 (April 24, 2006). Expanded Academic ASAP. Thomson Gale. Auburn University (AVL). 20 April 2006 <http://find.galegroup.com>.
---. "Road to Redemption." Forbes 171.12 (2003): 54-54. Academic Search Premier. 24 April 2006. <http://search.epnet.com>.
Newman, Richard J. "The End Of An Era For GM Workers." U.S. News & World Report 140.12 (April 3, 2006): 36-37. Expanded Academic ASAP. Thomson Gale. 9 April 2006 <http://find.galegroup.com>.
Peters, Jeremy W. " Both Ford And G.M. Scale Back." The New York Times. 2 March 2006. LexisNexis Academic. 20 April 2006. <http://web.lexis-nexis.com/universe>.
"Poor supply chain infrastructure costly." Industrial Engineer: IE 36.8 (2004): 12-12. Academic Search Premier. 22 April 2006. <http://search.epnet.com>.
Webster, Paul. "US big businesses struggle to cope with health-care costs." Lancet 367.9505 (2006): 101-102. Academic Search Premier. 22 April 2006. <http://search.epnet.com>.
Welch, David. "GM's design push picks up speed." Business Week (2005): 40-42. Academic Search Premier. 24 April 2006. <http://search.epnet.com>.
---. "What My Dad Taught Me About GM And The Auto Workers." Business Week 3958 (Nov 7, 2005): 48. Expanded Academic ASAP. Thomson Gale. 9 April 2006 <http://find.galegroup.com>.
I did my final research paper for last semester's Comp. class on why GM's going down the pooper. I'd summarize it, but I don't really remember the details of everything (and I never even really read through the thing), so I'll just post the whole thing here since you guys may be interested.
----------
In the past twenty to thirty years, the American automotive industry has been steadily declining. In 1985, the American Big Three had a 74% share of the American automotive market. In twelve years, it dropped to 61%, or 48% if sales to commercial fleets are not considered (Kerwin par. 4). Many ascribe the U.S. auto industry’s demise to an image of the American workforce, an image that portrays stubborn unions demanding exorbitant wages and benefits and shorter hours at the same time. While it is indeed true that unions are part of the problem, this view of their control over the workforce is not, and the whole of the blame does not rest on their shoulders. With nearly all situations in history, an event has more than one cause. In the case of the U.S. automotive industry, the variant causes of the industry’s downfall may be discovered through a study of General Motors Corp.’s situation. GM is facing many of the same issues that other companies are, or will, face, but with more urgency, so the outcomes with respect to General Motors have potential for setting precedents for the rest of the industry. A brief look into the situation reveals that the problem’s main causes are not rooted only in the workforce, but also in bad management and superior competitors.
Among the most popular blame-carriers for General Motors’ current financial strife are the United Auto Workers. Labor is among GM’s highest costs, and incumbent in maintaining a workforce is the cost of health care. GM spends $5.6 billion each year on health care alone (Durbin par. 4). With the rising costs of healthcare in America, that number is not going to go down any time soon, unless employee and retiree benefits are reduced. In October of last year, leaders from GM and UAW met to negotiate changes to the health care plan. Durbin reports that this attempt to revive GM resulted in approximately $1 billion in cuts from retiree health care benefits (par. 9). Now instead of paying nothing, former GM UAW employees will pay $370 or $752 for individual or family health care, respectively (par 10). But $1 billion is a modest amount when set beside the nearly $6 billion GM spends annually on health care, and especially when compared to the $10.6 billion GM recorded in losses last year (par. 1). More than the current cuts will have to be made to cut health care costs for GM to be able to stay afloat.
In addition to the monumental health care bills, GM must also provide wages for its active, and even some inactive workers. GM’s UAW factory workers make $25 per hour, which is 50% better than the average factory worker’s pay in America (Welch “What My Dad Taught Me About GM and the Auto Workers” par. 5). With 325,000 workers worldwide, the costs of labor really mount up (Webster par. 1). In the October negotiations, UAW did concede to give up a $1 future pay increase, the money from which will be contributed to health care for retirees (Durbin par. 11). Even so, this concession hardly helps GM’s financial situation. Though it keeps the wage burden from getting that much worse, it does not really relieve any burden, since GM still must produce that extra $1 per hour, which will amount to approximately $2,000 per year per worker (Durbin par. 12), to give it to the retirees. What is even worse for GM is that a system is in place that ensures pay for workers, even when they are not working. GM’s current contract with the UAW provides for a “jobs bank,” which “pays salary and benefits to laid-off workers” (Durbin par. 16). This system is especially hurtful because it is an expense for something that will not generate any revenue. Wages are a cost of any business, but with GM’s over inflated workforce and union members’ above average wages and benefits, it is an especially heavy burden for General Motors to carry.
The worst part of GM’s labor situation is that they simply have too much. They employ more workers than they need or can even afford. According to analyst Erich Merckle, GM has the operating costs of a company with a 33% market share, but they in fact only have less than 25% (Durbin par. 13); their costs are disproportionate to the amount of vehicles they are selling. These excess costs do not only include employees, but labor is a large chunk of it. As a result, GM has made plans to cut twenty five thousand jobs by the year 2008, and this move indeed appears to be a necessity (Durbin par. 15). In an attempt to make these cuts, General Motors has announced plans to offer buyouts to employees of $35 to $140 thousand to not only its own employees, but also to employees of spin-off company Delphi (Newman par. 1). The buy out plan faces two problems, however. First, takers of the highest offer will lose their health care benefits, and with health care costs so sky high, it is likely that only few will take the offer (Newman par. 3). On the other hand, those who leave without giving up their benefits will just add to the number of retirees for whom General Motors must provide health care and pensions (Newman par. 4). GM’s union obligations make it so that even reducing the work force may not solve the problem of surplus labor that they face. If that solution can not work, it makes it extremely difficult for any other solution to the problem to exist.
GM’s problems do not lie solely with wage workers, however, as GM’s products do poorly in the market anyway. The inability to adapt to changing market forces is especially damaging in the current industry. General Motors’ forte has for the past twenty years been large sport utility vehicles and trucks, but with current fears of gas crises and astronomical prices, many consumers are looking for more efficient vehicles. Small cars went from a 13.6% population on America’s streets to 18% in 2005, while SUV sales dropped 33% for September; even Hummer sales have suffered a large drop of 32% despite the ubiquity of advertisements on television (Jackson par. 4). In spite of these trends, GM is still pushing the gas guzzlers. Says Jeremy Peters, “Much of GM’s survival rests upon its new line of large SUVs and pickup trucks” (par. 6). GM’s new cars, such as the Pontiac G6 and Buick LaCrosse, have not created much excitement (Welch “GM’s Design Push Picks Up Speed” par. 1). The 2007 Saturn Sky and Pontiac Solstice are expected to do quite well, however, and may be just the type of small, exciting car that GM needs to produce to help turn themselves around.
Consumer perceptions of GM are also contributing to its financial trouble. According to Kelley Blue Book, consumers give General Motors vehicles low marks in areas such as value, fuel efficiency, safety, and style, areas which are important factors in purchasing decisions. GM is taking steps to improve its image, however, and perceptions are getting better. In an attempt to improve style and marketability, General Motors hired Bob Lutz, a former Chrysler “whiz,” in 2001 (Welch “GM’s Design Push Picks Up Speed” par. 1). In 2003, a brief advertising campaign was launched that essentially admitted the poor quality GM has had in the past, then explained how it is much better now (Halliday par. 5). The strategy was controversial, and marketing consultant Al P. Ries believed it to be a bad idea, saying, “It’s like picking a pimple. It only aggravates things” (qtd. in Muller “Road to Redemption” par. 2). But Lutz believed that GM’s reputation was bad enough anyway that bringing up the past would not be detrimental (par. 3), and the statistics agreed with him. A survey by J.D. Power and associates showed that the percentage of buyers who overlooked GM based on quality is greatly declining (Halliday par. 6). GM has also been using other marketing techniques to try to get consumers to reconsider their stance on GM quality, such as the 24 hour test drive (Muller “Road to Redemption” par. 4). Muller also reports that the problem is indeed a perceptual one, as GM has less problems than the other big American companies, and U.S. quality is swiftly approaching that of foreign makes (“Road to Redemption” par. 5). GM’s focus on consumer perceptions is essential for staying competitive, and their realization of that fact is a first step in the right direction.
Some of GM’s perceptual problems may be due in part to poor managerial decisions, which have caused problems in addition to a poor image. In “GM’s Design Push Picks Up Speed,” David Welch relates how Lutz’s attempts to reemphasize design in the GM development process have revealed flaws in GM’s management system. For starters, only 8% of GM’s earnings are devoted to research and development; the industry standard is 10% (par. 3). But Welch also points out that there has been little drive in the company’s design branches. Design decisions have in the past been made by engineers based on ease and cost of construction (par. 6), and studios did not have to compete with their designs (par. 2). Lutz is trying to change all this; for the new Solstice, for example, three studios submitted designs (“Shifting Gears” par. 3). Lutz is also working to improve interior quality, an area where GM has cut corners to try to save costs in the past (“Shifting Gears” par. 4). According to a study conducted by the National Institute of Standards and Technology, the United States auto industry loses $5 billion every year because of “poor supply chain infrastructures” that cause inefficiency and redundancy (“Poor Supply Chain Infrastructure Costly” par. 3). This is another area that GM could stand to improve. Perhaps the most damaging managing strategy GM uses, though is described by William Levinson. He explains that GM “pushes” cars to the dealership, a practice which creates surpluses that must be gotten rid of with big discounts at the end of each model year (par. 6-7). GM is forced to sell its cars with added incentives, virtually eliminating profit.
One of the most smothering factors for GM’s rehabilitation, however, is the rampant success of the Asian companies in the U.S. market. Honda and Toyota especially are growing in popularity. Peters reports that in February, Honda’s sales increased by 8.7% and Toyota is used to seeing gains of over 10% per month (par. 2). GM’s sales decreased by 2.6% (par. 3). Honda’s market share is increasing as well, from 7.8% to 8.5% last year, says Peters, while American companies are losing ground on their home turf (par. 9). Honda’s newest version of the Civic increased sales 37.6% from the old one and helped Honda post record sales in February (par. 9).Nisan is also bearing down on US makes. CEO Carlos Gohsn has promised to boost global sales by 24% by the end of 2007, and new products and fresh spins on old ones in the U.S. are expected to help that goal be reached (Muller “Just What GM Doesn’t Need” par. 2) Merrill Lynch analyst John Murphy comments on GM’s loss of market share saying, “This is not sustainable. The company will not survive if it does not improve that” (qtd. in Peters par. 10). But with the rising popularity of Asian manufacturers in America, it sometimes looks as though General Motors may be doing well to just hold on to its current market share.
Much of the Asian car companies’ success lies in their management strategies and philosophies. Toyota has been especially successful in creating the Toyota Production System, or TPS, a model which many Japanese companies use for its wide range of applications that are not limited to the automotive industry (Monden 1). John Gross explains that the basic goal of TPS is to “pull value through the system” (par. 1), as opposed to GM’s “push” mentality. The concept of pull is another way to express what Yasuhiro Monden describes as “Just-in-Time,” one of the two most basic concepts on which TPS was formed. The other, “Autonomation,” simply means that defects are found in the process in which they were created and not allowed to continue into other processes (5). Monden writes that the basic goal of TPS is to reduce costs by eliminating waste, be it created by “excessive production resources, overproduction, excessive inventory, or unnecessary capital investment,” each of which can be attributed to the cause of waste preceding it (2). This main goal is supported by three secondary and codependent goals of “quantity control, quality assurance, and respect for humanity” (3). A comparison of this model to the way in which General Motors is run reveals part of why the Asian companies are becoming so successful in America’s automotive market. TPS is a model of efficiency. This helps companies like Toyota to operate at lower costs than their American counterparts and increase competitiveness.
With help from their management strategies, Asian manufacturers continue to pump out cars that Americans prefer over their own domestic brands. According to data from the McGraw-Hill Companies, Inc., 45.8% of Baby Boomers and 49.4% of Generation X’ers prefer to buy Asian cars, while 44% and 41.1% buy domestics, respectively (in Kerwin “America’s Taste in Cars”). Kathleen Kerwin and Keith Naughton write that “baby boomers and the generation just behind them favor reliable Japanese sedans…or upscale German cars” (par. 3). That is especially damaging since baby boomers are approaching the age at which Americans spend the most money on cars (par. 4). A number of reasons why Americans may prefer Asian makes to American ones are presented in Kerwin’s and Naughton’s article. One hypothesis is that the pre-war generation holds on to domestic brands because of a war-induced grudge against Japan and Germany; ensuing “rebellious generations” have no such aversion to imported brands (“Beetlemania” par. 3). Import cars also portray a certain image that buyers prefer over the connotations carried by many domestic marks (“Beetlemania” par. 7). More importantly, however, is the earned perception of quality, which is instrumental in hooking buys for generation after generation of automobile. As Stella Otto, owner of seven Toyotas, says, “I’m inclined to stick with something that’s proven good” (in Kerwin “Hard Mentality” par. 2). Asian companies have earned themselves a much better reputation than American companies, and that is one of the biggest obstacles GM will have to overcome in order to turn itself around.
It is clear that competition from foreign companies, especially Asian ones, and errors in GM’s products and management are very valid reasons to be considered with GM’s problems with its workforce as causes of its current financial difficulties. The most debilitating and hardest to correct elements may be those which GM has created for itself over time. The most important aspect of GM’s situation for setting examples and precedents for the industry and other companies to follow, however, is its dealings with labor costs and the United Auto Workers. Ford and Chrysler are expected to follow suit with UAW negotiations (Durbin par. 6), and the whole thing has large scale implications for the future of health care in the United States. GM CEO Richard Wagoner is disgruntled with the amount of the U.S.’s economic output that is spent on sub par health care (Webster par. 2-3). These costs encourage U.S. companies to send many manufacturing jobs to Canada, where a health care system funded by tax payers’ dollars allows GM to save $1380 on each vehicle produced (Webster par. 4). The United States may not be ready to make a move to a centralized, tax funded health care system, but the GM situation certainly illustrates that the issue needs to be considered. One thing is sure, though, and that is that the status quo can not be maintained much longer.
Works Cited
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My Dad has a 2002 Chevy silverado and as of date it runs just as well as it did when he bought it the only thing that failed was an electrical smog sensor which was covered under the waranty. the truck now has aproximately 75,000 miles on it. As for failures all I have seen fail without warning signs are electrical components. as for the 3.8 v-6's that whole line has been plagued with problems in general I have a 2.8 liter chevy s-10 and when I got it, it had 90,000 miles on it. the engine and drivetrain had been neglected almost no maininance had been done on the truck in it's entire life and as a result it had multiple berrings going bad in the engine and at about 110000 thousand miles it burned out one of those berrings at which time I replaced the engine. At about 130000 thousand miles I encountered some problems with the auto at which time I just converted over to a manual. in hindsight the auto probably only had a bad sylinoid. and over the 50,000 miles I have also replaced the alternator which had a berring going the starter and smog pump. this vehicle has been driven 60 to 180 miles almost every weekday over the last 3 years totaling 50,000. Thats an average of 45 miles a day every day of the year. for a car that had never seen any matinaince in it's first 90,000 miles that is pretty good. though GM's quality has declined since then I have a hard time beleaving that a well maintained vehicle of any brand is going to completely self destruct before it reaches atleast 150000 miles as long as it's maintained.
and if you want a good GM engine take a look at their V-8's, their 4.3's or their stove bolt six.
and if you want a good GM engine take a look at their V-8's, their 4.3's or their stove bolt six.
Well, I wasn't talking about self-destructing. I am talking the overall quality of the car after a certain point. A well maintained toyota corolla, bmw 3 series, etc. at 150k miles WILL be in much better condition than an equally maintained domestic. No way a impeccibly maintained cadillac from 1989 with 182k miles will be in anywhere near the condition my E30 was in.