Diary

"GM's Doomed Future"

For as long as I can remember, most issues of Forbes magazine have been graced by columns on the automotive industry by long-time (more than 50 years) journalist-of-that-industry Jerry Flint.

Over the years, my only real gripe with Mr. Flint has been his long-running belief that “we” needed to do more to help the Detroit automakers – a viewpoint that I’ve never shared. But aside from that blemish, his columns have always been interesting and insightful, reflecting (literally) a lifetime of experience with the automotive industry.

Despite the storms that have ravaged Detroit over the past three decades, Mr. Flint has always been an optimist who has been able to find some reasonable grounds for hope for Detroit and the “Big Three.”

Until now.

In his latest column, Mr. Flint sadly gives up and throws in the towel on GM.

This is so gut-wrenching that I’ll just provide two or three excerpts, and let you go read the whole column on your own. It’s a difficult but worthwhile read on the situation.

Don’t wonder about General Motors; its future is set. With or without a bankruptcy proceeding, the company will struggle on. But there will be no quick return to greatness or even a return to mediocrity.

The government will continue to support GM for the next three years and eight months. The decisions will be made in the White House and will be political. Five midwestern states will be decisive in the next presidential election, and they might be hard to carry if the party in power doesn’t save some Rust Belt jobs. But after the next election GM will be largely on its own.

….

With politicians in the driver’s seat this could get really interesting. If “good” means profitable, then this part of the company will be making gas-guzzlers like Suburbans, Cadillac Escalades and full-size pickups. But in the Obama Administration gas-guzzling is bad and low-margin small cars are saintly. So Washington will find some way to wreck even the good half of the company by ordering it to make more small cars and fewer big ones.

A few years from now the surviving parts of this has-been will be down to a 10% share of the market, with lots of its vehicles being bought by the government. That sounds pessimistic given that, as of this morning, GM is the largest vehicle seller in North America. My calculation is based on the expectation that Chevrolet and Cadillac, which now get 12% of the market, are all that will be left of the once great company.

….

Someday a new Moses might come out of the wilderness and rebuild this company. He will gather a band around him like the greats of that old GM: Alfred Sloan and Charles Kettering, Charles Nash and Walter Chrysler (yes, they were GM men first), William Knudsen and Ed Cole. But fighters like these aren’t the leaders that a government would choose. If GM is reborn, it won’t be in my lifetime.

That’s basically, “I saw the world end”….