Death (?) of General Motors-The Legendary Giant


It is unbelievable to many like me but the reality too that can’t be overlooked anymore. GM will soon be declared bankrupt. General Motors filed for bankruptcy on Monday morning. It is the lowest point in General Motors’100-year history. GM would close 14 more American factories and cut up to 21,000 more jobs. G.M. will have fewer than 40,000 workers building cars in the United States – one-tenth of a work force that in the 1970s numbered 395,000 people.

GM that I knew was the largest company of the world with many legendary giants among its CEOs. In early70’s, when I was reading Alfred P Sloan ‘My Years with General Motors‘, I was awestruck by the data on its back page-its revenue and profit, its number of plants and number employees. It was a nation in itself perhaps a global one.

GM led the innovations in car that started with electrical starter instead of hand cranking. And majority followed from GM. It set management standards through professional teams. It made automobile manufacturing as sector the most respectable. ‘The auto giant helped to define the nation’s car culture and played a part in creating the American middle class’.

Hindustan Motors where I worked for the most of my active life was having a long business connection with GM. I went to UK in 1966 for a training in Vauxhall Motors that was GM plant. Vauxhall was one of the largest producers of commercial vehicles with each vehicle coming out from conveyor a different in one way or the other. Whatever the customer wanted it delivered. But when I visited it in 1982, Vauxhall hardly had its old charm. Its business had gone down. Later on in late 80s I visited Isuzu Motors, Japan many times. HM went to collaborate with Isuzu for building trucks in its new Vadodara plant as GM had a stake in it. Isuzu trucks were known world over because of superiority in technology. GM was outsourcing a number of vehicles from Isuzu. In late 80s and early 90s, GM was trying to come in India. It collaborated with HM for building car. It took over the HM assets, particularly the plant that HM had build for the Isuzu truck and abandoned later on because of strengthening yen. I was associated with GM’s team, visited their European facilities, and came in close contact with some GM Technical center in US. I couldn’t get very high opinion about their approaches. But then I was shifted to the factory operation for few years, and the contact with GM got lost that was there as corporate planning man.

However, as I had the academic interest I kept on knowing more and more about the automobile world that I could collectively put in my book, A Treatise of Automobile Manufacturing’. I can’t but mention GM’s Saturn cars and its technological superiority. GM had puts its best in it in many way. Perhaps GM had tried to compete with Japanese with Saturn. Surprisingly, after the bankruptcy initiated reorganizations, Saturn will no more be there. Last year when I was in US, I had visited NUMMI plant an experiment in collaboration where Toyota and GM were working together.

Last year itself Toyota took over the GM supremacy and went ahead of it. American automobile manufacturers over the years had handed over the leadership of the industry to the Japanese. And the recent financial meltdown brought the end faster than expected. The management system of American companies couldn’t find the solution to overcome the crisis. Even after substantial government aids and doles, GM and Chrysler couldn’t survive. Both have gone in bankruptcy.

According to the media, GM will be now Obama Motors. Obama considers it as ‘the end of an old G.M., and the beginning of a new G.M’. Will GM become viable again following the prescription of the bankruptcy and new ownerships? Will GM remain for posterity or get into only the history of automobile manufacturers of the world as my own company HM?

What are the lessons from GM’s demise? Whose fault was it? Is the American management system responsible for it? Has America lost its managerial talent that it even now boasts to have? Who were responsible for the much talked about poor quality coming out of the American auto manufacturers for more than a decade? Why couldn’t the management or the government take the right step in right time? How can Harvard and Stanford- the management schools, boast itself the globally best, as it happened in its country? And finally why we in India still keep on adoring everything in American management? Will Indian companies take some lessons from the GM story?

As reported, GM India may still survive. Surprisingly, GM India plans to come out with a new mini car at around Rs 2 lakh. Will the government and the banks in India allow GM India to continue and grow independently? One way for MNC GM will certainly be to make its local units in different countries totally insulated from American operation and its management control? And new GM may use research and development centre in India to get the right car with frugal design and manufacturing concept.

What a humiliation or what an end!

A search for ‘GM’ on Google got me 165,000,000 and for ‘General Motors’ 73,600,000 on this day June 04, 2009 at 1.45 PM.

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