Former GM Vice Chair Blames ‘Management Incompetence’ – Not UAW – for Detroit’s Demise

No motives just news.

IMO, Unions are the number 2 reason.

While I don't think it's as simple as Lutz makes it, I do find it funny/sad that even when a 50-year management insider refuses to lay the blame in the UAW, people from Bumfuch, KS (or where ever) who've never even laid eyes on an auto plant somehow just know the problems MUST be organized labor.

Don't get me wrong, I'm not trying to defend everything the UAW has done. It's just that the idea of blaming them for the recent bankruptcy is akin to blaming cashier & stockperson larceny for K-mart's bankruptcy without ever using the word "Walmart" in the discussion.

All of the German automakers deal with a union (IG Metall) that is far more powerful than our humble/regional UAW. A cousin of mine who works both in the US and Europe sums it up this way... "If we have a production need that requires extra long hours, you can always find a UAW person who will work for the overtime, but you'll pay for it. In our German plants, they simply refuse the additional hours and the workday ends." Take a look at what happens when any European company tries to cut wages/shut a plant/etc. The entire town gets taken over and shut down.

It's not unheard of in Asia either, where they also have auto unions (http://www.autospies.com/news/Japanese-Automakers-And-Unions-Threaten-To-Leave-If-Yen-Value-Isn-t-Adjusted-64661/) In this case, a union is attempting to dictate Federal monetary policy... Ever seen the UAW try that? What about the violent strikes and shutdowns in Korea a few years back? The Asian automakers promise a teenage-to-grave social contract, and are famous for never shedding excess labor costs.

That said, let me critique where I disagree with Bob Lutz... Management stupidity may have been where GM went off the rails by focusing too much on "numbers", but that's too much of a broad stroke to paint the entire industry with the same brush. A few of Bob's "car-guy" ideas didn't set the world on fire either... a.k.a, Pontiac GTO and Solstice/whatever the hell the Saturn version was called.

Jimmy Carter's CAFE standards did a lot to screw-up the US industry by mandating products no one wanted, with no incentive (fuel taxes) for customers to purchase. All your "refined" Euro/Asian markets would be driving around in 12 MPG V8 BMWs if gas wasn't $8.00 a gallon. This built-in small car demand in the Eurasian markets, combined with severe protectionist trade policies allowed huge economies of scale on small cars. Ever notice that the Japanese don't build their smallest cars here? (With the recent exception of the US Civic plant.) Instead they build larger sedans than they sell in their home markets, and SUVs/Minivans. The small cars are imported as the market demands.

Meanwhile, GM/Ford/Chrysler are cranking out low-profit compacts from plants in Ohio/MI/Illinois at low-volumes because they have no realistic chance of selling them worldwide because of foreign tariffs. This yeilds a chicken/egg problem... The cars can't be competitve in terms of fe

I thought the K-mart bankruptcy was due to the fact that not once in their history they had produced a profit. They were coasting on investor dollars. and were "too big to fail"

Continued...
----------------

Meanwhile, GM/Ford/Chrysler are cranking out low-profit compacts from plants in Ohio/MI/Illinois at low-volumes because they have no realistic chance of selling them worldwide because of foreign tariffs. This yeilds a chicken/egg problem... The cars can't be competitve in terms of features with foreign brands because there is no ecomomy of scale. Sales fall further in the US because the cars aren't competitive in terms of features.

How do I sell someone a $15,000 Chevy Cavalier, (which might sell 120,000 units) when two-year old Trailbalzer with leather and a moonroof is the same price? If the operational cost difference is marginal, 90% of the customers are going for the larger car. Thus I can only compete on price, and the car's content must suffer.

But if I'm Honda, I can offer a helluva nice Civic because my costs are spread out over a million units all over Asia/Australia/Europe.

Now spike gas up to $5 a gallon and you've killed the only segment where US builders could make money. Fixed costs are the same for small cars vs. large, but margins sure as hell aren't.

Lutz basically misses the third leg of the stool... Further, Chrysler's demise wasn't a lack of enthusiastic car people. Regardless of how you feel about the product, the Chrysler offerings from the mid-90s hit the market dead-center. Chrysler's death came because a recently hired CEO began hoarding cash, making the company a takover target. Daimler refused to invest in anything but trucks/jeeps, yeilding uncompetitive cars, and bailed when gas prices killed the golden goose... That's a world different than what happened at GM.

I'm not a big GM fan by any means (having sued them under the Lemon Law)
but Lutz should not throw the only company to hire him at his advanced
age and senility under the proverbial bus. Its all about ego, power and money with these guys at the top and is the reason for GM's failure and Lutz's fall from grace.

As for "deboosting" me, I suppose it's like Jack Nicholson says..."___"

As for K-Mart's demise, many people say it's because they refused to invest in a modern inventory system (until it was too late) that tracked sales immediately back to purchasing. Thus they were often out of stock on certain items, and filled to the rafters with slow sellers.

K-Mart also had a very inbred corporate culture... The only way to becoming an exec. was to be promoted from store manager, which meant there were a lot of people that knew how to run a store, but few that knew how to run a company (advertising, inventory control, logisitics, etc.)

They were second only to Sears in size, perhaps even surpassing them in the mid 80s. For a while, very profitable with a stock price to match.

Let's see how many K-mart shoppers de-boost me, lol!

Call Bob Lutz insane all you morons want, but companies that have listened to his advice have done very well as a result. And exactly what fall from grace is that imbecile talking about? Bob Lutz is far more relevant than any other automotive personality out there right now. I have paid attention to Bob Lutz since he was at Chrysler and he has not deviated from his core principle. Build cars that people want. He did that at Chrysler and he did that at GM. Want proof? The Cruze was the best selling car in June, the Malibu for May. Lutz is right. No matter how much the unions push and pull, ultimately it is a management decision on what models to build and how to build them. But then again some of you have no higher education than 3rd grade so talking business, accounting, and logic to you is a lost cause.

To "last tango to have an opinion"...your opinion no better or worse than the next guy.