Saab's Hip-Deep in New Product by Paul A. Eisenstein (6/11/2005)
But can this Swedish automaker stand out in a crowd of rebadged vehicles?

GM Critics Hit Product Development by Joseph Szczesny (6/11/2005)
GM needs a Volga, not another Aztek.

GM Braces for Shareholder Gripes by Joseph Szczesny (6/6/2005)
This time, it's Wagoner's big shot.

Eisenstein Mug Shot  |  

When you look at the latest Harbour Report - the oft-quoted measure of factory efficiency - and see that some GM plants ran at just eight percent of capacity last year, it's hard to argue against these cuts. Ironically, GM's senior management did just that. Like many Detroit-based journalists, I'd expected sharp reductions around the beginning of the year. Such a plan was reportedly put before Chairman Rick Wagoner and rejected.

Okay, so he's finally given in - or so the headlines suggest. Except when you look closer, the numbers aren't what they seem. Virtually all 25,000 jobs will be cut through attrition, and even then, only over 3-1/2 years. Until then?

What seems crucial for GM right now is the sort of dramatic, across-the-board reorganization that helped turn things around at Nissan Motor Co., and more recently at Ford. Yet there seems little likelihood that will happen unless and until things get worse.

Dodging reality

As a working journalist, I've been watching GM dodge reality for 25 years now. Perhaps the most revealing comment Wagoner made in Wilmington came in a surprisingly candid chat session with reporters. "If I had a chance to rerun the last five years," Wagoner conceded, "we probably would have done a little more thinking about making sure that each product was distinctive and had a chance to be successful." 

Wow, product actually matters.

In the decade after GM's 1992 near-bankruptcy, Wagoner and his predecessor, John F. "Jack" Smith, were often asked when they would put the emphasis on world-class vehicles. They just as consistently responded that first they needed to work on things like the corporate bureaucracy, quality, manufacturing efficiency, global alliances, the expansion into China , and new lines of business for GMAC.

It was only about five years ago that we started hearing about product again from then-GM President Ron Zarrella.  (Remember him? The guy who wouldn't promote engineers unless they got a masters degree in business, then turned out to have lied about getting his own MBA?)  Zarrella's line of thinking was that all you had to do was put out better TV commercials and people would believe you had the best product. That was the sort of thinking that led to the current rebate crisis, with GM shelling out more than $3000 per vehicle to get people into its showrooms.

Innovation backfires

When it became clear consumers could tell the difference, Zarrella - backed by Wagoner - pronounced that "fifty percent of all our new vehicles will be innovative." Exactly what that meant was never clearly defined. Perhaps Zarrella missed that class.

Clearly, GM has come up with some interesting innovations, like the Pontiac Aztek and, more recently, the GMC Envoy XUV. Apparently folks couldn't quite figure out why their luggage and cargo needed a sunroof. The XUV will soon vanish from the lineup, sales running barely ten percent of initial forecast.

Such products are "truly bizarre," asserts Maryann Keller, the longtime, widely quoted auto analyst and author.

As for what GM has called "innovative technology," well, yes, Stabilitrak is nice, but it's just GM's version of electronic stability control. With OnStar, the automaker has done a bit better than Ford did with the world's first emergency call system, but we've yet to see clear profits from OnStar, never mind anything to clearly show that folks are buying GM products specifically to get OnStar.

How about displacement-on-demand, which shuts down half an engine's cylinders to save fuel? Oops, GM talked about it so long that other makers, like Chrysler, got to market first.

Hitting the big target

What GM really needs is surprisingly simple, Keller argues: good mainstream vehicles. We've seen a couple decent attempts this year, the Chevrolet Cobalt among them. And I'm especially impressed with some of the entries coming from Saturn in 2006, especially the Aura sedan, which has what I consider the single best interior GM has ever designed.

This is what will get folks to buy General Motors products, not little chrome badges with the letters G-M, which will soon appear on every vehicle (except some Saab vehicles, we're told).

There are signs the automaker's product program is beginning to gel - thirteen years after the 1992 fiasco. Manufacturing is getting more efficient. Quality is definitely on the mend. There are all sorts of positive things happening at GM. Yet the overall picture is not very positive. And it has a lot to do, I would argue, with the inability to accept just how serious this crisis is and get everyone involved, from engineers to suppliers to line workers, pulling together.

Before GM goes begging for concessions from the UAW, shouldn't it make at least a symbolic cut in its dividend?

There needs to be the automotive equivalent of the Manhattan Project underway at GM. Right now, it's a little too close to business-as-usual. And so, despite the last week's run-up in General Motors' stock price, I still find it hard to feel optimistic about the automaker's future.