General Motors (GM) : 1960 - 2010

The Decline of the American Auto Industry

Sales of GM peaked until 1960, when European and Japanese car manufacturers began to throw a spanner in the works. Their initial models were perhaps not too good-looking in design, but they were robust and well made, whereas their American counterparts seemed to be put together with wire, and suffered from a deplorable quality !

In 1965, the American consumer advocate Ralph Nader publicly nailed this archi-poor quality to the wall, and in particular he aimed his arrows at the GM Corvair model , the first compact car.

The American auto makers reacted immediately, if too late, but foreign manufacturer market share rose from ten percent in 1963 to twenty percent by 1970.

In 1973, the American auto industry received another considerable blow, this time from the Arab oil embargo .

The public immediately traded in their American gas-guzzlers for smaller and more efficient imported cars, which at the same time were far less polluting ! Actually, all American manufacturers were rather slow to react to this new but sensitive concern.

GM building 1977
GM building 1977
Buick 1977 Electra Limited Park Avenue
Buick 1977 Electra Limited Park Avenue

The Decline of General Motors

GM continued to lose market share, and declined from forty-five percent in 1981 to thirty-five percent in 1989. Tens of thousands of workers were laid off, factories were closed, but the trend seemed irreversible.

GM gave in to union demands in 1990, and created a program that paid workers, even when plants were not running, forcing it to build cars and trucks it could not sell without big incentives.

Between 1990 and 1992, GM lost thirty billion dollars !

In 1992, the whole board of directors was fired, and the new board started a very strict and complete restructuration. The next year, finally they again made a profit.

But GM was reluctant to move away from big profitable vehicles to small, less profitable cars, even when consumers demanded better fuel economy, and gas prices began a steady rise.

The Decline of Flint

The result was disastrous for the city of Flint, the cradle of General Motors.

Tens of thousands of workers lost their jobs. Unfortunately, the ultra-powerful unions continued to maintain their iron grip on the company, and they incited the workers to refuse any other work or reject a lower wage.

Ultimately, the result of this ostrich policy led to the sad demise of the workers, the company, the suppliers, the overall employment, the unions, and finally even of the entire city of Flint !

Recent History

GM was the world’s largest car maker from 1931 to 2008, but then it was surpassed by Toyota.

In the fall of 2008, despite years of steep cutbacks, GM was on the brink of bankruptcy

In December it received nine billion dollars in federal aid, at the order of President George W. Bush. In March 2009, President Obama fired GM's chief executive Rick Wagoner, rejected the company's restructuring plan, and forced it into bankruptcy court.

The bankruptcy process was completed on July 10, when GM sold its good assets to NGMCO Inc.  Brands like Chevrolet, Cadillac and GMC were brought into the new company, that was later renamed to the General Motors Company.

The major shareholders are the federal and the Canadian government with sixty percent,  a health care trust for the United Auto Workers union, and bondholders owning the balance.

Brands like Saturn, Hummer and Pontiac were shut down or sold.  Labor costs were cut by more than two-thirds, from $ 16 billion in 2005 to $ 5 billion.

Through October 2010, GM sold about 2.2 million vehicles in the United States, about half as many as it did in 2005, when it lost $ 10.6 billion.  The company reported profits of $ 4.2 billion over the first three quarters of 2010.

On November 18, GM made the largest initial public offering (IPO) in history, raising $ 23.1 billion with an opening stock price of $ 35 per share. The Treasury Department’s ownership was reduced to 26 percent.

Video : GM Robot Super Bowl XLI Commercial

My other Articles about GM

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