For all the talk about restructuring going on today, it is hard for many outside of the automotive industry to remember that in 1985, GM had a blueprint for the Toyota manufacturing model and chose to "bureacratize" it to fit GM's system.
The net result? Abysmal failure.
GM has claimed to be lean, synchronous and without constraint, but in truth, it was all a facade. Instead of taking inventory out and shortening the supply chain, GM out-sourced its warehouse to get the inventory out of the plants and increase the overall cost.
But, it looked good!
Instead of streamlining itsoperations and taking out all the levels of front office redundancy, GM instead chose to strong-arm its suppliers who were "price gouging". They actually expanded the number of employees in purchasing in order to expedite the extortion process. Instead of getting rid of poor performers or over staff, they gave them all books on lean manufacturing and turned them into supplier development "experts", sending them into suppliers plants to create more waste and chaos.
All this delayed the inevitable for close to 20 years, but as we all know the best con men know when to get out. Waggoner and company just tried to milk it too long.
While efficient manufacturers are building plants and profiting (along with their suppliers) right here in the US. GM is now on the attack, blaming pensions and health care for the reason that they can't design a car paople want and build it at a competitive cost. My question concerning health care and pensions; who negotiated the stupid contract in the first place?
I have stated time and again that there will always be automotive manufacturing in the US. Lean Manufacturing dictates that you should build as close to the point of sale as possible. The only thing is that the companies building those cars may no longer be US based.
From Investors Business Daily:
GM Isn't America
Posted 11/22/2005
Industry: The world changed. The world's largest (for now) automaker didn't. The good news is that most U.S. businesses haven't made the same mistake.
Barring some miracle — such as a car that really clicks with consumers — General Motors Corp. is facing a future with no pleasant options. The least painful would be drastic downsizing, which means axing whole divisions like Pontiac and Buick, not just closing a few plants as it announced this week. It also might go into Chapter 11 or sell itself off in pieces, if anyone will buy.
This is a woeful tale indeed, but it also comes with a sense of inevitability. No one has any reason to be surprised.
GM's management and unions have been denying reality not only for the last couple of years but for the last couple of decades. It's almost as if they were the only ones who didn't see disaster coming.
That may be why we aren't hearing an outcry, at least to this point, for a bailout or some other government intervention to save a company that once symbolized, and heavily influenced, the whole U.S. manufacturing economy.
That's not how this story would have played out in earlier times.
A smaller automaker, Chrysler, hit a rough patch in the late 1970s and Congress responded as if the nation were in crisis. A GM break-up or bankruptcy would have been unthinkable then and the government would have found a way to prevent it (as with Chrysler).
Now, it looks as if GM will have to sink or swim on its own, with government mainly in the role of pension insurer and bankruptcy referee. Local economies hit hard by plant closings stand to get some federal and state help, as do laid-off workers.
But no one seems to treat GM as indispensable.
That's because it's not. Even within the U.S. auto industry, GM is far from the dominant player it used to be. It still employs 162,000 in North America, but that number is due to shrink fast. Foreign automakers now employ nearly 60,000 here; Toyota alone has 13 North American plants with about 35,000 workers.
The lesson in those numbers is that we can still make it in America — just not GM's way.
The presence of foreign-based firms as major players in U.S. manufacturing is another mark of change.
In GM's heyday, the 1950s and '60s, the distinction between "foreign" and "domestic," in autos and much else, was clear and politically charged. Domestic firms employed Americans, while foreign companies employed foreigners. So the buying of foreign products was assumed to be bad for American workers.
GM benefited from this argument as long as it could, but it could not keep U.S. consumers away from cars that were seen as offering better quality for at least as good a price. The makers of those cars then set up shop in the U.S., putting thousands of Americans to work and further undercutting GM's status as a patriotic choice.
In his 1967 book "The New Industrial State," John Kenneth Galbraith argued that GM was so big that it could create consumer taste, not merely satisfy it: "Since General Motors produces some half of all the automobiles, its designs do not reflect the current mode, but are the current mode."
Galbraith turned out to be wrong. More to the point, GM acted as if he were right, and the company ended up misjudging its potential customers. As things turned out, the company was not synonymous with America, and it did not have some unspoken contract with the American people to always be their top carmaker.
If only it could have grasped that fact much earlier.
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