World Auto View
Depend on GM for your livelihood? Reasons adding up for you to worry
By Daniel Howes / The Detroit News
FRANKFURT, Germany--If there are virtually no problems in today's auto industry
that can't be cured with great cars and trucks, as Nissan President Carlos Ghosn says,
then those who depend on Detroit's automakers ought to be a little worried.
Detroit can, of course, build great products when it wants to. Just look at
DaimlerChrysler AG's PT Cruiser, General Motors Corp.'s large pickups and Ford Motor
Co.'s constantly morphing lineup of trucks and sport-utility vehicles.
But those successes of the 1990s, trumpeted as evidence that Detroit's renaissance
was real, are in danger of being overrun. Blame stubbornly high fixed costs, long-term
labor contracts that stifle flexibility, nagging quality problems (real and perceived)
and the comfortable tendency to focus on what works (trucks and sport-utes) and limp
along with the rest.
That's Chrysler problem these days. And GM's, too. Yet the constant talk of
Chrysler's restructuring, due next month, is overshadowing a potentially far larger
shakeout at GM that would make any change at Chrysler seem mild by comparison.
Simply put, the state of GM should worry anyone in Metro Detroit - or the world,
for that matter - whose livelihood depends on the General for income, contracts or
charitable support. Sure, it's got a $13.3-billion cash hoard. Yes, it booked profits
in North America and worldwide. And you can bet that President Rick Wagoner Jr., the
youngest chief executive in GM history, would not stand by should GM nose-dive.
He won't. But it means something when people inside the company tell you privately
that the last time they were this concerned for their company, former-Chairman Bob
Stempel and President Lloyd Reuss were running the place. We all know what happened
next.
The argument that a smaller, more profitable GM is preferable to a larger,
money-losing GM has always made sense. We're now entering a time, however, when the
slimmer GM is making less money - and claiming less market share - amid fierce attacks
from its Japanese, German and South Korean rivals.
The numbers don't lie. Neither do the reactions to some important products in the
GM pipeline, the hot Chevrolet SSR and sharp Buick Bengal concept notwithstanding.
Conventional wisdom holds that GM basically is incapable of generating excitement with
its new cars and trucks. For once, I agree.
You can feel the uneasiness about GM's business prospects in North America and
Europe, despite bullishness from executives. The Opel lineup for Europe is tired.
Plans for Saab, the quirky Swedish brand, aren't showing any public signs of movement.
The edginess of the "new" Cadillac, judging by what we've seen, looks like designs for
designers - not customers.
None of this is comforting. The nascent revolution that Wagoner began by killing
Oldsmobile and ordering a 10-percent cut in the white-collar workforce should only be
the beginning. But we don't know if it's more like the end.
It can't be. Arch-rival Ford is far better balanced in more segments of the volume
and luxury markets than GM, thanks to Wolfgang Reitzle's Premier Automotive Group and
an improving Ford car line-up under Richard Parry-Jones.
In response, GM's Wagoner likes to say, "We have what we have." That's the problem.
Still.
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