Gm Problems
Essay by review • February 22, 2011 • Case Study • 831 Words (4 Pages) • 979 Views
One main problem that is hindering General Motor's (GM) ability to be
successful is the poorly designing of several vehicles over recent
years by GM, and there inability to cut certain lines of vehicles from
production that are outdated. Journalists say that GM makes ugly car's
period, but this is definitely false considering that the GM corporation
owns Corvette, Saab, Hummer, and Cadillac, all of which are top of the
line brands with top of the line vehicles in style and performance. Yes
of course GM has some bad seeds which is tarnishing its name like the
radical designed Pontiac Aztec and Buick Rendezvous, and the outdated
production lines of some of Pontiac and Buick. Outdated production lines
in brands such as Pontiac and Buick are to be expected when GM's
long-held philosophy is that nearly every brand should offer a full array of
cars, trucks and minivans, but this philosophy is outdated as well. GM
has many plans to fix and update there current vehicle design problems
but, many of them will not take effect until after September of 2007,
when Gm's contract with the United Auto Workers (UAW) expires. Until
that date GM can not afford to cut back production of it's problem brands
Pontiac and Buick or it would mean the layoff of thousands of UAW
employees. The contract between UAW and GM is one of the main reasons for
GM's production of outdated and poor quality vehicles in certain brands
of GM.
General Motors in its current slump needs to trim its problem brands
vehicle line-ups but, the contract with the UAW would make Gm liable to
pay employees laid off there wages, for not working at all. Gm feels
it is a lesser of the two evils at this point just to make the cars and
sell them at an all time low, but this strategy is giving would be
customers of GM a feeling that Gm is outdated in technology and design in
all brands. In December of 2000 when GM killed Oldsmobile in an effort
to shorten GM's brand base it cost the corporation about $1 billion,
after restructuring and dealer buyout's. Not only is it bad that GM has
to wait till 2007 to sever a line up of vehicles in its problem brands,
Gm has to also pay health care and pension plans to UAW employee's and
retires, draining GM's wallet further. "In 2005 GM will incur health
care spending of $5.6bn (Ð'Ј2.95bn). It covers 1.1m Americans, and has
become the largest medical provider in the country." (Worstall, line 5)
Health care expenses account for about $1,600 of the cost to build a
typical GM vehicle, giving smaller competitors an big advantage in pricing
there vehicles. Along with health care cost GM must also pay pensions
and the hourly wages of employee's. The average U.S. Auto worker makes
about
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