Our penchant for looking outward is costing us dearly at home. Comments on New Orleans are long past being appropriate; however, anyone who goes by a General Motors dealership offering employee discounts to new car customers should quickly realize that all is not well in the United States; actually, we're in a bucket load of trouble.
From coast to coast the nation writhes in pain from problems not easily fixed. With our eyes dominantly fixed overseas as we try to repair, or democratize, a recalcitrant world, we are not seeing that we have to heal ourselves first and foremost. I am referring to the deplorable condition of our national road and rail systems, our ports, our bleeding manufacturing enterprises that spew work to overseas manufacturers, our troubled education system, and the runaway cost of college. Please, add a few of your own. Sadly, there is much to choose from.
GM, our nation's largest manufacturer, is selling its autos at a loss of more than $1,200 per vehicle through its grotesque "employee discounts for everyone" marketing. Presumably they will make it up with volume. Is this a manufacturing problem? The answer is both yes and no. GM has saddled itself with an enormous payout to retirees. These retirees outnumber existing GM workers two to one. The Japanese do not have this burden and are making as much as $1,000 per vehicle in profit. The differential is over $2,000, and it's not about to go away.
The Japanese share of the vehicle market continues to rise despite the GM discounting. GM commands barely over a quarter of U.S. car sales. (Ford is nothing to crow about either). The discounted GM vehicles are hurting the resale of GM cars and hurting used car sales. Just how much damage does GM wish to create before it sees that it's going into a self-destruct zone that goes beyond its native and already staggeringly damaged home city of Detroit?
GM manufacturing has never reached the quality level of Toyota, and there is no way for it to make up for this $2,000 differential. That problem will only be solved by better GM management. The current managerial staff is staring at a $286 million second quarter deficit, a "D" rating financially and decreased sales despite giveaway programs.
These managers should either take themselves down a peg or hang their hats up. They might also take a hint from Kevin Kelly, whose book "New Rules for the New Economy" outlines growth and survival in a once very new-networked economy.
Kelly sees GM as the prime model of the old economy -- pre-Internet, pre-communication and pre-customer driven -dominated by property, warehouses, factories and dealerships as well as old-time management practices. Such an economy, according to Kelly, emphasizes place and proximity, whereas the new economy goes beyond place to what he refers to as space. Only Kelly can fully explain his meaning of this transition.
GM has been a favorite model of business schools as an example of old-style, hierarchy management with too many layers. The company has changed, but clearly not enough. It does not take a Kevin Kelly to know that we live in a business world that requires operating in real time. This kind of response cannot be accomplished within an old-world model.
It is hard to cry for GM, and yet we might cry for our beloved country.