GM Faces its Own Red Tide

February 27, 1992

Record losses in the American auto industry are, sadly, nothing new. But when the big loser is General Motors, the world's largest manufacturing enterprise, the amounts of money and people involved are staggering. In 1991 GM sold 600,000 fewer cars than the year earlier and wound up $4.5 billion in the red, the largest loss in U.S. corporate history.

Workers at Ford and Chrysler have struggled through dire straits before. Chrysler, rescued by a government loan guarantee and a radical restructuring by ex-Ford president Lee Iacocca, fought back from the brink after many observers had given up. Ford Motor honchos bet the company on Taurus and Sable after quality woes and out-of-step marketing efforts during a sandstorm of Japanese competition put it on the ropes. Their win is still reverberating. At GM, what Fortune magazine called "a sense of invulnerable permanence" prevailed even as its U.S. market share fell from 1979's 46 percent to last year's 35 percent.

That translated into productivity lags. Ford can produce Tauruses and Sables with less than 17.2 worker hours per vehicle, but GM needs 32.2 to 36.3 hours to make a Chevrolet Lumina. Hear that cash register ringing? At roughly $31.50 an hour for wages and benefits, Fortune says, GM is operating at a $441-per-car cost disadvantage.

There are encouraging signs, despite the gloomy news. First, the downsizing announcements mean GM's leaders are finally seeing the crisis in all its seriousness. Second, the quality problems that plagued GM's products, and those of American manufacturers generally, have largely been eliminated. GM introduced 16 new vehicles this model year, two of which ranked among the J.D. Power & Associates top 10 for customer satisfaction.

Locally, it is gratifying to see the Broening Highway plant escape the ax that lopped off 16,000 GM jobs nationwide, but the hot market for Baltimore-made minivans will not last forever. Government, business and labor must cooperate to keep a GM operation here viable when a new generation of vehicles is up for bids. A loss here would hurt a long time.

The bottom line is on-time production, at high levels of per-worker efficiency, of cars that everyone wants to buy for prices most people can afford. Turning around a company whose behemoth size once seemed to insulate it from harm is a huge challenge. It is vital to the nation and to this region that GM survives and prospers.

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