GM needs to focus on innovation

Marketplace Staff May 4, 2009
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GM needs to focus on innovation

Marketplace Staff May 4, 2009
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Kai Ryssdal: General Motors may not be far behind Chrysler. It needs billions more in government loans to survive and stay out of Chapter 11. But commentator Harley Shaiken says GM is going about it all wrong.


HARLEY SHAIKEN: The problem with GM’s new Washington-mandated restructuring plan is that it steps on the gas in the wrong direction. Washington is at cross-purposes: the stimulus package spends $800 billion to create jobs, while billions in loans to GM are conditioned on eliminating them. GM’s plan seeks to save the company by shrinking it.

In the U.S., GM will ax 23,000 factory jobs — a number the size of Chrysler — 17 plants, and Pontiac, all in the next three years. What’s more, the company plans to build 40 percent of the cars it sells in the U.S. offshore, up from 23 percent today, many in low-wage areas say China. Well, what other options are there?

The auto-task force should press for a bold plan to innovate like accelerating the far-better, more fuel-efficient vehicles already rolling off the assembly lines. How about a Pontiac with the sizzle of a 1967 GTO and the soul of a hybrid? It’s easy to forget that GM has some of the most talented engineers, designers, and blue-collar workers in the world. What the company lacked is imagination and effective leadership.

Consider FIAT. When the Italian automaker floundered in 2004, a new CEO, Sergio Marchionne, turned management inside out and introduced exciting, popular new models. The company began making money without closing plants or eliminating workers. GM’s accountants then paid $2 billion to sever its ties to FIAT.

Fritz Henderson, the new GM CEO, praised the government for acting like a “private equity firm.” A hedge fund wants to make money fast for its client — in this case, the taxpayer — without regard to social cost. Unlike most clients, however, the taxpayer picks up the social cost. Longer unemployment lines and more foreclosures are devastating for the victims, not cheap for the rest of us.

In the late 1950s the legendary car maker Studebaker-Packard sought to regain its luster through downsizing. It was so successful it no longer exists. The best use of taxpayer loans is a revitalized GM that creates jobs, not eliminates them.

RYSSDAL: Harley Shaiken teaches labor and the global economy at the University of California, Berkeley.

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