General Motors is out of bankruptcy, which is certainly good. If, and how soon, it will achieve anything resembling normal operations is doubtful. Finding a successful routine is going to be a difficult — note that GM’s Saginaw Metal Casting Operations
will not resume production until July 20 — and they’re going to have to do it under close scrutiny, with lots of overseers making demands, and in a brutal economy.
There are numerous reports assessing the overall state of and outlook for GM; I think
this one gives a solid recap of the circumstances prevailing as the automaker returns to “solvency.”
“The bottom line now is that GM gets a second chance, a rare and precious thing in life, as any survivor of a serious illness knows,” writes this reliable correspondent. “The company faces significant challenges. That's the nature of second chances. But with minimal debt, lower labor costs, fewer brands and dealers, and the shedding of health-care expenses for retired workers, the pieces are in place for the company to succeed."
But, after reading the whole column and absorbing the agenda he lays out for the new GM — delivering reliable and profitable products, maintaining the UAW’s cooperation, complying with the federal Auto Task Force’s agenda on corporate structure and fuel efficiency — you may ask, as I did, “what’s changed?” The previous management structure has been axed, but GM now has the oversight of federal bureaucrats and legislators. That’s not a change for the better, in my opinion.
The real burden for GM is its image. It was not good before the collapse, the bankruptcy did not fix it, and in some critical ways the rescue plan has made the image worse than before.
Seemingly, no one (at GM or on the Auto Task Force) appreciates that many of the most loyal customers are past buyers of larger cars and trucks that are not in their future plans. Add these customers to the outraged citizens who promise
not to buy GM again, and you might conclude that the real challenge is identifying
any likely cusomer.
There are practical concerns for all buyers, of course (eg., vehicle reliability, warranties, trade-in values) but what can GM possibly do to overcome the general public’s impression that automaker and its dependents did not deserve this extraordinarily careful handling — and with taxpayers’ carrying the cost?
Numerous other companies got no such consideration, and many of those are GM suppliers (including
foundries) that have been substantially ruined by GM’s mismanagement.
Whatever other problems can be diagnosed for GM, it should be plain that its nearly impossible goal is to create an image that can win new customers and mollify the former ones.