General Motors
300 Renaissance Center
Dear Mr. Wagoner,
I certainly do not envy your position. General Motors is in an incredibly challenging and potentially impossible position. Although I am sure that you and your family are not in financial peril, your legacy as a business leader is decidedly at risk. Bold, innovative and thoughtful action will be required.
At the heart of the actions taken there needs to be, in my opinion, an incredible sense of responsibility for GM employees and retirees as well as your suppliers and the American people at large.
You may very well be the first to agree that private businesses requesting Federal assistance is a highly undesirable situation. The private sector should operate responsibly, but without the burdens of oppressive government regulation and without the belief that the tax payers will bail out faulty business management. Our business community and leaders in
There are five topics I have addressed within this letter that I feel have merit for thought—effective product portfolio and customer relations management, operations management, union relationships/union contracts, the pension problem, and the sentiment that select companies are “too big to fail.”
1. Product Portfolio and Customer Relations Management--General Motors has done a poor job, in my opinion, of anticipating market trends and consumer demands. GM put a tremendous amount of the stake in the truck and SUV sectors. Although GM did pretty well in these product areas for a handful of years, not only were many of these vehicles environmentally irresponsible, a dramatic increase in oil/gasoline prices was a highly predictable scenario. No one knew exactly when prices would rise, but operating as if low oil prices would continue forever was extremely short-sighted. Spending enormous amounts of GM time and energies fighting CAFE standards was likewise irresponsible. Could those same resources and energies have been applied to developing fuel efficient technologies? GM is decidedly behind in the development and introduction of fuel efficient vehicles and only time will tell whether or not you are able to catch up and, preferably, be a leader in this arena.
Although I believe that GM’s trucks and SUV’s are perceived to be of high quality by consumers, much of the rest of your product portfolio was and is out of step with consumer trends.
What does
The Buick brand is not perceived to be current—I know few people younger than 80 who drive a Buick. Saturn was an outstanding venture in the early and mid-90’s, but I have no idea what happened.
Another issue that has hurt GM tremendously in the minds of consumers is the general arrogance and lack of care for customers. I owned a 1997 Pontiac Grand Prix. I would be happy to supply the details of the story, but the summary is that at three years and 46,000 miles I had to replace the entire engine in the car. I did replace the engine and drove directly from the
I made it clear to the GM personnel I was working with that this situation was not acceptable and that I would never buy another GM car again. This declaration of departure from GM products had no impact. In short, no one cared that as a 28-year-old person (at the time) that I would be purchasing many more cars in my lifetime and that none of them would be GM cars.
Since 2000 when I traded in my Grand Prix I have owned a Volkswagen Jetta, a Volvo and a Honda Civic—all three great cars, but not one from GM’s offerings. I know that I am not alone in feeling betrayed and not appreciated by GM. I would lift my purchase ban on GM products if GM manufactured quality, fuel efficient cars that I want to own and that I had confidence that GM would stand behind the products it sells.
2. Operations Management—It is my understanding that GM’s plants are fairly inflexible in terms of the ability to change out lines and quickly re-purpose a plant to manufacture different products. There is plenty of intelligence from the Japanese on how to implement LEAN manufacturing practices and create flexibility in operations. If your plants truly are inflexible, this is simply inexcusable. If it is true that it is easier and more cost efficient for GM to shutter a plant than to retool it, GM has a very large problem.
3. Union Contracts/Union Relationships—I am certainly not the UAW’s biggest fan. Although I firmly support fair and safe working conditions for all workers and fair wages, the UAW is a business just like any other. It has gotten greedy and self-interested over the years and although has made concessions recently, I fear that these concessions came too little too late. In today’s world, it is not reasonable for workers to be guaranteed pay even if there is not work available. It is not reasonable to put uncompetitive restraints on corporations. Everyone, including the UAW and GM workers will lose.
The admirable historic purpose of unions was to assure that working conditions were safe, fair and that workers were paid fairly, not to negotiate sweet-heart deals for union members that were out of step with the rest of the labor market.
It seems to me that given the seriousness of the situation, third-party mediators might need to become involved. Every line of the UAW/GM contract needs to be reviewed and GM workers will have to accept a situation that is more in line with the reality of today’s business world and stop trying to hang onto 1952 era agreements.
The greatest service that the UAW and other unions could provide to its members, corporations and to the American people is implementing education programs to re-purpose workers as needed. I know that there are a lot of jobs across
4. Pension Situation—This is the most difficult problem of them all. At the root of the problem is enormous economic pressure that was only accelerated by the “30 and out” policy negotiated in the early '70's. If a worker started working at GM at 18 and retired at 48 with full benefits, the individual could easily be tapping into the pension for 40 years. The math simply does not work and no pension program was designed for retirement of this longevity.
Maybe a 55 year old is no longer physically able to work on the line. The UAW, GM and individual workers need to partner to re-educate and re-purpose that worker for a less physically demanding, but needed role. The reality is, as more and more of us live into our mid-80’s, 90’s and beyond, we have to figure out ways to be productive members of society longer. Non-UAW workers, including myself, will be working into their late 60’s and early 70’s. GM workers need to follow suit.
5. “Too Big to Fail”—The following is a segment from a letter I wrote to my Congresswoman, Melissa Bean, and to my Senator, Dick Durbin.
If we have corporations that are truly “too big to fail,” perhaps corporations should not be allow to get that big. Or, at least not allowed to become “too big” without adequate capital and liquidity to navigate through economic downturns. I have no idea how this idea could be structured in a way that supports fair free-markets (emphasis on fair), yet protects the American economy from a handful of companies bringing our entire economy to its knees. Although, I have no idea how this idea could be structured, I do believe that there is merit to the thought.
Mr. Wagoner, I truly hope that you will take my thoughts and insights into consideration. There is nothing I would like more than to have a thriving U.S. auto industry, but it is clear that General Motors, Chrysler nor Ford can continue to operate as they have for now decades.
Sincerely,
Tonia Becker VerShaw
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