Well, school is finally over for the term! I Passed my math 111 class, and am very excited about that. I also have been working a lot of hours, so by the time I get home around 10:30 pm, I usually just have time to do homework. Anyway, the reason I have not been writing, is because I had to concentrate all of my collective writing powers into my research paper. So, instead of boring you all with all the other stuff I have been doing, here is a portion of my 12 page paper. If you want to read the whole thing, comment on the bottom that you want me to send you a copy, and let me know how to send it to you (unless I already know.)
American Automotive Goliath Meets Global Market David:
Can General Motors Survive?
In 1959, when Dinah Shore was singing to the all-American post-war audiences about seeing the U.S.A. in your Chevrolet from behind the wheel of her Impala convertible, (Vintage) not one person could have imagined that less than fifty years later, the future of her sponsoring company would be uncertain at best. An America emerging from the Korean War, and still having the taste of WWII in it’s mouth, would have called anyone crazy had that person told them that by the end of the century, America’s largest automobile maker would be on the brink of extinction due to poor marketing, market pressures, quality issues, healthcare costs, and union gouging. Not to mention the very people they had just fought in both WWII and The Korean Conflict would be the nations largely responsible for beating the General at his own game.
The issues now in the new millennia are that global markets dictate products and the problems of rising costs of doing business in America. This is leading General Motors (GM) to open manufacturing plants in other countries and close plants in the U.S. (Doh) product quality, while increasing, has been so poor for the last three decades that huge numbers of buyers will not be considering GM’s products for at least another ten years due to market stigma. Recent attempts to purchase Europe’s leading cheap car manufacturer, FIAT--as well as costs to buy their way out of the welched deal, has led to the near bankruptcy of GM. In the late 1980s GM almost folded while trying to build Saturn in order to compete with the Asian econo-cars. All of this has painted the General into a corner. Junk bond status amongst lenders, parts suppliers going bankrupt due to GM’s inability to pay bills, rising healthcare costs, and UAW (United Auto Workers) union’s ever increasing wage scales has put GM in a position that may mark the twilight of a century old American Icon. (MacKenzie)
General Motors--first founded in 1908 by Billy Durant who brought Buick, Oldsmobile, and Fisher Body Company together currently employs around 325,000 employees worldwide—about half of which work in the U.S. GM, who at one time almost bought Ford Motor Company, and who spent $12,300,000,000 on the World War II effort, only two years after building its 25 millionth car, has been plagued by union problems since 1937 when it first recognized GM employees’ rights to have union representation by the UAW. (GM.com) Currently, union costs, and rising healthcare costs add an additional $2550 to the cost of every vehicle built by GM compared to Toyota’s $250. (Sloan)
Worldwide, GM builds cars using ten different brand names. In North America, GM builds cars under the brands known as: Chevrolet, Buick, Pontiac, Cadillac, GMC, Hummer, Saturn, and Saab. Together, these eight brands build some 89 different vehicles, including performance specific products, such as the V-series Cadillacs, and GXP models of Pontiac. Currently, GM is the largest automobile manufacturer in the world. (Welch et al) It is rumored that GM has been trying to buy several different Chinese manufacturers, in hopes that by the end of the decade, GM will be the first company in the U.S. to offer imported Chinese vehicles. It is said that these vehicles may cost fewer than ten thousand dollars. This is in hopes to breathe new life into a company that has been teetering on the brink of collapse since the early eighties.
The thorn in the side of GM these days is no longer the competition from Ford and Chrysler, rather it is from Toyota, who just this year celebrated making its 15 millionth vehicle—71 years after GM built its 25 millionth. Toyota, which consists of Toyota, Lexus, and the newly formed Scion, builds 26 models, and sold their first vehicle in the U.S. in 1957. (Grant) This year, it is rumored that Toyota will eclipse GM as the largest manufacturer in the U.S. (Kageyama) This is going to be a one plant larger figure, but it will be a milestone for both companies without a doubt--A good milestone for Toyota, and a black eye milestone for GM. Toyota builds the number one selling car in the U.S., the Camry, and has for about 7 years now. It may be the number one selling car, but it comes in 4th on the list behind the half-ton trucks built by the big three. The only GM passenger car on the top ten list, the Impala, comes in at a paltry number nine. The only saving grace GM has on this list is that it has the number two vehicle, the Chevy Half-Ton pickup. (Lienert)
For years GM has struggled to keep its head above water in the marketplace while trying to stay competitive to other American manufacturers, as well as the Asian brands. It is the Asian brands, which were simply dismissed as a flash in the pan when they first started building the economy cars that have done the most damage to GM. During the late 1980’s, in the dawn of building Saturn, which again almost bankrupted them, General Motors built a facility called the Mona Lisa Center near Detroit. In this facility engineers disassembled some Honda Accords and Toyota Camrys in an attempt to find out what it was that made these cars so hugely successful. The facility was closed and the project was scrapped when it was determined that the answers could not be found. The problem with this approach to building cars is that it is completely backwards. (Keller) During the time that GM was desperately grasping at straws to figure out why no one was buying their cars, instead of looking ahead, as the Asian brands were most certainly doing—they were looking back at a model of car that was already built and no doubt planned to be replaced soon anyway.
General Motors’ problems stem not just from not being able to build a quality car, or even from being able to retain customers. Its problems stem from not being able to build cars that attract new buyers, as well as having a poor reputation in the marketplace. Chevrolet retains approximately 58% of its customers, slightly less than Toyota’s 62%. (jdpower.com) If you were to ask a stranger what the most dependable vehicle on the road is, they would most likely say Honda or Toyota. Ask that same person where GM falls under that list, and they might tell you that American cars are junk, and that GM could not make a car that would last 200,000 miles. A seemingly common misconception about build quality of American cars is that they are unreliable after warranty. This is not always the case. With regular maintenance, GM cars are capable of nearly 300,000 miles. In the late 1980’s, while GM was taking apart a Toyota to see what made it tick, Toyota was boasting ads containing its customers who had more than 200,000 miles on their vehicles. There is a market stigma that GM can’t seem to shake. According to the J.D. Powers Vehicle Dependability Index, GM has 30 of its 73 vehicles among the top three in segment, and earned 16 quality and dependability awards—more than any other manufacturer. (jdpower.com)
