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tama z71

GM: Preserving America's Last Big Business

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General Motors
Preserving America’s Last Big Business
A Tama Article
March 28, 2006


General Motors

A perfect storm of business and economic factors has brewed at a time when General Motors is already facing an internal revolution. These forces threaten to tear the company down in the midst of its largest ever corporate and product restructuring.

Of these factors, the American media has done what no other rival nation ever could – they have created a culture of self-defeatism that inclines American consumers to dismiss the products built within their borders. Combine this national mentality with fearsome and well-managed foreign firms, and our economy, the most open in the entire world, has become a profit playground for foreign investors. Where the popular media went to work on molding public perception, Japanese auto manufacturers were at the task of lobbying the federal legislature, ensuring themselves a consumer foothold and financial leniency in the lustrous American consumer market. Now that these companies have a firm hold in our country and our government, America’s carmakers are starting to decline. Aid is scarce from a government who is adamant about free (?) trade. Though GM has largely cleaned up and put away the problems created within its own headquarters, these external issues may well prove too much for the struggling manufacturer to overcome. Amidst endless talk of bankruptcy, the company’s future is now in question. Despite the effect of the media on our people and the Japanese Business Machine on our government, GM’s effect on our people and our economy remains unquestionably greater. If the corporate giant is allowed to fall, the shock wave will be felt by every person in the nation – whether we want to admit it or not.

The Media

Mass media is a powerful tool. Dictators have used it to brainwash an entire people. Orson Wells used it, albeit accidentally, to lead Americans to believe that an alien race had arrived and overrun the world. Special interests use it to bend public perception toward their respective political views. Today, a small, tight-knit group of media elite uses it to bend numbers, obscure truths and often times flat-out lie (DeLorenzo).

“Media bend the truth? Surely you jest.” While it is clear that most of those in the media use the power inherent to the position to carry out an agenda, the system of the auto monthlies is fail-safe. Should blatant favoritism be called into the public eye, apologies are given, the public receives a few good words of reconcile and lessons learned, and the system returns to normal. The automotive media is somewhat exclusive, in that no other media body is capable of offering an editorial view and consistently presenting it as “fact” (DeLorenzo).

One of the biggest complaints of those who criticize the media hierarchy is the well-documented favoritism displayed towards foreign cars. This notion was best defined by the story of the Ridgeline pickup, introduced by Honda for the 2005 model year.

The notion of authorial preference is first validated in Car & Drivers June 2005 article “Do it all compact pickups” (Car & Driver). In this comparison, the Ridgeline is pitted against the Chevrolet Colorado, Toyota Tacoma, Nissan Frontier and Dodge Dakota – all classified as midsize trucks (Car & Driver). Honda, however, has referred to the Ridgeline as a “half ton truck” in several often-played television commercials. The rest of the half-ton category includes the Chevrolet Silverado, Toyota Tundra, Nissan Titan and Dodge Ram. The Ridgeline has a base MSRP (manufacturer suggested retail price) of $30,590 (Car & Driver) -- that is over three thousand dollars more than the nearest midsize competitor. After considering average transaction prices, the Ridgeline is priced closer to competitors’ comparable full-size entries than those midsize trucks used in the C&D comparison (Edmunds). The Ridgeline took first place in the comparison. When pitted against all half-ton competitors, the Ridgeline is outclassed in every term of space, power and capability (Edmunds).

The second example of direct favoritism deals again with Honda and again with the Ridgeline. The Ridgeline was awarded “Truck of the Year” by Motor Trend for model year 2005. In their criteria, Motor Trend states that the winners are chosen based upon significance in the vehicle’s perspective class (Motor Trend). Please remember, Honda categorizes the Ridgeline as a half-ton, and it falls thoroughly short in the aggressive half-ton segment. Since its introduction, Honda has cut Ridgeline production twice, in addition to falling short of its 2005 sales goal of 50,000 units. (Autoweek) Without managing to make any sort of great impact with buyers or within the vehicle segment, the Honda Ridgeline fails the Motor Trend test of significance, leaving the once coveted “Golden Calipers” award as just another example of the media’s foreign free pass.

To those readers who have conscious minds and are capable of feeling emotion, the most striking element of the automotive media today is the collective lack of creativity. Articles are predictable, as the same complaints are brought up in each vehicle, regardless of actual competence. The redundancy of the monthly auto magazines has been best explained by Peter DeLorenzo of Autoextremist.com.

“In simpler times, the monthlies were given priority to get their pictures and write their stories with enough lead time (as long as two to three months) built in to match the embargoed release date set by the manufacturers, which everyone adhered to, for the most part. This "long-lead" date worked cozily for the monthlies, and when everyone abided by this "gentlemen's agreement," everything worked just fine - then the manufacturers' PR types could sit back and smile when their latest models dominated the major car magazines covers at the same time. But when Autoweek really began to gather steam, the difficulties with the process manifested themselves, and the established system began to get frayed around the edges, especially since the lead times for a weekly publication were dramatically shorter than those for the traditional monthlies. Yet still, the gentlemen's agreement remained intact and everyone soldiered on, comfortable in its predictability.”

The integrity of auto media has been tarnished for quite some time, but remains unchanged as legitimate competitors are left little room in this monopolistic sect of the media. However, the explosion of the internet has allowed any person with a keyboard and an audience to become an automotive expert, resulting in the widespread plagiarism of an ideal. This is not the direct plagiarism of one man’s work – rather, it is the plagiarism of an ideal; one common train of thought that runs rampant in the words of would-be journalist. This train of thought states that American products, despite any significant change or significance, cannot quite catch the detail-oriented Japanese – ever.

Right now, the poster boy for the auto media is General Motors. The flurry of problems and changes the company is facing right now are cannon fodder for the insatiably hungry media machine. After all, Americans have an innate desire to see the big guy fall, and we just love to hear bad news.
The topic has become a work for what seems like every single member of this sect of the media (Eisenstein). The articles are so numerous and overlapping, DeLorenzo’s theory of media redundancy can be validated five times over. In the public’s endless desire to see the big guy fall, we have forgotten how much the big guy really means to us. Perceptions often do not mirror reality, and the sensationalist automotive media has served only to further engrain that baseless ideal into the mind of America (Langley).

The Government

General Motors has to deal with the mountain of legacy costs resultant of headquarters’ past inadequacies. The biased media is a slap in the face. Governmental indifference is pure salt in an open wound.
When asked what he thought about the domestic Big 3 (GM, Ford, DCX) during an interview with the Wall Street Journal, President Bush offered his signature one-size-fits-all style of response (Autoweek).

“I think it's very important for the market to function… …As these automobile manufacturers compete for market share and use technology to try to get consumers to buy their product, they also will be helping America become less dependent on foreign sources of oil… …I have been very reluctant,” Bush said, cutting off his sentence. “I'm mindful of the past where at one point in time, a predecessor of mine was faced with that same dilemma. I would hope I wouldn't be asked to make that decision [regarding a government bailout]… …This is going to be a very troubling time for workers and their families… …That's not how the market works and that's not corporate responsibility as I see it,” he said [in response to government bailout]. “I'm very firm on seeing to it that this government holds people to account.” (Autoweek)

President Bush managed to offer no relevant response regarding the state of the companies, the role of foreign currency practices, nor the need for government to help pick up and revive the single greatest contributor to the American economy since the beginning of the 20th century.
How strong should the role of government be in our economy? While Mr. Bush has often spoken of the need for the American economy to remain mostly independent of government controls, he has also stressed America’s role as the leader of the emerging world economy. On every corner of the globe, first world nations have a system of government funded national health care. America has yet to adopt such a system. For private companies, this means greater financial responsibility to their employees and a massive strain on the corporate entity. For decades-old companies such as General Motors, it means casting off an entrenched system of high benefits and generous pay. The overhead has become a specter above GM’s corporate entity, as legacy costs and payrolls cost GM over 1500 dollars per car sold (DeLorenzo). Multiply 1500 times the number of cars GM sold last year, 4.45 million (North America sales), and the result 6.68 billion dollars. That is 6.68 billion dollars that could have gone into research and development, debt payments, factory retooling, and a countless number of other essential programs. Washington’s refusal to adopt any type of national health care plan is putting America at a grave economic disadvantage, and may very well contribute to the demise of one it’s most storied and significant businesses.

Japan Inc.

Of all the competition GM has faced, Japanese competitors are by far the most logical (what company should be forced to compete with its own media and government?) Since the Marshall Plan took hold after WWII, the unstoppable Japanese economic machine has come to be known as Japan, Inc. In this instance, Japan, Inc. includes the Toyota Motor, Honda Motor and Nissan-Renault companies.

These are car companies -- straightforward competition. GM has dealt with competition for the 100+ years of its existence, and these should prove no different. Just good old car vs. car competition. Right?

Wrong.

By 2000, GM had finally managed to put its car line on par with the top Japanese competitors in terms of quality and dependability. The General has also managed to start picking up quality awards (from a still begrudging media), most notably from established publishers such as J.D. Power & Associates. Though the required steps for regaining control from Japan Inc. may seem clear, a series of economic procedures and unspoken codes of conduct have once again put GM and the rest of Detroit under the gun.
Japan’s most effective weapon for entrenching themselves in the American economy has been their acquisition and placement of lobbyists in Washington (JapanYes). By systematically placing their interests in government and gaining holds with influential people, they have managed to protect themselves from any major legal backlash (JapanYes). The Japanese have effectively placed themselves in a position of favor by lobbying Senators and building factories in their states. Such actions also allow these Tokyo-based firms to pass themselves off as “American,” insuring against consumer backlash and creating the guise that they are contributing to the American economy. In spite of the cash infusions these plants have put into their local economies, it is estimated that for every job Toyota creates in America, 30 more are lost (JapanYes).

Inversely, Japan has set up a complex structure of governmental red tape that serves to discourage foreign competitors from making headway into the Japanese home market (JapanYes). When governmental controls prove too politically incorrect, coercive tactics such as delayed shipping and unnecessary inspections serve to put the foreign business at a financial disadvantage. Without the ability to create even a toehold in the staunchly nationalist Japanese market, the business either fails financially or gets frustrated and is forced to leave the market (JapanYes). Such acts go uncontested, however, as each Japanese company has a literal army of lawyers at the ready, set to crush any foreign firm that may bite at their ankles. Such measures of economic independence and governmental protection have placed Japan Inc. on a pedestal that no truly free economy will be able to disassemble. It is a system of protectionism and nationalist sentiment that is still used to define America – but serves as a clearer representation of modern Japan. The Japan, Inc. system has ultimately served to take over the freest economy in the world – ours.

General Motors has perhaps the most expansive outreach of any company in North America. The initial success of the company during the pre-depression and postwar eras literally shaped the middle-class landscape that is definitional of modern America. The effects of the company have reached a point where whole towns and entire communities thrive and die with the GM plant built there (Peters, NYTimes). Our media has created a false image of Detroit in the mind of Joe America, however, by blending “fiction” with “innuendo” to create “fact.” The President who so prides his administration on fair and free trade has dismissed aid to the biggest contributor to our economy as “not the marketplace as I see it.” Japan has done what any good competitor would, and taken those tactics to a level that are certifiably illegal. GM has contributed to the growth and prosperity of America more than any other business entity. Today, it faces the very real possibility of bankruptcy, or worse. A complete downfall of the company will adversely affect every single person in this country, regardless of how many jobs Toyota created last year. It has been made painfully clear that the government will do nothing to help.

In its current financial state, GM will be hard-pressed to bring to the public the fantastic products that they are preparing to have completed by late this year. Americans need to shake the false imagery of the auto media and demand help for the largest private provider of health care in America. Today, we see ourselves as incapable of creating a viable product. Our generation is descendent of the World War II generation – the generation who won the greatest conflict in human history on the back of its mighty manufacturing homefront. But now we are bred to believe our work inferior to the Japanese, because the chrome on our door handles does not shine as brightly as a Toyota’s? America needs to wake up and give itself a swift kick in the proverbial ass. If we fail to realize that we are starving our own businesses, our country will be hurting far worse than we could ever have possibly imagined. Edited by tama z71

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