Friday, February 27, 2009

GM Loses Some Swagger

When General Motors Chairman Rick Wagoner visited the Commonwealth Club in May of last year, he spoke with uncommon boastfulness despite the fact the automaker was in severe dire straits even then. In a speech that mainly covered the company's foray into green technology, he said:

Over time we have a natural advantage by our experience here and our depth of technology, and we plan to win. We welcome the competition, but when I come back to see you in 10 years there may be other guys in, but we plan to be leading the parade in this area.

Famous last words?

The good news is GM's $30.9 billion loss last year was not the company's worst ever. That was 2007. While Wagoner visits Washington asking for as much as an additional $16 billion just to keep the assembly lines rolling, the aftermath of GM's possible demise is being felt outside our borders.

Reports today say GM is preparing to ask European countries such as Germany for over $4 billion in aid to keep its Opel brand operating. This comes a day after GM announced it would cut 1,600 jobs and furlough another 900 at a plant in Brazil.

The situation in the U.S. continues to be perilous for GM. Wagoner reportedly told the auto task force created by the Obama administration that GM would cut the company's brands to four and eliminate 47,000 jobs as a part of a vast restructuring plan. In addition, an agreement with the United Auto Workers over a contractually obligated $5 billion payment to the union's health-care trust has not come to pass.

Wagoner mentioned GM's health-care predicament during his Commonwealth Club address, arguing that it inhibited the company's growth. “I have long been outspoken on the fact that the health-care costs in the U.S. is significantly damaging the manufacturing competitiveness of this country and the competitiveness of our economy, and I continue to feel that is true,” he said.

The plight of General Motors with its corporate tentacles extending far from Detroit might be a prime example of how GM's decisions and its fate not only affect the streets of Flint, Michigan, but employees in small European towns and workers in auto plants in South America.


Post a Comment

Thank you for visiting us. Please post your message. We ask that all comments be considerate of the many viewpoints and backgrounds of our other readers.