Like many young boys, I grew up with an affinity for a specific brand of automobile. The Vance’s were a General Motors family. Every vehicle Mom and Dad bought was something on the GM masthead. From a blue Pontiac Bonneville that hit a calf in the middle of road late one night when I was three, to a square-nosed green Silverado flatbed Dad let me drive to Ohio State when I went off to college, I hold special memories of a quarter-century of American-made automobiles. In fact, my first (and only) model kit was a 40th Anniversary Corvette. I still want that car.
This week, however, the Obama Administration helped drive the last nail in the coffin for a (formerly) great American company. General Motors filed for bankruptcy protection this week, announcing the closure of nearly a dozen key plants and production facilities. I say the final nail in the coffin because I have a real and present concern that GM will not emerge successfully from this restructuring. Because of several likely irreversible bad decisions, I fear the car company I’ve loved since childhood will not survive to sell automobiles to my children.
The first sign of impending disaster was the Obama-dictated sacking of GM CEO Rick Wagoner. While Wagoner is far from the example of peerless executive leadership, the President of the United States has no business dictating HR policy to the Board of a publicly traded corporation.
The wrangling for control of the company that ensued provided ample opportunity for the Obama team to beat down investors and the business community while beefing up political allies in the powerful United Auto Workers union, and the role of the government itself. With a 60% stake in the “new” GM, Obama’s share dwarves the 17.5% he grafted for the UAW, but quick math shows that less than a third of the company actually still belongs to the bondholders and investors who previously owned the company.
“Government Motors” now has the daunting task of rebuilding a brand and company tarnished by years of bad decision making in marketing and design, and decades of capitulation to a greedy union hell-bent on expanding its political influence. The purposes for which the UAW was founded long ago accomplished, the modern Hoffas of the world evolved into savvy politicos siphoning dollars from member paychecks to wield massive amounts of power over the liberal left.
With the GM debacle before us, it is clear they’ve succeeded.
By beating the company into all manner of illogical contract schemes over the last fifty years, the union virtually insured it would be impossible for GM to maintain a healthy profit margin while remaining competitive in a market dominated by Japanese ingenuity unhindered by organized labor’s interference. By doing so, they pushed the company to the brink of extinction, allowing an increasingly anti-business federal government to rush in as the White Knight and save the company for the downtrodden worker.
None of this, by the way, do I blame on the average worker himself. These workers want to produce a great product at a fair wage. The union overlords at the UAW, however, drunk with greed and power, have long convinced the average member that the employer is the enemy. As a business owner myself, I can tell you that I value my employees beyond words; our organization is only as good as our team members. The same is true of GM: a successful business is a partnership between owner and worker. Without the workers, there is no product, without the company, there is no job for the worker.
The executives at “old” GM, of course, made dozens of critical mistakes in leading the company to its doom. First and foremost, the company lost its competitive advantage: making great American cars. From the Caddy to the Camaro to the Corvette, from “Like a Rock” to “The Heartbeat of America,” GM was a traditionally tremendous marketing organization, designing and building legendary cars that resonated with the spirit of Americana. In recent years, however, the company fashioned and mismarketed a bastion of also-rans. From the oddly angular Pontiac Aztec to the generically named G-6 sedan, the traditional genius with which GM designers and promoters turned out Detroit magic disappeared.
Add to that a maddeningly incoherent brand strategy (acquisitions of SAAB and Hummer and axing of Pontiac and Oldsmobile for example) and a wandering eye on quality control, and its clear why consumers became increasingly wary of the firm.
Beyond the mistakes of the past, however, the biggest mistake of this tragic tale is still unfolding. On his blog this week, New York Times best-selling author and speaker Scott McKain explained: “The Christmas season before their bankruptcy, Circuit City fired their most experienced sales professionals in a cost-cutting move. GM is making the effort to close dealerships and reduce points of contact they have with their customers. Why would any business in difficulty make it more challenging for people to purchase their product?”
McKain acknowledges the need to reorganize and refine the dealer network, but suggests several significant strategies that would streamline and advance the dealerships. “GM needs many improvements – a better labor deal, better design of their products to provide what customers REALLY want, and better management.”
“However,” McKain contends, “what it needs MOST of all is something the Obama administration, labor leaders, management, and news pundits aren’t talking about – better dealers staffed with better sales professionals and better service technicians.
“If buying a car from GM felt more like building a relationship rather than haggling price at a Middle Eastern bazaar, maybe customers would look forward to the experience to a greater degree.”
Scott McKain is exactly right. Dealers ultimately make the difference in a customer’s decision to buy a car or drive to the next lot for a better buying experience. I’ve bought all but one vehicle I’ve ever owned from the same dealership my Dad took me to as a child. I know and trust the owner, and he treats me like a valued partner rather than a problem to be dealt with.
McKain points out that most customers purchase somewhere between 10 and 15 cars in their lifetime. “That means the prospect kicking the tires of a $32,500 Buick Lucerne is actually about a HALF-MILLION DOLLAR sales opportunity for the dealership.”
Government Motors could use some relationships like that moving forward.
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