Tuesday, February 21, 2006

I read my comments. GM part deux (or whatever number I'm up to)

Dickens made some good points in his comments to a GM post I made a few weeks backs. Both can be seen by clicking here.

Since my post, GM has taken steps that I appreciate. Dickens is right to acknowlege the unions as a hurdle.

I feel GM needs to do the following:

1) Sell or close several lines of cars. I don't know much about which ones, because I honestly don't follow GM as anything more than an armchair investor. They need money, and they need simplification. Toyota, Honda, Nissan are great companies because all the cars are essentially the same. A camry is a corrolla is a lexus ES...just different tweaks to the same model. A sentry is a altma is a maxima is a infinity. They are simple. A friend pointed out to me a few days ago that the japanese car companies are strategically superior because they also go many years without significant changes to models. They build cars that work and then just tweak them. GM builds cars to build cars. If you build it, they will come no longer applies.
2) innovation.
3) cut executive pay and dividends. They recently did both. Although I would like to see them eliminate dividends...but first things first. The execs (at every company) should get paid on performance. Give them a 100k salary, and then bonus' if they hit benchmarks.
4) eliminate unions. Companies can not grow nor compete in this day and age if they have unions. Profit sharing and establishing pride is the way to go.
5) I read once that Toyota's biggest problem is their sales force. After many studies Toyota said their cars sell themselves and they don't know why they need a sales force. Do you think GM has this on their list of problems?
6) It is taking GM and Ford longer to build each car than it takes Honda, Toyota, and Nissan....if I recall its like a 5 hour gap per car. That is huge when you're talking about millions of cars....and the gap is widening. Its not just about engineering the cars, its about engineering and innovating the process to build and distribute the cars. Microsoft became great because they innovated their own processes and not just their product....same thing with 3M, toyota, nissan, FORD 80 years ago, etc.
7) Opportunity: Hybrids offer GM and Ford a chance to innovate. This is a revolutionary time in transportation. Who will take advantage of it. So far Honda and Toyota are the clear winners. Can GM, Ford, and Nissan make a big move here?

GM is on a better track than when I wrote last about them....but they really do need to downsize dramatically, focus on a core line of vehicles, establish pride and profit sharing in a non union workforce, and go from there.


Anonymous Anonymous said...

I kind of agree with what you are saying but it is harder to fix than you think. I am an american from Japan. I am an engineer for a electrronics company. I will tell you what is the real reason that american cars are losing. This is only the beginning. You are lazy. Your schools are out of date. Your plants are old and ran down. And lastly you dont have the eagerness to compete like we do. In our eyes World War 2 never ended. The war went from the battle fields to the Business World. Thank You for supporting our troups. We have almost crippled your two biggest money making machines. The we already took over the Television industry. Next we will go after Microsoft and Apple. It will be impossible for americans to start trusting their own products.
Did you know the owner of Toyota lost an uncle at Hiroshema.

Wed May 03, 11:49:00 PM EDT  

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