GM Announcement Signals the Beginning of the End of the American Automobile
Survival of Company on the Line, Says GM CEO
High oil prices have hurt all three automakers but have impacted GM significantly on its SUV and truck lines. The expected prolonged American economic downturn will also batter GM as fewer consumers will be purchasing new vehicles.
Today's GM announcement is expected to be the first of many from the American auto industry that will give a painful insight into the financial devastation caused by rising gas prices and changes in consumer preferences. In June, GM announced that it will close four of its truck and SUV plants and would stop making Hummers altogether. GM also announced earlier in the year that it would offer buyouts to its entire hourly workforce to replace more expensive experienced workers with cheaper labor.
Wagoner, in an attempt to paint a rosier picture at GM, added to the announcement today by saying that GM will shift its production from SUV's and trucks to fuel-efficient cars in order to follow consumer trends. GM will fall significantly behind those automakers who are already far down the path of producing alternative energy vehicles, such as Japanese automakers Toyota and Honda. GM has dabbled in electric and other alternative energy cars in the past decade, but none have come to fruition. GM unveiled its electric car prototype, the Chevrolet Volt, and its hydrogen cell Equinox at the Hollywood Goes Green conference in December 2007 but does not have firm retail production dates on either vehicle yet. It is not known how today's cuts will impact new vehicles releases.
About General Motors
GM began production in 1908 and has outsold all other carmakers for the past 74 years. GM is the fifth largest public company in the world and manufactures vehicles in 35 countries under 12 brands. Prior to today's announcement, GM has lost 1/3 of its hourly staff since 2004.
Sources: gm.com
Published by Angie Mohr CA CMA - Featured Contributor in Finance and Lifestyle
Angie Mohr is a Chartered Accountant and Certified Management Accountant who has worked with thousands of business clients from home-based entrepreneurs to rock bands to celebrity chefs. She is also the auth... View profile
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7 Comments
Post a CommentEngaging article Ang....it's just unfortunate where things are right now!
Nice article and very thought provoking. I do wish GM had foreseen this before they had to do layoffs. It was pretty obvious that fuel efficiency and clean alternative renewable fuels was the way all auto manufacturers needed to go. Why do the American auto companies lag behind in their forecasting? A pretty sad statement on their business sense.
This could spell bad news pretty quickly across the country.
This is very well written. Your title is a mouthful!
Important topic. My area has already been devasted by the downfall of American car manufacturing. It may be to late.
Great reporting. These are scary times.......
GM's brilliant lobbyists fought against standards for more fuel efficient cars for years, so now the poor GM workers and pensioners have to pay the price. While Bush said at his press conference this morning the market will dictate what kind of cars auto makers will produce, he forgot about a concept called "lag time." Fortunately, some of the other automakers were a bit more prescient... or we'd have nothing to drive.