Tuesday, June 07, 2005

Corporate America shafts workers again

General Motors plans to cut 25,000 jobs over the next three years, reported the NY Times today.

Here's another case where workers end up paying for lousy management decisions. Record profits on SUV's and monster pickups made GM lazy. The fat cats in Detroit must have figured the party would never end.

The main problems GM faces are not, in fact, legacy health care and pension problems (but you can bet people will point fingers - and GM may in fact stick the taxpayers with a bailout). No, GM's biggest problems are stagnant development, redundant design and production, reliability problems, and now, sagging SUV sales caused by concern over oil prices.

The reliability problem is underscored by 11.6 million GM recalls in 2004. Think that might have an affect on consumer perceptions? GM sales are slumping - so much so that the company has been forced to offer generous rebates to prime sales.

Compare the GM design paradigm to the Japanese model:

GM's Japanese competitors never introduce "all new" products (except when they are introducing a new product, such as their full size pickup). The Japanese make changes to the chassis and power train in years that body changes are not scheduled, because they realize that "all new" creates the real potential of major quality problems and product recalls.

Or take a look at GM's lethargic response to consumer desires. Ford got into the 4-door pickup trend right on the heels of Nissan's high-demand Frontier. GM took years to get that feature into their designs.

Notwithstanding the problems caused by GM's obviously flawed business model and lackluster leadership, GM CEO Rick Wagoner still made $4.66 million in 2004, plus another 400,000 GM shares and about $160 000 in other pay, but that was (boo hoo) an 8 percent decline from 2003.

For me, it all goes back to my father's firing from the engineering staff at Harley-Davidson in the early 1980s. After AMF screwed with the company's image by making crap that leaked oil on people's garage floors, after the company went into the tank, begging the government for protection from Japanese copycats, after my dad helped to design the #1 XR750 racer, after his 20 years of service to the company, he was a handed a pink slip. If he believed in unions, he might have been able to save his position with accumulated seniority. It was a painful transition for my dad. There were a couple of years there where I think he must have wondered what he could do that would pay as well, that fully utilized his talents, and that he found interesting.

Corporate America needs to pay more heed to workers, inviting them to participate in decisions, and pay less attention to quarterly profits and the desires of CEO's and boards of directors.


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