Posted by: David Kiley on December 5, 2005
In Today’s Wall Street Journal, General Motors chairman and CEO G. Richard Wagoner Jr. pleads his case for why GM is losing so much money. He makes many relevant points with which I am already familiar, and he ignores some big ones too.
It’s true, as Wagoner says, that the Japanese companies manipulate the yen against the U.S. dollar to help maintain a profit and cost advantage over the Big Three. It’s also true that healthcare and pension costs GM has to pay relative to the Japanese and Koreans is also a disadvantage.
But it’s also true that Wagoner’s predecessors, but also GM in Wagoner’s time, have not only coddled the United Auto Workers union to the point where they have the best, most obscene healthcare package perhaps in the world, but they have also consistently backed political candidates at the highest level who are clearly opposed to reforming U.S. healthcare in a way that will help make GM and the U.S. as a whole more competitive with the rest of the world. GM’s political action committee backed Bush-Cheney in 2000 and 2004. To be fair, the GM PAC backs both Democrats and Republicans. But Bush-Cheney are anti national healthcare reform and have no intention of ever intervening in the U.S. dollar the way the Japanese manipulate the Yen, nor do they have any inclination to hold the Japanese accountable for what Wagoner suggests is unfair. In fact, the Bush Administration, nor the Republican leadership in COngress, has expressed not the slightest concern about whether GM or Ford go Chapter 11. Could it be that they resent all the PAC money that the UAW sends to Democreats?
While the GM PAC did not send any money to Al Gore in 2000, or John Kerry last year, it is interesting that the FEC website indicates a handful of contributions to Sen. Hillary Rodham Clinton’s “Friends of Hillary” fund. And Hillary is the goddess of national healthcare reform. Hedging their bets? Maybe. But don’t get too excited. There are also ten contributions to Tom Delay.
Now, one of the big problems facing GM (and this is where marketing comes in) is that the company has fostered an institutional disconnect between product design, marketing and corporate policy about such things as alternative fuels and safety. GM does a great deal in fuel economy and safety, to be sure. But it hasn’t been orchestrated with the company’s marketing machine in a way that makes any of its brands stand for anything clear. Toyota backed hybrid development. And no matter how you feel about the efficacy of hybrid engineering, it has stamped Toyota as the green company in the minds of consumers. Neither GM nor any of its brands resonate with the public in the areas of fuel economy, environmentalism or safety. And most of its brands—Chevy, Buick, Pontiac, Saab and Saturn—have had their marketing strategies shifted around so much year to year that few members of the buying public know what those brands stand for. That’s not the case with Toyota, Honda, Nissan, BMW, Mazda, Porsche and a few others. Toyota (green and quality). Honda (green, quality and great engines). Nissan (design). BMW (performance cool). Porsche (iconic sports cars). Mazda (Japanese performance, fun-to-drive). Pontiac? Buick? Saab? Chevy cars? Saturn?
Wagoner runs a sales and distribution company. If one day he decides he really runs a marketing company, then perhaps GM can work toward achieving what has eluded it for the last thirty years. Too many people just can’t find a good, compelling reason, other than a cut-rate price, to buy a GM product. And that’s not a good plan for making money.