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Gm's Chance To Get It Right



Is General Motors Corp. finally going to do what it should have done 10 years ago? Will this strike spur it to close excess manufacturing capacity, dump tired brands, and trim bloated bureaucracy? Will the United Auto Workers end its self-destructive opposition to work-rule changes and parts outsourcing that are absolutely needed to boost productivity? History says no. This time, we hope, will be different.

GM once held over half of the U.S. vehicle market, but that is down to 31%. Even after closing factories during the recession of the early 1990s, the company has 50% more assembly plants than Ford Motor Co. but only 25% more market share. It has twice as many brands. GM simply has to cut back.

But that's not the worst of it. GM is the most vertically integrated of all the world's major auto companies, buying spark plugs and other low-tech components from its own Delphi and Delco operations. Other carmakers are assembling entire exhaust, transmission, and other auto systems from outside suppliers that design and build them. The UAW, fearing a loss in membership, is fighting outsourcing tooth and nail, but GM must sell its parts operations and speed up plans to buy globally. The UAW fiercely resists changing workplace rules as well. GM has local agreements that allow employees to fulfill quotas and go home early or work a second job. That's crazy.

GM's management shares much of the blame. Bad decisions, such as the one to starve Saturn of funds for a new sport-utility vehicle and a minivan, have hurt the company and curbed job growth. Even worse, since 1992, GM's senior management ranks have increased 47%, while Ford's have dropped by 37%. Not good.

Opportunities often pop up at unexpected times. The current strike was not supposed to develop into a total shutdown, but it did. GM: carpe diem.

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