GIANT NO MORE

Over the Thanksgiving weekend I saw an editorial cartoon in the Santa Barbara News-Press (often referred to around here as the Snooze-Mess), syndicated from the Orange County Register, that depicted a vehicle emblazoned with the General Motors logo, an engine labeled United Auto Workers, and an exhaust tank which read, Revenues.

The exhaust tank was festooned with cobwebs, clearly rendering the meaning of the cartoon: GM’s money woes are the fault of the United Auto Workers.

All I can say to that notion is Bullshit. GM’s problems are bigger than its unionized blue-collar workforce, and to lay the blame for the decline of this American industrial icon at the feet of the men and women who assemble GM cars and trucks is to miss the larger picture.

GM has been lurching into irrelevancy for nearly two decades. Remember Roger & Me, Michael Moore’s 1989 film about the effects of a GM plant closing in Flint, Michigan? From the mid-80’s on GM was struggling to compete with Toyota and Honda, Japanese manufacturers who built high-quality, fuel-efficient, front-wheel drive vehicles. GM still held the title of world’s biggest manufacturing company, but every passing year saw Honda and Toyota chip away at GM’s market dominance.

How did giant GM respond to the threat from abroad? First, CEO Roger Smith pushed through the acquisition of Hughes Aircraft Company, a defense contractor, ostensibly to milk Hughes’s hi-tech expertise. Smith and other GM honchos thought a dose of space-age technology could help GM build more appealing vehicles.

The only problem with this billion dollar experiment was that GM never quite figured out how to harness Hughes’s strengths and marry them with its own.

With great fanfare, GM then announces the creation of a brand new car division called “Saturn” that would not only revolutionize GM but the American auto industry as well. Saturn, Roger Smith assured the Wall Street crowd, would operate completely outside the GM box; in itself, this boast was a backhanded indictment of GM’s bloated processes. Saturn wasn’t necessarily a bad idea, just one that came to fruition too late to halt GM’s slide.

GM’s core problem was never entirely its blue-collar workforce. Bloated and inefficient management lay at the center of GM’s woes. Year after year the giant reorganized and restructured, closing a plant here, shifting production to Canada or Texas, tinkering with its supply chain, but nothing could stem the tide. The cars and trucks coming off the GM drawing board simply paled in quality and style to those imported from abroad.

At one point it got so bad that GM entered into a joint venture with Toyota to build the Corolla, Toyota’s flagship vehicle, in Fremont, California using Japanese manufacturing processes and UAW represented labor. Soon, Honda was building cars in the US using the same framework.

GM was so dominant for so long, with far flung operations so massive and intimately connected to the fortunes of the US economy, that the company – management and labor – grew fat, happy, and complacent. Toyota and Honda were mere upstarts way back when, nothing to worry about.

By the time GM realized it was in a fight for market share with savvy adversaries it was too late for the giant to shake its behemoth mindset and change for the future.

Sure, the blue collar workforce represented by the UAW bears some of the responsibility, but don’t lay the whole enchilada at the feet of working men and women.