Monday, June 1, 2009

Goodbye GM

The Lehmann Letter ®

In 1965 GM was the industrial paragon: Best managed, most efficient, most profitable, and a company that paid good wages to its workers. As the biggest of the Big Three, it was untouchable. Its position was impregnable.

Who could enter the industry? How could they amass sufficient capital? And even if they did they’d have to sell so many cars that they’d ruin the market for everyone, themselves included. Foreign competition? Forget it! At the most, niche players.

But management fought seat belts, emissions reduction, safety features and fuel economy. When imports appeared, they were dismissed as junk made by pauper labor.

Eventually it became all too clear: Management wanted to market the cars they wanted to make. They wanted to inflate the product (bigger and heavier) to realize fatter margins, and then advertise it into our driveways.

How the chickens have come home to roost. How the warnings were ignored. How the decades were squandered.

Too bad. It didn’t have to end this way.

© 2009 Michael B. Lehmann

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