This item just came across our desk:
A few years ago, when GM was losing market share – for good – and losing money operating all of its plants, it apparently was a fact that it lost less money keeping an unprofitable plant open than it would have lost if it had done what it should have done – that is, if it had closed the plant.
Closing a plant would have cost GM more than operating a plant which also was losing money.
It was a lose/lose proposition.
IT COULD NOT CUT THE LOSER OUT AND SAVE MONEY!!
The reason???
Take a guess.
We understand that in France, if an individual holds a job for a year or so, it is virtually impossible to downsize, to remove him/her from that job.
We did not realize that there was a US version of this same thing.
Is it possible that this ‘wrinkle’ had a role in the downfall of the American icon??
Is it possible that the UAW had just a little to do with the collapse??
You think??
1 comment:
The UAW and GM management failed time after time to think of anything except the next contract.
It takes four years just to bring a new car to market, yet these two entities have spent the last five decades planning their future in just three-year increments: the length of a UAW labor contract. So much for strategic planning!
I guess you might expect hourly labor to think in these terms, but for GM mangement to work that way is not just short-sighted, it's downright irresponsible.
They had the ability to start corrective action on labor and benefit costs way back in the seventies. Surely, there were some smart economists back then that were predicting that GM's (and Ford/Chrysler) business model could not be sustained forever. It was a dam that had to break. Did amyone really think that $40 per hour, plus four-weeks vacation, plus ALL the fringe benefits they could think of, was justified for bolting a part onto a car? Not to mention the "job for life" guarantees that Paul writes about here? Think about it!
The big three had enough money in the bank back then to start taking a hard line. With billions in reserve, they could have endured months of strikes and started nipping away at these insane costs one contract at a time. But no. Life was good. Leave it alone.
Henry Ford and Billy Durant had more strategic "vision" in their little fingers than the recent management of the big three had in their entire collective boardrooms.
Shame on the UAW for stealing from the future. Shame on GM for leaving the safe unlocked.
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