Is this the death of GM?
July 15, 2008

1. Is GM dead? GM CEO Rick Wagonner said Tuesday the automaker would cut dividends, jobs, health care bvenefits for retirees and become the world's leader in fuel-efficient cars. It’s about time. Absent a federal energy policy that does more than drill big holes in the ground and absent a global commitment to reduce greenhouse gases, we are stuck with the internal combustion engine for transportation. If so, the least an automaker can do is lead trends, not follow them. GM built massive trucks and SUVs when oil was relatively cheap and now finds lots filled with them. They’re certainly not alone, but GM, the Titanic of the auto industry in terms of size, certainly saw the iceberg coming three years ago. They just couldn’t turn the ship in time to avoid hitting it.

2. The solution to revive GM? I’m no expert, but the quick analysis of GM’s business is simple: too many brands, too diffused a message, too unfocused a manufacturing effort. The auto world would be a better place with Chevrolet, Saturn, Cadillac, GMC trucks and a committed effort to make great vehicles at every turn. Clearly there’s some volume out there that could be absorbed if Buick and Pontiac just went away. We got sentimental when GM ended the Oldsmobile brand, and yet we seemingly managed to survive. Tradition and sentiment are fine. Workers can't build a life based on it.

3. Other modes of transportation: What can we learn from Toyota’s announcement last week that they would move Prius production to its new, now-under-construction plant in Mississippi in 2010? Two very simple things that every manufacturer ought to learn: Making your products close to your customer cuts down on time and transportation costs, reducing your overall costs to allow you to stay competitive in a global marketplace, AND that wages are only one factor when choosing where a manufacturing plant ought to be. Otherwise, why would the world’s best automaker move rapidly to put the Prius production in the U.S.?

4. And lost in the shuffle: Will surely be this little nugget of information. The Bureau of Labor Statistics came out with the jobs that are most in demand in this evolving economy. Guess what’s one of the top positions? Engineers. The BLS is projecting 11% growth per year, as the complexity of facilities, the need for new energy sources and the understanding of the importance of running a facility well are getting back into vogue. Here's a quote from one part of that story: "Chemical engineers who work with biofuels, electrical engineers who design power plants, mechanical engineers who find better ways to capture air and wind energy, and nuclear engineers who make plants run more efficiently will all be in high demand -- with salaries to match. While some engineers, like chemical engineers, may need a PhD to do their jobs, most others, like environmental engineers, only require a bachelor's degree in physics or engineering, according to the BLS." Plant Engineering readers understand this, of course. We’ve been writing about it non-stop for the last three years.

5. So add it all up: The economy is changing. The world is flat, which is fine, but it’s also curling up a bit at the edges, like a skateboard ramp. The ride down is steep and fast, the ride back up is thrilling. The lesson we’re learning is that the fall back to earth requires lots of padding. The real challenge, though, is how fast you’re willing to get back on the skateboard and do it all again. The results can be amazing.

Posted by Wolseley on July 15, 2008 | Comments (1)