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.