May 27, 2009
Going, going, gone.
By Peter M. De Lorenzo
(Posted 5/27, 8:15AM) Detroit. It wasn’t just another company, no, far from it. It was, at its peak, the mightiest corporation the world had ever known, a juggernaut among mere mortal companies and a shining beacon of American industrial strength, resolve and leadership envied around the world. Now, General Motors, after an incredible slide to oblivion that no one could have predicted, is officially bankrupt.
How we got to this point has been dissected, discussed and downloaded for years now. I founded this website ten years ago on the premise of telling it like it is about this industry - as someone who was both lucky enough to be around and experience GM up close and personally in its heyday and one who was also around to witness the abject futility and stupidity of the “bad” GM while mired in the marketing trenches attempting to make a difference.
At its best GM was a monolithic corporate dynamo bristling with brilliant personalities and talent so deep that its bench could have easily led the other two domestic car companies in their spare time. From the late 50s through to the late 70s GM set the tone for the entire automotive world. It had some of the finest designers, the most gifted engineers, the most savvy marketing and sales people, and without question, the sharpest financial minds in the business.
GM dictated the operating cadence for the entire industry - from design to engineering and pricing to content - right down to the market segments created and even the color palette choices favored.
GM was so dominant that if it were analogous to a professional sports team they would be akin to the New York Yankees in their glory years. They didn’t just win championships; they won the championship every year. It was so successful as a corporate entity that at one point long ago elected officials in Washington were seriously talking about “breaking up” General Motors, because it had become too big, too powerful and too dominant.
But the world changed, and what worked for GM in its era of dominance became woefully obsolete and untenable in a new automotive world that didn’t put much stock in the past “glory days.” Detroit’s market share eroded right along with each new competitive entry from Europe and Asia that arrived on these shores, but GM, steadfast in its refusal to acknowledge that the world was changing dramatically around them, stuck to a game plan that was simply unworkable.
And at that point the “bad” GM took over, and we got to see the company at its worst.
GM took its eye off of the ball for the better part of two decades as its management became more and more complacent, unable to take their focus off of their painfully narrow-minded 30-day sales reports. And when they weren’t doing that they were building – except for a very few exceptions – bland excuses for automobiles that were engineered to the lowest common denominator and that were religiously benchmarked to their competitors' previous generation models, so that they fell further and further behind the curve with each subsequent year.
And while lost in their own little world pretending things would get better - and that a turnaround was “just around the corner” - an entire generation of customers who were turned off by the mundane choices and the shoddy, or better yet, nonexistent workmanship combined with a relentlessly piss-poor dealer experience simply walked away in droves, never to return.
On top of it the timeless adage of this business - It was, is, and always will be about the product - somehow got lost in the shuffle, and GM and the rest of Detroit simply either forgot about that simple premise or even worse, pretended it really didn’t matter anymore - while the import manufacturers handed them their lunch, month after month, quarter after quarter, and year after year.
And because of it traditional automotive reputations were destroyed for good and new reputations were created overnight and the entire domestic automobile industry became unglued.
And even still, GM - while grappling to slow the inexorable downward spiral of its plummeting market share - clung to its hoary divisional structure despite all evidence and rational reasoning to the contrary. The classically ingrained Alfred E. Sloan concept of “a vehicle for every purse and purpose” was brilliant when GM controlled 50 percent of the U.S. market, but it was flat-out disastrous with a market share that was deteriorating with each passing year.
I wrote about GM’s burden of too many models, too many divisions and too many dealers from Day One of this publication, but it was such a fundamental part of GM’s raison d’etre that the company’s paralyzed upper management and entrenched bureaucracy could never deal with it with any permanence or make even a substantive attempt at retuning its structure for a radically altered automotive landscape.
And it absolutely killed the company.
Even with this constant swirling maelstrom of negativity, there was more than a glimmer of hope for GM when former CEO Rick Wagoner hired the brilliant product guru Bob Lutz just after the turn of the century in a desperate attempt at fixing the moribund company once and for all. As I predicted, Lutz completely transformed GM’s product development function and reenergized its Design staff, and he willed GM to greatness again. Under Lutz’s tutelage a GM product renaissance began in earnest and a series of concept and production cars was unleashed that were simply some of the greatest the company had ever produced, even rivaling the very best from its illustrious history.
But in the end, it was simply too little, too late. The spike in gas prices a year ago killed off demand for large SUVs and trucks and that in turn destroyed GM’s last vestige of profitability. And that combined with the global economic meltdown last fall put paid to any chances of GM surviving as a thriving, independent company.
And so here we are.
Despite a glittering historical legacy that will never be duplicated again, the greatest American industrial icon of the 20th century is now flat broke and busted, a listless hulk smoldering by the side of the road.
General Motors, the once-majestic American symbol of success that in its glory days was a source of intense pride to its employees and dealers, even eliciting grudging respect from its most bitter of rivals, has been relegated to a punchline, staring at an ignominious future that has the UAW - of all things – owning 20 percent of the company and the U.S. Treasury owning as much as 70 percent of the rest.
A living, breathing corporate entity of some note may emerge from the wreckage at some point down the road – although I for one have very serious doubts about that - but the General Motors that once was has now officially been relegated to the history books.
An inglorious end indeed.
Thanks for listening.
See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and auto industry PR veteran Jason Vines this Thursday evening, May 28, at 7:00PM EDT at www.autolinedetroit.tv. By the way, if you'd like to subscribe to the Autoline After Hours podcasts, click on the following links:
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