Sunday, May 31, 2009

General Motors goes bankrupt. An era ends.

The inconceivable is about to become reality as GM is expected to declare bankruptcy on Monday. It's one of those days when you can't help but think that the world has shifted just a bit.

One of the first cars I ever drove - my mom's - was a Pontiac. It was a miserable piece of machinery whose parts meandered down the road in close formation and guzzled gas in between extended periods sitting outside the mechanic's shop. I was privileged to have the occasional moment behind the wheel because, frankly, when you're a teenager, driving yourself beats waiting for a bus. But in retrospect, this single vehicle epitomized everything about the North American automotive industry and the roots that eventually took hold and resulted in the implosion we're witnessing today.

I've seen a lot of anti-Detroit sentiment in recent months. Critics say the Big 3 - or whatever's left of them - deserve everything they're getting today, that they had it coming. Factually, they're not wrong. GM, Ford and Chrysler have spent decades pawning off indifferently designed and manufactured products on buyers they viewed with thinly disguised arrogance. They've wrongly assumed that consumers would routinely come back for more - a fatal error given how quickly foreign competitors capitalized on the domestic vendors' mistakes.

Yet as the pillars of a century-old industry are dismantled in a high-stakes, last-ditch attempt to save it, those who cheer the demise of the domestics would do well to appreciate how much pain the process will ultimately cause. Tens of thousands of jobs are being lost. When ripple effects are factored in - dealerships, suppliers, companies that rely on the core ecosystem, etc. - the number swells by an order of magnitude, if not more.

We may vent our frustration at the clueless suits who literally drove these businesses into the ground, but we owe the legions of victims of their hubris - the regular folks who simply wanted to work, raise families and be part of their communities - something more than a snide comment and a shrug. As we've all learned, after all, individual fortunes can turn on a dime, and those who torment the loudest may yet find themselves on the wrong side of the economic wave.

Your turn: Thoughts?


Said In Jest said...

I can think of a few responses to the general anti-Detroit sentiment right now: The Flex, the PT Cruiser, the Hummer (any inCARnation...har!), the Pontiac Aztek, and many, many more.

When a company's most "innovative" designs are fugly, there's a pretty good chance that no one will find them interesting.

To cite history, look at the Mustang. It started off as a sexy vehicle, then devolved into some sort of lump in the '80s.

North American automakers have proven themselves fully capable of taking a good design and making it horrible.

Not to mention the prices. When the STARTER version of a car costs half what a down-payment on a house costs, no one wants it, except for the very-rich. Look at India: they have recently started selling a car that costs, in total, US$2,500.

Personal transportation is one of the few costs that have come down in the last few decades. Consider that a Pontiac Impala, from 1967, costs less than $30,000. Yet it's known as a "sexy" car today, and would probably retail new for $60,000. But Chevrolet (GM) didn't bring it back as it was, they brought it back in an undesirable, supposedly more modern version.

You know the saying, "Those who don't remember/learn from the past are doomed to repeat it"? That's what's happening here. Great cars are being ignored, in favour of nasty, supposedly eco-friendly versions. Not that I'm against global warming-warning, but if you look at the US's history, they're more interested in cars they like than they are saving the planet. From a business standpoint, it would make sense a little to try to bring sexy back.

Hell, thinking about the 80s, let's bring back to the cautionary tale of John DeLorean: no one will block the creation of a new model, as long as it LOOKS okay.

Compare that to the Pontiac Aztek.

How did it ever make it to production?

Gordon said...

Yeah Carmi I hear ya. I mean how can someone "modernize" a car and make it look as you said "fugly".
I mean I drive a Ford Ka, which has just been remodeled and it's actually okay looks a bit better than the old one, cheekier anyway.
I've seen some of the cars that have made it over from the US even after a "tweak" for the UK market I wouldn't buy one, in saying that there are plenty of cars out there all wanting to be bought all look okay, some are more functional than "lookers" but if your buying it, it's not for the looks..
I say we all go buy a mini :D great British car, okay owned by BMW now but they bought the company and kept the right car...

srp said...

I just always wanted a car that would last, run daily without breaking down and use less gas. I remember the last oil crisis and standing in line for gas. I changed my car habits then.. but the US car companies didn't.

When I compare the amount I spent on repairs for my Honda with that my dad spends on his Dodge Caravan.... not even close. Value is more important than looks. Dependability and not having to fear a vehicle will break down and leave you stranded.

They did a comparison of hybrid vehicles in our local paper.. two Hondas, Toyota Prius and the Ford. Even here.. Ford came in more than 10 mpg less than the foreign designed models. And it turns out that my Honda was made in America and has more American made parts than some of the GM cars.

There is much fault to be spread around. I wish I had worked in an industry where I could get such pay and health benefits for life after retiring. What a mess.

Nikky said...

during all of this I have somehow managed to retain my job in at an auto parts manufacturer. I have been laid off since December and just recently lost my employer RRSP match and my profit sharing. I am all for taking concessions to keep my job, I don't have a problem with that.

I find it amusing that people contiually go on about the fugliness of the north american cars (flex, pt cruiser, hummer, aztex) and yet there is no mention of the Honda Element. Possible the biggest eyesore on the road. Just a glorified shiny box on wheels with no personality. I personally will never purchase a Japanese vehicle. I noticed that Toyota just recently started touting the fact that they make cars in Canada. No thanks foreign companies...I'll be supporting North American car makers. After all they are my bread and butter.

Wendy said...

Wow Carmi, you've said it all - and so well too.

Carli N. Wendell said...

Nicely put, Carmi. It's hard to say "General Motors" in front of my father without getting a lecture about how no one in his family will ever again drive one of their cars.

I'm still trying to figure out how Canada got 12% of GM. Nice going, buddy.

Mojo said...

Is anybody really surprised by this? No, people will buy ugly cars if they think they're getting a good value. How else can you explain the success of the Honda Element or any variant of the Scion? Or any one of a number of other fugly cars. Aesthetics aren't a primary concern in this economy, but bottom line sticker price sure as hell is.
When a base V-6 Camaro is going for $35K USD? Who can afford it? Apparently somebody forgot to tell GM that there's record unemployment sweeping the land right now and everybody's scared ... witless to spend any serious cake on anything. I'm not saying bring back the Chevette or anything, but it doesn't take a rocket scientist to figure out that your customer doesn't consider any of his income "disposable" at the moment.