Farewell to General Motors

An old friend is leaving us. General Motors will soon be gone. It isn't a surprise, but certainly a disappointment. That they are bankrupt is a given, despite whatever taxpayer dollars are poured into it. GM is a casualty not of a sick economy but of its own arrogance. Previously in this blog I spoke of Dr. W. Edwards Deming. He was the mind behind the nation's efficient war machine that defeated the Axis powers in WWII. Then, the Army asked him to go to Japan to help with the reconstruction efforts there. His ideas on statistical process controls impressed the Japanese and soon transformed their industry. He is still revered in Japan today. The American auto manufacturers soon abandoned the lessons of Dr. Deming and later rejected his approaches to their own detriment.

It might interest you to know that when Ford got into trouble in the early '80's, they reached out to Dr. Deming. They were, of course, shocked to discover that management, not costs, were the source of their failure. Soon after, quality improved and the highly profitable Taurus / Sable models hit the market. Isn't it interesting that out of the "Big Three", only Ford seems to be weathering the economic tsunami relatively well? And of course, the Japanese automakers, though reeling, will be just fine.

It is with this in mind that we will watch the weeping and gnashing of teeth in Washington and Detroit as despite the mountains of cash poured into GM, it will end up in bankruptcy. It can't survive because it never learned how to compete. Its management is lost and unions don't get it. The UAW will keep holding out for the most it can salvage from its agreements right up to the time it loses everything. The utter stupidity of the union is surpassed only by the "whistling past the graveyard" act of our politicians.

There is always the conversation of how America has lost its leadership and manufacturing base. Between Detroit and Washington, it was largely inevitable. Taxing industry at the highest rate of the industrialized world, legislating rules that shackled our corporation's ability to compete globally, along with myopic management all led to the demise. What will be left, at best, will be boutique manufacturers much like what evolved in the steel industry. Even Ford, to survive, will be a much smaller and focused auto manufacturer. From the current actions of our leaders, the reactions to the economic conditions will unlikely change anytime soon. We have not learned the lessons of the "Lost Decade" in Japan during the 90's. Sadly, we will repeat their mistakes.