GM in Crisis?
Well, I'm almost done reading the World is Flat by Thomas Friedman. He did a tremendous job putting together some of the economic phenomenons that are occurring today and projecting these trends into the future. While many may scoff at his cataclysmic predicitions about the economic future of the US if we don't change our mental state about education and really working for our rewards the US will suffer. The current GM crisis has gotten me thinking.
A few years ago GM was the darling of the US auto industry and then Chrysler had its time in the spotlight. However, now GM is on the brink of collapse. UAW members clamoring for better benefits but they are unable to get them because the costs are too great for the automaker to pick up. A dull car line up doesn't help either. Clearance, red tag extravaganza, pay what we pay marketing isn't helping too. The exception is Cadilliac, who took a chance and it has paid off.
But, I think the major problem with US automakers is this, they are always a step behind. Toyota is primed to become the leading automaker in terms of volume and is alerady a great leader in quality. You don't see them doing crazy deals to get sales. They let their products sell themselves. US automakers don't need to lower price, they need to take a page from the Japanese. Build what we want! The American consumer will purchase it. Hell, we spend $350 on a purse and $250 on a pair of jeans we will purchase nice vehicles, but it has to be what we want.
Here's the kicker. Get this, I looked at the new Hyundai Sonota and I liked it. While it wouldn't win too many style points, it does all the right things well. Yeah, a friggin' Hyundai. The fastest growing auto company in the US is from Korea. If you think the competition is going to get easier think again; the Chinese are going to be jumping into the foray soon. This year they will showcase their first car at the Detroit Auto Show. While, the vehicle is simplistic and overall an okay car the Chinese can only do one thing - get better.
Okay, I'm criticizing the US auto industry, but I'm positive that these challenges will arise in other economic segments which the US has been the leader. So, how can we change this? This may sound unpatriotic but we need a crisis to come about. After 9/11, our country was unified to fight a single cause. I admit that the government and the President may have been over zealous at first, but we're seeing now a response in the US Congress and the people as they question some of these practices.
I'll like to make an analogy to control systems controlling water flow for a process. If we change the set point asking for more water the control system responds. Like any control model , the control system tries to find that new "stable" operating point, the reponse may be too much or too little water, but eventually it finds the correct operating value. Also, some control systems will respond quicker and find that new set point faster than other control models. The problem with the current US state of mind is that we're happy operating at our current set point. However, the world has changed and the set point is a new greater value. Other countries are racing to that new set point, while we're being lethargic - allowing our trusty old control system work. What this country could use is a disruption to our control model. So the disruption I mentioned earlier that would be unpatriotic is this - allow a major company like GM to fail, go bankrupt, disappear, go extinct, whatever you want to call it. Yes, this would cause major economic peril, but it might wake us up from our comas. Also, the remaining auto companies would swallow up the market share that was once GM's. I would bet that those that use to work for GM would work for Toyota, Hyundai, or the new Chinese auto company instead of being unemployeed.
2 comments:
Yo Bro! So, I finally discovered your public secret. I mean, you introduced your blogspot to me over Christmas, but I just haven't taken the time to remember what the URL was til now. Interesting thoughts about GM. I too am reading The World is Flat, but am only 1/4 of the way through. Currently, I'm reading the new Dalai Lama book, The Universe in a Single Atom, and a few HR books for class. So for a rhetorical response to some of your claims: I agree. The US is stuck in this paradox of circularity, where we create unoriginal innovations of frivolous utility where more is really less and cheap actually means cheap.We can't escape our own demons and realize that yes, while we promote change, we no longer lead in its occurence. It's best summarized as this: Never mistake moving fast with moving forward. We're moving at a desperately rapid pace to nowhere. Isn't Iraq a perfect example? Back to the market: the problem is 2-fold: first, the government is in bed with the corporations, so politics and business so closely tied together that they're literally strangling the life out of each other; second, there's a rupture between US consumer behavior and our personal belief, or at least the belifs we hold dear til we see the "lowest prices" signs - we want cheap, we want more, we want fast, we want better, we want less taxes, we want less work, we want more play, but we also want patriotism a self-soothing need to maintain our false system of belief that we're not part of the problem, it's the Chinese, Japanese, dirty knees people of the world who are creating disruption of the most devilsh kind. But we buy, we benefit, we profit, and we save because of this emergence of foreign competition. If all consumers read The World is Flat, maybe, as a country, we'd start to piece together the puzzle, but it's hard a diffcult puzzle to put together when you're actually one of the pieces. If you don't put yourself in the puzzle, the picture will never come together.
Yo Bro! So, I finally discovered your public secret. I mean, you introduced your blogspot to me over Christmas, but I just haven't taken the time to remember what the URL was til now. Interesting thoughts about GM. I too am reading The World is Flat, but am only 1/4 of the way through. Currently, I'm reading the new Dalai Lama book, The Universe in a Single Atom, and a few HR books for class. So for a rhetorical response to some of your claims: I agree. The US is stuck in this paradox of circularity, where we create unoriginal innovations of frivolous utility where more is really less and cheap actually means cheap.We can't escape our own demons and realize that yes, while we promote change, we no longer lead in its occurence. It's best summarized as this: Never mistake moving fast with moving forward. We're moving at a desperately rapid pace to nowhere. Isn't Iraq a perfect example? Back to the market: the problem is 2-fold: first, the government is in bed with the corporations, so politics and business so closely tied together that they're literally strangling the life out of each other; second, there's a rupture between US consumer behavior and our personal belief, or at least the belifs we hold dear til we see the "lowest prices" signs - we want cheap, we want more, we want fast, we want better, we want less taxes, we want less work, we want more play, but we also want patriotism a self-soothing need to maintain our false system of belief that we're not part of the problem, it's the Chinese, Japanese, dirty knees people of the world who are creating disruption of the most devilsh kind. But we buy, we benefit, we profit, and we save because of this emergence of foreign competition. If all consumers read The World is Flat, maybe, as a country, we'd start to piece together the puzzle, but it's hard a diffcult puzzle to put together when you're actually one of the pieces. If you don't put yourself in the puzzle, the picture will never come together.
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