GENERAL MOTORS - part 2

1945 to 2010

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This is an extract of the article, with small photos. You will find the complete article with full-sized photos in my e-book View America: North East - Part 1

In the travel series View America, North East - Part 1 covers Michigan and Wisconsin. It is not a traditional travelogue, but a non-commercial and more or less objective chronicle of an in-depth exploration of these states. Each state is described with its own brief historical background and its main sights, tourist attractions and points of interest.

My book does not describe lodgings, restaurants or entertainment, except where these may interact with the narrative. It is illustrated with more than 100 full-sized photos.

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Post War production

In 1945 Buick again opened its doors to the public, and the lines were converted once more to the production of "normal" cars. By 1946 GM released super-modern cars, with brilliant innovations such as an automatic transmission, power steering, power brakes, air conditioning and seat belts. In 1953, Chevrolet introduced the Corvette sports car, the first mass produced car with a fiberglass body.

The incredible growth of GM would continue until the 1970's, when it employed 349,000 workers and operated 150 assembly plants.

The decline of the American auto industry

Sales of GM peaked until 1960, when European and Japanese car manufacturers began to throw a spanner in the works. Their initial models were perhaps not too good-looking in design, but they were robust and well made, whereas their American counterparts seemed to be wired together and suffered from a deplorable quality.

In 1965 the American consumer advocate Ralph Nader publicly nailed this archi-poor quality to the wall, and in particular he aimed his arrows at the first compact car, the GM Corvair. The American auto makers reacted immediately, if too late, but foreign manufacturer market share rose from 10% in 1963 to 20% by 1970.

In 1973, the American auto industry received another considerable blow, this time from the Arab oil embargo. The public immediately traded in their American gas-guzzlers for smaller and more efficient imported cars, which at the same time were far less polluting. Actually, all American manufacturers were rather slow to react to this new but sensitive concern.

Buick Electra Ltd Park Avenue 1977

GM Renaissance 1977

In 1977 GM built its new headquarters in Detroit, the superb Renaissance Center. GM continued to lose market share, and declined from 45% in 1981 to 35% in 1989. Tens of thousands of workers were laid off, factories were closed, but the trend seemed irreversible. In 1990 GM gave in to union demands, and created a program that paid workers, even when plants were not running, forcing it to build cars and trucks it could not hope to sell without large incentives. Between 1990 and 1992, GM lost thirty billion dollars!

Flint logoIn 1992 the entire board of directors was fired, and the new board started a very strict and complete restructuration. The very next year the group again became profitable, or at least didn't lose money anymore. But GM as a whole was reluctant to move away from big profitable vehicles to small and less profitable cars, even when consumers demanded better fuel economy and gas prices began a steady rise.

The result was disastrous for the city of Flint, the cradle of General Motors, and tens of thousands of workers lost their jobs. Unfortunately, the ultra-powerful unions continued to maintain their iron grip on the company, and they incited the workers to refuse any other work or reject a lower wage. In hindsight, the result of this ostrich policy led to the sad demise of the workers, the company, the suppliers, the overall employment, the unions, and finally even of the entire city of Flint!

New General Motors

GM was the world’s largest car maker from 1931 to 2008, but then it was surpassed by Toyota. In the fall of 2008, despite years of steep cutbacks, GM was on the brink of bankruptcy. In December it received nine billion dollars in federal aid, at the order of President George W. Bush. In March 2009, President Obama fired GM's chief executive Rick Wagoner, rejected the company's restructuring plan, and forced it into bankruptcy court.

The bankruptcy process was completed on July 10, when GM sold its good assets to the New General Motors Corporation (NGMCO Inc). Brands like Chevrolet, Cadillac and GMC were brought into the new company, that was later renamed to the General Motors Company. The major shareholders were the federal and the Canadian government with 60%, a health care trust for the United Auto Workers union, and bondholders owning the balance.

Brands like Saturn, Hummer and Pontiac were shut down or sold. Labor costs were cut by more than two-thirds, from $ 16 billion in 2005 to $ 5 billion. Through October 2010, GM sold about 2.2 million vehicles in the United States, about half as many as it did in 2005, when it lost $ 10.6 billion. The company reported profits of $ 4.2 billion over the first three quarters of 2010.

On 18 November 2010 GM made the largest initial public offering (IPO) in history, raising $ 23.1 billion with an opening stock price of $ 33 per share. In 2012 the share price fell below $ 19, but more recently it again climbed over $ 33.

The Treasury Department's ownership was gradually reduced to 26%, and in 2013 the government sold its remaining shares. The US government (read the American taxpayer...) lost about $ 10.5 billion on its entire investment of 49.5 billion dollars.

Video : GM Robot Super Bowl XLI Commercial

 

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