Working Wounded Blog: GM Is Bad for the Country
June 15, 2005 — -- News Flash: General Motors announced plans to lay off 25,000 workers.
It was almost impossible to miss the announcement that GM was laying off 23 percent of its U.S. work force in a plan to save $2.5 billion. It was front-page news from coast to coast.
GM CEO Rick Wagoner stated, "Our absolute goal is to get our largest business unit back to profitability as soon as possible." A bold move by a company focused on assuming leadership in the automobile industry, right? Hardly.
GM acknowledged that the 25,000 job cuts are actually "little more than it would get through normal retirements" (according to USA Today). By trumping normal attrition as a bold cost-cutting move, GM managed to upset and unnerve its three key constituencies -- not an easy move to accomplish in just one announcement. Let me explain …
GM annoyed employees because the layoffs were announced without deadlines or specifics. With one in four employees about to lose their jobs, I'm guessing GM employees worked a lot harder at updating their resumes than building cars last week. GM managed to do something that I thought was impossible -- to make an incredibly cynical work force even more cynical.
GM also did nothing to impress Wall Street. According to industry insiders, GM is losing $2,300 on every car it sells -- that is when GM actually sells its cars. Want to really turn off Wall Street? According to my MBA finance professor, this is how you do it: claiming as a breakthrough something that was going to happen anyway. Wall Street might not be full of rocket scientists, but they are smart enough to see through this hooey.
Finally, GM sent a message of desperation to its customers. You wouldn't put money in a bank that you felt was failing. And no matter how good the deal, you're probably skeptical about buying a car from a company speeding toward Chapter 11 ("employee discounts" notwithstanding). People like to see a bit more stability when they make a major purchase, if for no other reason than it's nice to know that someone will honor your warranty. And for most of us, buying a car is still a very big deal.
Way to go GM! In one announcement, you alienated all of your key constituencies, something that normally takes numerous butchered press releases and public statements. This is reminiscent of your factories -- the U.S. productivity leaders -- that create cars remarkably efficiently that no one wants to buy.
Let me make a confession. My dad was a GM dealer for almost 50 years. I've always felt a part of the GM dysfunctional family. So this blog was hard to write, because at the end of the day I'm a GM loyalist. A loyalist who is shedding a tear today for what has become of a formerly great company.
Quote of the week:
"One of the greatest diseases is to be nobody to anybody." -- Mother Teresa
Weekly book excerpt:
From "Reinventing Government" by Ted Osborne and Ted Gaebler (Plume, 1993)
"It is hard to imagine today, but 100 years ago the word bureaucracy meant something positive. It connoted a rational, efficient method of organization -- something to take the place of the arbitrary exercise of power by authoritarian regimes. Bureaucracies brought the same logic to government work that the assembly line brought to the factory. With their hierarchical authority and functionally specialization, they made possible the efficient undertaking of large, complex tasks. Max Webber, the great German sociologist, described them using words no modern American would dream of applying: 'The decisive reason for the advance of bureaucratic organizations has always been its purely technical superiority over any other form of organization. Precision, speed, unambiguity, reduction of friction and of material and personal costs -- these are raised to the optimum point in the strictly bureaucratic organization."
Working Wounded Mailbag:.
Worst excuse: Employee couldn't attend a meeting the supervisor told him to attend because he couldn't find a parking spot. The other building was a half block away.
Here are the results from a recent Working Wounded Blog/ABCNEWS.com online ballot:
What does a mentoree owe his mentor?
Bob Rosner is a best-selling author, an internationally syndicated columnist, popular speaker and a recent addition to the community of bloggers. He welcomes your comments at bob@workingwounded.com.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.
