Letters To The Editor For November 2005

Oct. 18, 2005
Reviving GM's survival.

Re "Evans On The Economy -- Can GM Survive?", June 2005. It sure seems to me that you miss the central point: GM is designing and producing a lot of cars that are not highly appealing. In the article's sub-title, the biggest issue is deemed labor costs. Mercedes and BMW also have very high labor costs yet have grown and prospered by developing cars that people lust after and marketing them with real skill.

Clearly, labor costs are a crucial issue at GM, and your Iacocca quote was exactly apropos. Nonetheless, it always starts with how desirable the product you're selling is to your target markets. The Corvette is hot as a pistol, and it's one of the few cars exempt from the GM Employee Discount. It is a great car which people will pay to get.

The opinion that GM "is run by a bunch of fatheads" is arguably true from one key perspective -- they have shown themselves to be utterly clueless in terms of understanding what car buyers really want and then organizing a successful effort to deliver it. . . . I would refer you to A.G. Lafley of P&G. He is driving P&G to greater heights by driving a deep understanding of their customers, who are predominantly women. That understanding results in dead-on products, delivered before the competition gets there. That wins, every time, and nearly irrespective of labor costs.

Christopher Chaloux, sales/business dev. manager
Texas Instruments
Attleborough, Mass.

As a college economics teacher and former GM employee, I have kept up on the move toward outsourcing. The issue can be traced back to the 1920s when the auto industry was rapidly insourcing and reversed itself as union wages started to get way too far ahead of what an outsource would cost.

There are some caveats, however. Besides the obvious lowering of real income and a huge reduction in tax receipts for both the federal and state governments with an income tax, sometimes the real cost is diluted by paying costs that don't reflect the true costs of outsourcing. A big item is transportation costs.

While GM is focusing on things like health-care costs, which only offer savings of a couple of billions of dollars (a miniscule percentage of gross revenue), little attention is being paid to waste within the system. Both GM and its suppliers are operating very inefficiently.

The point is that as we make things good by sidestepping costs and let Six Sigma garbage lead American industry into bankruptcy, no one wants to address the real problems, which is the only way we can prevent a massive downsizing of the middle class into the poorer classes.

Eugene T. Buckley
Lansing, Mich.

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