Posted 3/19/2009

IS THE USA FOLLOWING GM INTO BANKRUPTCY?

Between 1920 and 1955, General Motors was populated by men who saw themselves as executives whose mission was to take care of the corporation.

Between 1956 and 1980, a new type of executive grew at General Motors – men who saw their role as maneuvering for promotion in a corporation which would take care of them.

Due to the ineptitude of a succession of GM CEOs, the caretakers steadily lost out to the "taken-care-ofs." The guys who quickly said, "Yes, boss" won the big promotions over the men who too often said, "I think there's a better way to do it."

The tilting point came in 1979 when the following occurred:

1. A senior vice president made a presentation to the GM executive committee showing that GM badly lagged behind Toyota in manufacturing costs, productivity and quality. For two months nothing happened. Then the Detroit Press announced that the senior vice president had "retired."

2. A consulting firm was hired to improve the engine operations at Pontiac. A two-week analysis showed that Pontiac took seven man-hours to make a four-cylinder engine, while Toyota required only one hour to make a comparable engine. All sorts of problems were unearthed. The consulting firm was shuttled off to work on a small operation elsewhere.

3. The storied "GM 10" project fell badly off schedule. This was the project which was to design a produce a new midsize car for Chevrolet, Pontiac, Buick and Oldsmobile – a business of two million cars. The project failed and GM lost its control over the midsize market as everyone beat them to the punch.

4. The Pontiac general manager failed miserably in his job. Subordinates joked about him, and the manufacturing managers openly plotted to end the car division and change Pontiac into an engine, wheels and axle producer for the corporation.

The following year, a new general manager launched the "Pontiac Builds Excitement" campaign along with a jaunty new sports car. Pontiac turned on a dime, becoming very successful. Outstanding engineering students who refused to consider GM suddenly began applying for jobs at Pontiac.

In later years, when it came time to pick a new GM CEO, the Board picked the man who failed at Pontiac and ignored the man who had succeeded. The choice was so obviously bad that the ill-qualified CEO became the first CEO in the history of GM to be fired.

5. A third-shift foreman was chided by a consultant for sleeping on a cot. The next shift, the foreman ran his shift properly and production doubled. The third day, he went back to his cot. Why? "Because nobody noticed the doubling of production. They just don't care." ("They," of course, was management.)

For the past three decades, General Motors has been managed by men who felt the corporation was there to take care of them. They instituted what is referred to as "the kick-ass/kiss-ass" style of management. You please your boss and make your subordinates please you – regardless of the cost to the corporation.

Now the United States of America has reached that 1979 General Motors tipping point. In 2009 we are engaged in a war between those who want to take care of the country and those who want the country to take care of them.

At first it was big labor who wanted the world to take care of the worker.

Then came the government workers, from clerks to Congressmen.

Then came the aged, wanting a money net which became Social Security.

Then came the farmer, who wants price supports to take care of his business and himself.

Then the aged came back for another bite of the apple, and Medicare was born.

Then came the education lobby, winning funds for teachers (regardless of competency).

Then came the savings and loans, when many went belly up in the 1990s.

Then came the Republicans, spending like drunken sailors and running up massive deficits.

Then came the banks and insurance companies, begging for bailouts to cover foolish bets made gambling on high risk assets.

Now come General Motors and Chrysler and all their employees, suppliers and dealers – all begging to be taken care of.

We still have some rugged individualists out there, but they are mostly in small business.

With the Obama Administration bent on bailing out everyone and giving healthcare to everyone regardless of cost, it appears that we will soon be under the control of those who believe that Americans should be taken care of – by Mother Washington.

In his campaign, President Obama said he believes in "spreading the wealth."

But the lesson of General Motors suggest he may more likely be spreading the poverty.

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