Wichita Business Daily

What is the source of the problems with General Motors?

I know that they say General Motors is losing ground to Toyota. I was wondering if the labor unions and the cost of health care is the root of all there problems or is there other things that is hurting General Motors.

Public Comments

1. over paid CEO
2. The Japanese took a lot of the car market away from them, because Detroit has no clue how to engineer or build a car anywhere near as reliable as the ones Japan makes. And now that gas prices are up, the fashion accessory truck market is failing them, too.
3. There are a lot of problems with GM. First of all, the rising cost of health care is astronomical. The workers still continue to get nearly 100% of their premiums paid for by the union labor contract. Second, there is a lot of waste in the company. In a union, if certain jobs are being done, you must have XX number of people on the site. Many of which may or may not be working. The workers can claim they need overtime to support one another and end up riding around the plant on carts. (I used to work in a UAW facility) Third, the perks for the executives are outrageous. Look at their annual salary and all of the other benefits they get. It's astronomical when you consider how many times the salary is of the lowest paid worker. And when you consider the cost of their factory labor, it's a LOT. Fourth, the company has a legacy cost in terms of the pensions. The retirees also get healthcare benefits. As the baby boomers age, they add more and more health care costs to the picture. Fifth. The TS:16949 system was designed to build quality, but it is highly bureaucratic and very cumbersome. Translation: added costs built into the product. Sixth: The company is not addressing some of the key issues in terms of competing with Toyota. If they don't make the vehicles that people want to buy, they will buy from other companies. For those who may claim that you need to buy from the Big 3 to buy American, you might want to check out where the suppliers are. Many of the Big 3 suppliers are from out of the country, while many of the suppliers for Toyota, and Honda are made here in the USA. My college professor said that now, Toyota and Honda are more American made than Ford, GM or Chrysler. All are part of the the problems with the declining sales. My resource: I've worked in a GM plant.
4. To answer your question, "What is the source of problems with General Motors", my answer to that is FEAR and GLOBALIZATION! Globalization did not just start today. Take a look back during the times of the so-called (Black) riots. Blacks were rioting and ...were getting inside!
5. unions, poor design,, low quality,, very good competition from Toyota and Honda
6. I would agree with your comments, and searcher made a very good post too. GM spends about $4 billion a year for retiree health care. One of the other issues, which seems to be common for domestic makers is that they like to market products and change the names all the time. If you want an import you can get a Camry or Accord or BMW 3 series because they've made them for decades. That allowed them to build a reputation for the cars since more a more people have experiences with them, and the good experiences keep building. Most domestic brands continue to throw away the names if they stop selling and make up new names to try to catch the latest fad. But you can't build a reputation that way. Even though the Corvette is a long standing name and flagship for the company, a friend bought a new one but had to bring it in for service many times.