Monday, June 1, 2009
GM sticks with failed strategy all the way to bankruptcy
What is truly disturbing about today's bankruptcy filing by General Motors is not that the largest U.S. automaker collapsed right after No. 3 Chrysler -- these are volatile economic times. No, what is most unsettling is that GM set the decline in motion -- and kept it in motion -- by blithely continuing to pursue the same strategy that had already failed. Yes, the car company managed a few extra years of prosperity by lobbying Congress to allow exceptions to mileage and pollution standards, but it never could build the kind of quality cars that rocketed Japanese auotmakers to record sales in the United States. Everyone, except GM, Chrysler and Ford, apparently, knows what this was about. Does the United States have a small car that can compete on quality with Honda or Toyota models? This is 30 years after the first OPEC oil embargo jolted the oil importers of the world into rethinking their dependence on fossil fuels. Nothing? What U.S. automakers apparently figured was that they were too big to ever have to give into the demands of the buying public -- that they were too big to fail. But that's what some of the largest U.S. banks thought, too, before the self-induced collapse of the financial sector. It's not that they were too big to fail, they were just too big, and we can blame government financial regulators in the United States and elsewhere for that. Remember the days when the government regulated companies for more than putting botulism in our food? Remember the days when banks and big corporations could be trusted to do more than overpay their executives? Maybe those days will make a comeback, now that the U.S. government has taken major ownership interests in so many major companies under the Obama administration. U.S. taxpayers will own 60 percent of General Motors when it emerges from bankrupty this summer, according to the Cable News Network (CNN).