GM needs an extreme makeover

Opinion -- Few sickly companies have ever cost-cut their way to glory. GM's extraction of health-care concessions from the UAW may be a tourniquet, but it is hardly a cure. Even GM's intention to sell a controlling stake in its captive and profitable finance subsidiary, General Motors Acceptance, will only capitalize the subsidiary's earnings. Nor has adequate liquidity been GM's problem. Its holdings of cash and cash equivalents have remained above US$24 billion this year. GM hasn't become a corporate basket case because of a need for more capital. What it needs is a way to make its capital productive, rather than bleeding it away. GM is an organically sick enterprise, one that has been in decline for more than three decades, and one that has never seriously come to grips with itself. Its defects have lately become more evident simply because increasing competitive encroachment has exposed them. Even the heavily highlighted legacy-cost burden would be much more bearable if the core business, selling vehicles in North America, were heading north instead of drifting steadily south. The company is certainly a victim of its history -- but the legacy costs grabbing center-stage are far from GM's only self-inflicted problems. There are others: inadequate corporate governance; culture of management non-accountability; technological followership; brand proliferation; and vision failure.

The internal culture at GM has reached a dead end. This vast company, once cited by Peter Drucker as the best-managed entity on the planet after the Roman Catholic Church, will not reverse course by cost-cutting, shutting down redundant capacity or re-enacting the tactics that have brought it to where it is today. At GM, the perennial turnaround prayer resides in next year's lineup of presumed hot -- but ultimately lukewarm -- new products. Yet the interests of shareholders, employees, suppliers, dealers, customers and, ultimately, the nation at large, point to the need for a real corporate makeover. The experience of 30 years strongly suggests that it isn't going to come from the executives within GM or from the culture that formed them.
(Wall Street Journal 051024)

I tells ya, the North American car folks are in BIG doodoo here. They are getting annihilated by the Asian companies, while trying to limp along with their bloated carcasses resembling a corporate culture. Doom, I tells ya, doom!