PROBLEM: General Motors reported today an annual loss of $38.7B and a voluntary buyout of all of its 74,000 hourly workers.
See: http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22969123.htm
SOLUTION: Despite the dismal for General Motors denoted in the bleak financial report, General Motors and the United Auto Workers (UAW) can re-focus and become profitable. No, it will not be the national automobile manufacturer of fifty years ago. But with blood, sweat and tears, it can be profitable.
General Motors, itself must adapt to the fact that it is in a global economy and the automobile industry is extremely competitive. The average American is looking for a bargain and also value. Value means a history of reliability, style, and features.
Here’s the plan to fix General Motors:
ACTION PLAN: Redefine your product offerings, and brands.
General Motors cannot sustain itself with competing models within their product lines. For example, GM has multiple models of its large SUV across its brands.
Let’s take the Chevy Tahoe. The Tahoe is the cousin to the GMC Yukon and Cadillac Escalade.
Let’s take the Saturn Outlook. It is the same as the GMC Acadia and Buick Enclave. Later this year, a fourth model, the Chevy Traverse will join the GM lineup.
This does nothing but confuse the customer. Consumers are very fickle, and only statistics will show if they abandoned a GM product for a competitor.
Simplify the product offerings to three car brands (entry, middle, and luxury) and truck brand. Based on the current lineup:
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Saturn (entry-level)
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Chevrolet (mid-level)
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Cadillac (luxury)
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Truck (GMC, Hummer)
The product line, maybe in the Saturn line-up, should use the models from overseas. Opel and Holden are selling really well abroad, and can be the footprint for a re-birth of a more streamlined GM.
ACTION PLAN: Focus on energy-efficient models.
General Motors needs to be the pioneer of the American automobile industry with fuel efficient models. It should explore diesel, hybrid and electric. With gas over $3.00 per gallon in most places, gone are the days of the classic muscle car. Americans now are purchasing with their wallets, rather than their remembrance of the muscle power of yesteryear.
ACTION PLAN: Work with the union (UAW) to streamline health care costs.
Actually, UAW should take the lead on this. UAW with its membership base should use its economies of scale to price health care premiums for its members. The cost savings should be passed onto GM, Chrysler and Ford.
Continued discussions between GM, UAW and its members are needed to get off of the single-payer system. It is making GM uncompetitive globaly.
