Elegy for GM &#151 And Ourselves

General Motors logo - factory worker graphic AP

This column was written by Nicholas Von Hoffman.
Among the things an executive can do without: a cover story in Fortune magazine predicting your company will go bankrupt. That is what Rick Wagoner, the boss at General Motors, had to look at the other day.

The not-so-upbeat piece, titled "The Tragedy of General Motors," was written by Carol J. Loomis, one of the best writers in the history of American business journalism. She has been lapping the field for fifty-one years at the magazine, and when she writes an article predicting the death of what has been the premier American industrial corporation, it is not done for sensation.

The article describes the long, losing struggle to turn GM around. Everything in sight that management can cut has been cut. Wagoner's salary has been chopped in half, as has the dividend. But the dimensions of the company's troubles are so huge that the savings of half a billion dollars on the dividend is a trifle. Thus, Loomis writes, "no companies have ever turned around because of cost cutting alone."

When the news of GM's bankruptcy filing does come, it will jar Americans and foreigners of a certain age, as even the end of such landmark corporations as AT&T did not. They may not be able to believe it. General Motors was the apotheosis of American industrial might, the greatest manufacturing organization in the history of the world.

If during World War II the United States was "the arsenal of democracy," as President Franklin Roosevelt styled it, General Motors was its center. In 1953 President Dwight Eisenhower appointed the head of GM, Charles Wilson, as Defense Secretary. In answer to a question at his Senate confirmation hearings, Wilson remarked that he could not conceive of his new job and his old one as a conflict of interest because "for years I thought what was good for the country was good for General Motors and vice versa."

The remark offended liberals, but there was something to it. With a million employees and millions more indirectly dependent on it, with half the car market in the automobile's supreme moment, GM occupied a place in American life and business that was even larger than Wal-Mart does today.

Like Wal-Mart, GM's organization and methods were studied in every business school. My Years With General Motors by Alfred Sloan, the corporation's legendary CEO, is still read with veneration. At its apogee, GM, centrally managed and superbly coordinated, made everything from refrigerators to the diesel railroad engines that replaced coal and steam.

If Americans thought of their country as a wealth-producing, manufacturing marvel, then GM was the epitome of that idea. Though they often denounced big business and attacked GM as a would-be monopoly, they were proud of it as they are not proud of Wal-Mart, a corporation that has married organization and technology in ways that would impress Sloan if he were still around, but which does not make anything.

While business propagandists try to convince us of the superiority of being a service economy, we resist the idea and turn back to the time when we made things. GM, wizened as it may be, reminds even younger people of a nation that had a vigor, a power and a productive independence. Now we see ungainly, top-heavy container ships lumbering into our ports, bearing merchandise we used to make for ourselves.

It's not that GM now makes lousy cars. That is not the case. Loomis uses the words of an independent auto mechanic to sum up GM's sales problem. When the mechanic is asked what he thinks of the quality of today's GM cars, he answers, "They're very good. They don't break like they used to." Then he adds, "But nobody will buy them."

Americans can build a decent car, but too few of GM's cars have the right come-hither look. The company has too many brands and models, but cutting them down would mean shrinking the dealer organization, and the laws make that difficult. GM is dying as it tries to live up to its gigantic health insurance obligations for current and past workers, and its crushing pension program, born of a time when foreigners could not import cars and the competition was with other automobile companies with the same health and pension programs.

When GM goes down, it will take us all down with it. It will devastate its own workers and the workers in the companies that supply it. It may bring trade unionism to death's door. The nation will become yet more dependent on foreign imports, because when GM finally emerges from bankruptcy, it will be as a smaller, slighter company.

When great landmarks disappear from sight, they do not disappear from the heart. We still see the twin towers. And we will see GM long after it's gone.


By Nicholas Von Hoffman
Reprinted with permission from The Nation

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