Apparently GM is the Devil's Demon Love Child

No, GM is NOT the devil, nor his progeny. But you certainly wouldn't know this by reading much of the news these days. It's amazing what people can run with! Which is why I was so happy to read this story over at the Scripps News site.

With so many bashing the Big 3 as dinosaurs that need to go away, it's nice to see a more balanced opinion about their strengths and weaknesses. Let there be no doubt that GM does have problems and is experiencing the brunt of it now. However, much of the rhetoric being spewed out is influenced by personal situations and pet causes, while ignoring business realities. And this is not only patently unfair, it's counter-production to finding a workable solution.

To the socially minded unionist, GM is a behemoth that cheats it's workers. To the environmentalist, they are destroying the world. To a person buying a car they are charging too much.

But let's consider the facts:

Assume that a car is $40,000. What do you think the margins are on that vehicle? I'll tell you. It's 6%. And that's the best case. Many times it's even less if not a complete loss.

But let's put that aside for the moment and simply go with 6%. That means the manufacturer is getting $2,400, approximately 2/3 of which is going to healthcare costs. That comes out to $1,525 per vehicle is set aside to pay for the growing health needs not just of workers, but a pension group that is exponentially bigger than its workforce, and outpaces workers even further as the size of the production output deflates. And that cost is even before research and development and other charges that are needed to keep consumers happy, improve gas efficiency, build new vehicle technologies, etc.

I'm all for greener tech and support such causes wholeheartedly. I'm all for treating workers fairly. But how can a company stay competitive in this industry with these margins? We all know Toyota isn't saddled with these kinds of costs.

It's naive for people to claim GM is ignoring the pollution issue and is out of touch with environmental needs. It's also useless to saw the old harp about, "He makes $15 million and I only pull in a $40K wage." Some people make more money. Get over it. And, the problems at GM are deeper and much more complex than the fact that the company is ACTUALLY REDUCING COSTS, FUEL CONSUMPTION AND CARBON IMPACT by flying their executive teams via a private jet as opposed to buying ten commercial coach seats.

If we paid everyone the same and built small, under-powered cars with less environmental impact, we'd have what...the Yugo? That's the product of socialized thinking isn't it?

This is not an argument for bailout or a defense of wasteful practices within the US auto industry. It's an argument for people to stop looking for scapegoats. GM got caught with it's pants down. They were implementing change and the economy collapsed in the middle of it. Tough break. But it's time to stop vilifying and time to look for reasonable solutions.

It will be very interesting to talk to Chris Barger this week on The BeanCast. We're a marketing podcasts, but I'm still looking forward to getting his take on the whole financial situation as well.