It's official: bankruptcy is good for GM. In their recent ass-covering exercise for the Securities and Exchange Commission (SEC), The Ford Motor Company listed 'adverse effects from the bankruptcy or insolvency of a major competitor' as a significant risk to its financial future. Translation: if GM goes bankrupt, The General will slough off its excessive labor costs and become… wait for it… competitive. So competitive, in fact, that Ford reckons GM's products would gain an important price advantage. Well how about that?
Obviously, there's more to it than that. Ford's SEC filing also alerts investors that GM's Chapter 11 could destroy The Blue Oval's supply chain. Both automakers share a large number of mission critical parts suppliers; if GM's submersion sucks vital parts makers into bankruptcy– which it most assuredly would– Ford will lose access to the bits and pieces it needs to build Fords. In fact, it's hard to see how Ford could survive a GM bankruptcy. Or why it would want to. The automotive community is slowly (and quietly) beginning to conclude that bankruptcy is both the only thing and the BEST thing that can happen to GM, and, by extension, Ford.
To review: GM can't build competitive vehicles at a profit. It's got too many models, brands and dealers. Too much bureaucracy, waste and inefficiency. Its labor costs are too high, its capital investment is too low and its supply chain is about to snap. And GM can't change a thing. The United Auto Workers' contract prevents any wage or benefits cuts, and precludes any alteration to their Byzantine working practices. Legal obligations also stop GM from trimming its distended dealer network or euthanizing fatally wounded brands. To survive, GM needs to lower its costs and revamp its business. And it can't do that without Chapter 11.
Oh, OK, it could, if everyone pulled together: investors, management, unions, dealers, suppliers and customers. But they won't. It's not in their nature. And even if it was, GM CEO Rabid Rick Wagoner is singularly incapable of tackling this monumental leadership challenge. And even if Rabid Rick could unify all the negatively charged particles in the GM universe, it's too late. The General doesn't have enough cash to weather the turbulence between business-as-usual and the end result of a difficult and dangerous overhaul. Nobody's going to give them the extra money– at least until The General declares bankruptcy. As Ford publicly acknowledged, only bankruptcy can give GM the wiggle room it needs to implement necessary changes to the way it goes about its business.
So be it. As I said at the beginning of this odious odyssey, GM will emerge from this multi-decade debacle a smaller, leaner and better automaker or, preferably, automakers. And that's why Ford's worried. Of course, they're not the only ones. The prospect of revolutionary change is making everyone involved a little, well, crazy. We're already seeing some strange behavior emerge from GM World: a public pledge to end national incentives followed by the announcement of a "March madness" sale, exciting new cars playing one-two-three green light, red light, green light; a Board Member and Car Czar squabbling over a moribund Swedish car brand, etc. It's the End of Days, Detroit style.
As GM's fate reaches its terrifying conclusion, workers will get all the attention. The moment the axe falls, whether by a slow strike or a lightning default, the spotlight will shift to "the little guy." Needless to say, the media will depict them as victims. They'll highlight the most desperate cases and blame their fate on management incompetence, outsourcing, the Japanese, the Chinese, foreign trade policy, currency manipulation, oil prices, George W. Bush, the anti-GM press, anyone and anything other than the workers themselves. Never mind that a huge number of these workers performed two hours work for eight hours pay. Never mind that thousands were willing to receive full pay and benefits for doing nothing whatsoever. It will always be someone else's fault.
Understand this: GM's workers are no better or worse than any of the other players in this sad saga. All of them work for a company where personal responsibility doesn't exist. Where everyone thinks they deserve to be well-paid, no matter what they or the company does, or doesn't do. Yes, there are plenty of good people within GM. And here's the kicker: most of them can't wait for the company to file. They want to see an end to the waste, laziness, greed, corruption, inequality and stupidity they see around them. When GM becomes the world's largest bankrupt, these good men and women will be satisfied, knowing that there is justice in the world. And they'll be hopeful; that something good will replace something bad.
When is enough enough? The Delphi/General Motors crisis touches all of us. Government cannot turn its back on workers in the name of private-sector immunity. State Sen. George Maziarz told The Buffalo News, “This is between Delphi management and the union; there is nothing we can do.” Rep. Tom Reynolds said, “It’s out of a lot of people’s hands.”
This is a government, however, that is OK with selective intervention. It accepts our tax money and over-regulates our businesses onshore. Delphi’s workers’ compensation bond alone is $108 million just for the privilege of doing business in New York State. Then it is also must protect us from this type of shameless exploitation that is currently being called “private-sector business methods.”
The so-called hands-off approach allowed the steel industry to be systematically dismantled. We are sitting quietly by, watching our nation be turned into a two-class society of the very rich and those who serve them.
If the government really wants to help, it could step up to solve the health care crisis in our country. These soaring costs become another good reason for American business to ship our jobs offshore.
Elected officials can do as Attorney General Eliot Spitzer has done and aggressively pursue and prosecute corporate criminals. They can close the loopholes that allow corporate leaders to steal workers’ pensions through bankruptcy, while giving themselves huge bonuses and maintaining offshore operations. They can put strings on tax incentive programs tying benefits to American job creation. They can legislate labor-friendly laws and appoint labor-friendly judges. There is plenty our elected officials can do.
In this anti-labor climate, people forget that labor unions work for the good of all workers. They have brought workers many advances, including the eight-hour workday, Social Security, minimum wage, safe work standards and child labor laws. Labor is the lone voice for the workers in a climate where it is fashionable to sell our technology and therefore national security in the name of profit.
The language has been sanitized but do not be fooled. When you hear “legacy costs,” substitute mom’s or granddad’s hard-earned pension check.
When you hear “outsource,” it means good American jobs shipped out of the country to a place where people and the environment are exploited.
The public needs to know that the financial problems of Delphi Corp. are not the fault of the workers, but a deliberate plan to systematically put this portion of GM’s onshore business out of business while breaking the union.
Although 6 percent profit for hard manufacturing has always been a good return on investment in this sector, greedy accountants at the top wanted more. The new profit goals are unattainable without exploitation of labor and the environment.
Ask yourself, “Is the American dream gone, and will my job be next?” Help us draw a line in the sand today.
wow, the fact that all of this was written more than 3 and a half years ago is impressive. Well done RF
This one was mostly correct, except that the focus on the plight of the Poor Little Line-worker never happened. Part of this is because the bankruptcy happened in the middle of the recession and thusly goodwill among the general public was lacking (if you got downsized from anyone from Microsoft to Wal-mart, it’s hard to feel sorry for a GM lineworker and their severance package), but mostly because one thing GM desperately didn’t want people to notice was that the operating costs weren’t the problem.
What goodwill they have left centers on the their being the victim of circumstance. Start focusing on truth about, well, anything about their business but certainly on their claims about being broken by labour costs and currency manipulation and such and suddenly how badly managed GM has become is instantly apparent.
It wasn’t the recession. It isn’t the Big Bad UAW. It certainly wasn’t evil, slant-eyed currency manipulators as Bob Lutz liked to trumpet. It’s the generations of corporate aristocrats and the yes-men they float on that brought them down.
The other annoying part of this editorial is that, when it was written, I was completely comfortable with GM biting the dust. That they waited and flailed and continued to burn money like gasoline until suddenly letting them fail wasn’t an option (well, to some) was either brilliant strategy, or sheer dumb luck on the part of GM management. Going bankrupt during boom-time would have exposed them as the incompetents they were