General Motors goes bust
The bigger they are, the harder they fall. This has never been more true
than today, with General Motors (GM) filing for bankruptcy. Only a mere
couple years ago, the fall of GM would have been considered preposterous. GM
was the global sales leader for 77 consecutive calendar years from 1931 to
2007. It manufactures cars and trucks in more than 30 countries. GM employs
more than 240,000 people around the world, and sells and services vehicles in
some 140 countries. The company was too big, too good; too dominate to be
taken down. GM was the symbol of American Innovation. Today GM is a
different symbol.
Too keep GM afloat, the company has accepted more than $20 billion in federal
aid. The government pledged an additional $30 billion, and refuses any
further capital injections. The federal government will own more than half
of the company. Parts of the company will be sold, some simply closed, and
others put on taxpayers life support. Today, GM is a symbol for failure,
mismanagement, and irresponsibility.
Surely, nothing lasts forever. But one would expect a company so dominant,
with so many advantages, based in the greatest country the world has ever
seen, would survive longer than a century. General Motors made bad
decisions, squandered their advantages, and did not take advantage of its
gifts. Last year it lost its lead in the auto industry race to a foreign motor company,
Toyota. This year, thousands of Americans employed by GM will lose their jobs, and millions
of Americans are paying for it.
This should be a wakeup call to American companies nationwide. There is no
company too big to fail. The economic environment is independent of your
wants and needs. Foreign companies are hungry to take their place at the
top of the commercial battlefield; and are willing to make the necessary
sacrifices and decisions to make it happen. Now is not that time to slouch,
get lazy, or lay back. Now more than ever, innovation, sacrifice, and smart
decision making are needed. Hopefully, we will not have any more American
giants of industry fall, but like always, like all of us, our destiny is in
our own hands.
Reported in a news article “GM, Chrysler to face Senate scrutiny on dealers” posted on Reuters website (C) 2009 by Thomas Reuters:
John McEleney, chairman of the National Automobile Dealers Association said in a news report today that “Rapid dealer reductions increase unemployment, threaten communities and decrease state and local tax revenue without any material corresponding decrease in an automaker’s costs.”
Around where I live, two of the main Chrysler dealers have closed down, meaning that all of the individuals employed in sales, marketing, service, and management have been laid off with the buildings deserted.
What does this mean for the local economy? People, in general, now have fewer places to take their Chrysler for maintenance. And where as Chrysler skilled automotive technicians are now flooding the market, available service bays are dwindling so the few places that might have been able to hire the laid off technicians cannot because there is no place for those technicians to work.
With all of these people laid off from their jobs added to the large number already jobless no one is buying anything, they can’t afford to. Taxable income is diminishing leaving monetary gaps translating into service gaps and a decrease in the service available to all of the people living there.
In addition; dealers that own their inventory are not being allowed to sell anymore cars from the manufacturer. This means that those retail stores have to close up, sell of their inventory since the manufacturer has stated that they will not buy those cars back.
Not only that but it’s important to note that those retailers are no longer permitted to do warrantee work, the 100,000mile/10year warrantee that comes with some new cars will only be available in a dealer which could be very far away form the owners place of residence; if it’s a powertain problem, that will equate to a large tow truck bill.
Common sense dictates that a person wishing to purchase a vehicle, or have one serviced, will buy one from a dealer that is closest to where they live. Subtract the number dealers available for any given manufacturer and that person must travel farther to buy a specific vehicle. Instead of this inconvenience, that person is more likely to purchase a different product than what they originally wanted; thusly yielding a further decrease in sales of automobiles; which in turn lead to less profit for that company.
One may hypothesize that the car companies that are shutting down these dealerships are sending themselves further into debt. Others know this to be true.
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