Life without GM

The reality is that General Motors, once one of the most powerful corporations on earth, is about to go bust. Regardless of the outcome of loans from the US government, GM faces enormous excess inventory, a declining market in the US, and a lack of models that meet current and future consumer demand. There seems to be a distinct feeling of when, not if, GM goes to the wall. My family has had links to GM since the 1920’s, so it’s strange watching something that was a daily part of life potentially unravel.

Some of my earliest memories centre around our Holden dealership in Inverell, big shiny cars, enormous glass windows, a linoleum floor that would squeak underneath your sneakers and a 1922 Chevrolet, that we sold new and traded back in the 30s, still residing in the corner. We were actually one of the inaugural Australian dealers when GM officially opened in Australia in 1926, earlier vehicles being bought in by private importers, and this in turn meant we were one of the first Holden dealers in 1948.

Holden cars were part of my identity as a child, partly because I loved them and partly because in a small town, being the Holden dealer meant everyone knew our family at least by name. As I grew older I resented this at times, but I still loved those noisy, brutish cars. My immediate family sold out of the dealership earlier this decade and, having lived away from Inverell since the mid 90s myself, I have no direct links any more.

Now GM faces a spectacular crisis, largely of its own making, but also exacerbated by the financial crisis that is gripping the world in general and the US in particular. The ‘Big Three’ have been disastrously run for decades, refusing to innovate, ignoring environmental concerns and market trends, hoping that by lobbying enough politicians and calling ‘Buy American’ they could maintain their market power. It couldn’t last. Making matters worse, in the past two years the credit crunch has meant that the availability of finance has made it difficult for those who do still want to buy a car to do so.

Sadly, the failure of a company like GM has ramifications beyond the two hundred thousand direct employees and the shareholders. In the US alone there are over two million workers who work directly in the car industry, assembly line workers, component manufacturers, new car dealers, all of whom will be affected by the failure of GM. However the bad news won’t stop there, a new car dealer closing may mean thirty or more families lose their main source of income which will then ripple through the community that they live in, the closure of a component factory would no doubt be even more dramatic. Picture this happening all over the US and it’s a frightening picture. The failure of the ‘Big Three’ will also lead to higher costs to the overseas manufacturers who have built factories in the US as failing suppliers lead to increased prices for them too.

GM’s global reach affects Vauxhall workers in the UK, Holden dealers in Australia, Opel engineers in Germany, designers from Saab in Sweden, along with others employees throughout Asia and South America. The flow on effect of GM’s failure could have far reaching consequences. Two years ago I would have confidently predicted that if GM, Ford or Chrysler failed there would be no shortage of buyers willing to look at part, or all, of the GM empire, today I wonder not only if anyone would want to buy a car company, but if they could raise the billions of dollars needed to do so anyway.

Next month’s Commodores may be destined to become collectables.

3 thoughts on “Life without GM

  1. I have no sympathy for GM Australia, Dave. Even as recent as the introduction of an Aussie made, all alloy V6, that did not improve the fuel consumption on imported, cast iron block V6 engined Commodores was a despicable hoodwink of substantial proportion.

    Now as for my feelings for the workers, that’s a different story.

    Michael Moore (dot com) has an interesting take on how to save the Big 3 in the US.

    As for next month’s Commodores being collector’s items, PIG’S ARSE! More like oversized door stoppers at best.

  2. Until now, people have been concentrating on climate change and the ‘post carbon’ economy and, suddenly, the emphasis is shifting from the climate to the world’s financial crisis.

    I think we now need to develop a ‘post globalization’ paradigm to replace the excesses of the ‘free trade capitalism’ paradigm which pervades western democratic societies.

    Unfortunately, there is no ‘soft landing’ for the workforce. We will wear the consequences of the collapse of the financial system and major global corporations.

    I hope that the new paradigm incorporates ‘renationalizion’ where countries learn to grow what they eat and make the clothes that they wear etc.

  3. Of course there’s no soft landing for the workforce, Greg, and neither should there be. We’re all in this up to our collective eyeballs.

    Everyone’s just as much to blame. Manufacturers and marketers for convincing us we needed this stupid, wasteful consumerism and consumers for being stupid enough to believe them.

    We can all point fingers until the cows come home, but in reality we need to all look in the mirror and learn to practise restraint. But that proverbial gate aint going to be shut until after all the horses have bolted.

    And don’t forget, no matter what price we set, our children will end up having to pay it off, in the wake of our greed.

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