Sunday, June 12, 2005


GM's Highly Paid Management Killing Company

The folks who built the GM Aztek are losing their jobs while the folks who ordered them to make that money loser get incentive bonuses. What's wrong with this picture? Forbes magazine said this:
But that's not the biggest problem. When they brought Aztek out, the AWD wasn't ready, so GM launched the vehicle and sold it for five months without AWD. This might work in places such as California and Texas, where there's rarely snow or ice. But I think this omission cost the Aztek half its potential sales. Even worse, the vehicle is now labeled a loser, a label that's practically impossible to change.

Once again, GM blows a crucial launch. This worries me.
(Source: Jerry Flint, Forbes Magazine The Pontiac Aztek: GM Stumbles Again January 26, 2001.
Fast forward to 2005:
What ails GM today is much the same as what ailed it then -- and it's not just a matter of big pension plans, health care costs for workers or undervalued Asian currencies. The problem is that GM has forgotten how to make cars that people want to buy.

That's why the 25,000 layoffs that GM announced on Tuesday were only part of the week's distressing news for the automaker. The company also said that it is hard at work at a concept car called the Buick Centieme, a seven-passenger "crossover" vehicle designed to compete with popular rivals from Honda, Ford and Chrysler. (Crossovers have SUV attributes, but are built on car, not truck, platforms.) GM's lack of a seven-seat crossover wagon to sell in 2005 is a problem now, but the new model car won't arrive until sometime between 2007 and 2009. Will it be substantially better than what I could buy today? GM has never behaved as if it understood that the competition is always moving forward. The car I can buy today is not something I want in four years. The company might as well still be stuck in the Mona Lisa center.
(Source: Maryann N. Keller Washington Post Dull at Any Speed
Yeah, when sales go down, manufacturing plants must shut down, too. However, GM is pushing further worker salary and benefit cuts as the solution. Where are the management salary cuts? They're the ones that screwed up, shouldn't failure be punished with something other than a multi-million dollar golden parachute?


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