It was a sad day Monday when GM filed for bankruptcy. Once an American icon of manufacturing might and technological expertise (there was a time when, below the line that underscores GM in its logo, it read: Mark Of Excellence), it’s been reduced to a pale imitation of its former glory, its executives reduced to going hat-in-hand to the government for help and spouting hollow praise about how bankruptcy and government control are really, really great things.
I admit to feeling less sympathetic to GM as the story unfolded. The actions of some executives were embarrassing; the unions were as confrontational as ever; all the while GM was shedding jobs and capacity anyway.
But what appeared to be coming since the second half of last year was still worrisome and sad. A loss of such a great American company was a loss for the United States. The economic and psychological impact of such a failure would still be huge, especially in this economy. And growing up in an area with a large GM assembly plant and several large supporting companies left me with additional emotional ties. Where I’m from, it’s tough to not know someone who could base at least part of his job on GM.
However, for years GM’s demise could be envisioned because of the stories heard about the great-paying jobs at GM and some of the support companies. It’s natural that people aim to maximize what they earn, but it seemed that the union was going too far. The same word we hear today about government programs such as Medicaid/Medicare is the same word that applied to the brewing situation at GM, unsustainable. Sooner or later the golden goose was going to be destroyed and that day has arrived.
This does not absolve management. I remember a while back reading in a union publication something like: their (GM) designs, their plans, their tools … our fault? Management should not be faulted for making big SUVs; customers wanted them and they were very profitable for the company. It should be faulted for not making the tough decisions in a myriad of other areas, from negotiations with the unions to better quality products earlier on. Just as the unions grew fat with unrealistic contracts, GM grew fat on past success and a less competitive marketplace.
This is why, in addition to many other reasons, the government’s control of GM is so wrong.
Politicians are notorious for being unable to control spending because they believe it could have a negative impact on their re-election chances. Politicians love to play favorites. They also relish the idea of directing or requiring people to do what they think is best. We can only imagine what this kind of thinking will mean to the “new” GM and remaining car companies. Ford, which has stayed away from feds bearing gifts and not sought bankruptcy, has started talking about this.
Indeed, the way this process has unfolded, the saddest part about the GM bankruptcy is not the bankruptcy itself (which is not a true bankruptcy but should have been). It’s what the government has done about it. This is especially true since the government to some degree had a hand in GM’s demise.
We are all, in numerous ways, the poorer for it.
