What Gm Needs to Do for Future Growth.

{draw:frame} Chevrolet Corvette 1969 Image Source (1) GM and its strategic partners manufacture cars and trucks in 34 countries, in various brands and configurations: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. United States is GM’s biggest market, followed by China, Brazil, the United Kingdom, Canada, Russia, Germany and India. General Motors Company obtained operations from General Motors Corporation on July 10, 2009. A sequence of slip-ups and mishaps led GM into bankruptcy. GM was unable to stop these incentives because competitors weren’t letting go either.

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One mammoth misstep was that GM scraped its program to develop an electric car, EV1. GM could have lead in this hybrid car market and offered green cars to the ever-increasing global market. By evaluating the above reasons GM should have filed for bankruptcy much earlier, as the world market was still strong and could have immersed the downfall better. Initial plans were set to produce 200,000 vehicles a year, for which Toyota would provide the main components, NUMMI would provide stamping and assembly operations, and other parts and components would be provided by suppliers in the United States.

Production would begin with a compact car that Toyota sold and produced in Japan named Sprinter, but in the US it would be named Chevrolet Nova. Even Toyota was eventually impressed with NUMMI’s operations and decided to begin producing its famous Corolla FX-16s at the plant to be sold directly through its own Toyota dealerships. The experience for General Motors was mixed; sales for its Nova model were not going well, production capacity at NUMMI plant had been cut from 600 to 400 cars daily. Toyota only would let GM produce four-door models, in order to avoid conflict with its two-door Corolla.

Nevertheless GM was working hard to put into practice lessons cultured from the plant, with a Technical Liaison Office at the plant documenting what was being learned at the NUMMI plant for realization at other GM plants in New Jersey and Delaware, where its new Berretas and Corsicas were being produced. For Toyota, this was its first major manufacturing investment in the United States. It learned about the US automotive market than from its biggest and most experienced car manufacturer GM. Toyota learned how to adapt its famed Toyota Production System to work with US suppliers, US government regulations, and, most importantly, the UAW.

After 2 years of alliance with GM at NUMMI, Toyota invested in its first wholly owned plant in the USA; this new plant in Kentucky eventually became Toyota’s largest outside of Japan. It was also challenging for GM to implement whatever little it learned from Toyota. GM understood that Toyota structured the factory floor and relations with suppliers differently. But shifting these new methods to GM’s legacy plants in Detroit were complicated. The new Saturn line was built from the above learning, but old corporate habits were hard to change even by rebranding and rebuilding.

General Motors was straddled with the ‘legacy costs’ of providing healthcare and pensions to a host of retired workers, which cost GM millions of dollars every single year. (11) “When GM agreed to them, the company was lauded as an example of good corporate governance. Now, everyone says, ‘How did they agree to this? ’ Back then, it was considered enlightened. But now, it’s a different story,” said Jeremy Anwyl, CEO of Edmunds. com. (11) These legacy costs shake out to be about $2,000 per car, David Cole, Chairman of the Center for Automotive Research, told Popular Mechanics.

And that $2,000 has to be passed along to the consumer if GM wants to turn a significant profit. (11) To better understand how UAW got the upper hand, we must go back into history, during the Great Depression as conditions eroded, creating a ripe environment for workers to unionize. In 1936, the tide turned. The United Auto Workers (UAW) was formed as an independent union. Its ultimate goal was to obtain some badly needed benefits. UAW applied the strike tactic and kept making gains, starting from a minimum wage, then to reduction in assembly-line speed, rules respecting seniority and fair pay for overtime work.

After the war most Americans were eager to turn back to their normal lives. Autoworkers and UAW leaders pushed to secure a standard of living that would allow its members to earn a fair sum of money considering market inflationary pressures. In 1948, UAW and GM agreed that the cost-of-living would be one consideration for future salary raises, helping protect purchasing power of its employees. Then came the pension benefits that were standardized for all workers.

Japanese counterparts have been able to remain out of these lifetime benefits, as they haven’t been around that long in the United States, therefore avoiding these extensive legacy costs, which were implemented immediately after World War II. Further these Japanese producers formed their own in house labor unions away from the super powerful UAW overpricing and belligerence. The new changes that have come via voluntary bankruptcy proceedings, allows new management and radical changes in the normal operations. The new bosses can persuade or threaten the workforce into leaving old habits and procedures behind.

The prospect that the company will fail and be dissolved, with everyone losing their jobs, is the motivation for accepting unwelcome change in these cases. All of the Big 3 had numerous opportunities to make progress in order to compete with Japanese, Korean, German auto companies, but they all choose not to do so because of poor judgment and self-righteousness of their managements. The UAW, selfish one-sided, outdated workforce union, has always demanded for more pay and higher benefits for shorter hours, lower productivity and quality in return, never considering the dire future of US auto industry.

Refusing to learn from other American autoworkers that work for foreign car companies with better benefits, job security, and help these companies with higher quality products output. US auto industry is tainted from management to UAW. The best way forward is to re-invent the industry with new rules and conditions. Any bailout money spent on US auto companies is a big waste of American taxpayers’ money. GM needs to enact the following immediately to circumvent the current business environment: Enact new business dealings to sustain growth and increase core revenues Find ways to reduce cost and improve performance

Capitalize on the demand of the Emerging markets Find ways to reduce excess labor, production capacity, inventory, and excessive margins Increase efficiency on supply chain Re-organize retiree health care costs Intensify retail and distribution performances New guidelines (accounting standards, government regulations e. g. , block exemption reform, IFRS, ELV, CAFE, EU accession, CO2 regulations) Environmental sustainability Global automobile industry is moving towards global competitiveness.

Continuous and rigorous improvements are the only way forward for everyone in the auto industry. Only the lean will survive. As there is no straightforward method that can be followed for any particular form of manufacturing. “Each firm must create its own unique set of products, processes, people, and history. While certain principles may be immutable, their application is not. Manufacturing Strategy will always be a difficult, uncertain, and individual process. Strategy (“The General’s Art”) is still, largely, an art. But, that should not prevent us from bringing the available science to bear on the problem. (12) American automobile industry will survive, but most of the production should be based in the South, exclusively non-union, and owned by corporations based in foreign countries. The larger and more respected among these “transplant” producers do engineering, design, and other high value-added functions in US, and even export their American-made products to foreign markets, employing tens of thousands of Americans. {draw:frame} *GM’s 2012 Holden Volt will work solely on lithium-ion batteries. (Image* 3) No doubt the worldwide economy slump has resulted in drastic fall in vehicles sales, but that does not mean demise of the industry.

The global companies need to constantly innovate to strengthen their bottom line, reduce costs, increase productivity, and focus on new technologies. Follow the Japanese & Korean companies who spent billions on R & D to enhance levels of their performance, efficiency, & safety to their models. With the changing times the customer needs have also undergone change. He now needs more safety, better performance, more efficiency, and smaller but smarter cars. The size of the world automobile industry has attracted a host of new entrants, with more certain to come in the decades ahead.

Following are new green technologies, which GM must consider in expanding to offer new greener cars to regain its leadership position. {draw:a} Image (4) As Hybrids utilize two or more power systems, such as a gasoline engine and an electric drive motor, to provide more proficient propulsion. Another solution is offering electric cars, which utilize one or more electric, drive motors, powered solely by batteries, for zero-emission motoring. Plugging into the electricity grid can charge electric cars. Ethanol is an alcohol-based alternative fuel made from natural grown crops. Recently it as become a popular alternative fuel, ethanol is typically used in the form of E85 to power flex fuel cars outfitted specifically to run on this blend of 85% ethanol and 15% gasoline. Cleanest of all alternative energy cars running on hydrogen are among the cleanest cars on the road, emitting oxygen and water vapor only. Popular alternative energy source in Europe, biodiesel can be made from various sources including soybeans and biomass. Biodiesel can be applied in most diesel-powered cars without any major modification. {draw:a} Image source (4) Newest of all alternative energies, air powered cars are new to the green car scene.

Compressed air is being discovered as a viable ‘alternative fuel’ to efficiently power car engines with little or no environmental impact. References: “Detroit: Why GM May Go Bankrupt | Newsweek Voices – Daniel Gross | Newsweek. com. ” Newsweek – National News, World News, Health, Technology, Entertainment and more… | Newsweek. com. Web. 23 Oct. 2009. http://www. newsweek. com/id/196808. General Motors | Corporate Website | GM. Web. 23 Oct. 2009. http://www. gm. com/. “GM learned quality lessons in 25-year NUMMI joint venture with Toyota: expert -. ” Nova Scotia News – TheChronicleHerald. a. Web. 23 Oct. 2009. http://thechronicleherald. ca/Wheels/1144194. html. “GM leaves NUMMI, Toyota is left holding the bag – BusinessWeek. ” BusinessWeek_ – Business News, Stock Market & Financial Advice_. Web. 23 Oct. 2009. http://www. businessweek. com/autos/autobeat/archives/2009/06/gm_leaves_nummi. html. “Green Technology & Alternative Fuels | Green Car. ” Electric Cars, Hybrid Cars & More | Green Car. Web. 23 Oct. 2009. http://www. greencar. com/alternative-fuels-green-technology. php. “Lawmakers Fail to Save GM/Toyota NUMMI Plant; 4,600 Jobs ?. ” Reviews & Ratings. Web. 3 Oct. 2009. http://www. cardealerreviews. org/? p=116918. “Nummi: What Toyota Learned and GM Didn’t – Now, New, Next HarvardBusiness. org. ” Voices – HarvardBusiness. org. Web. 23 Oct. 2009. http://blogs. harvardbusiness. org/now-new-next/2009/09/nummi-what-toyota-learned. html. “Professor Hopkins: Let GM Go Bankrupt | Economy. ” Home. Web. 23 Oct. 2009. http://www. ourblook. com/Economy/Professor-Hopkins-Let-GM-Go-Bankrupt. html. 10. “What If GM Did Go Bankrupt… ” BusinessWeek_ – Business News, Stock Market & Financial Advice_. Web. 23 Oct. 2009. http://www. businessweek. om/magazine/content/05_50/b3963114. htm. 11. “What killed GM? ” New York News, Traffic, Sports, Weather, Photos, Entertainment, and Gossip – NY Daily News. Web. 23 Oct. 2009. http://www. nydailynews. com/money/2009/06/01/2009-06-01_why_did_gm_fail. html. 12. “Lean Manufacturing History. ” Lean Manufacturing Strategy. Web. 23 Oct. 2009. http://www. strategosinc. com/just_in_time. htm. Image Source: “What killed GM? ” New York News, Traffic, Sports, Weather, Photos, Entertainment, and Gossip – NY Daily News. Web. 23 Oct. 2009. http://www. nydailynews. com/money/2009/06/01/2009-06-01_why_did_gm_fail. tml. “Lawmakers Fail to Save GM/Toyota NUMMI Plant; 4,600 Jobs —. ” Reviews & Ratings. Web. 23 Oct. 2009. http://www. cardealerreviews. org/? p=116918. “2012 Holden Volt – New Car and Used Car Pictures on Lincah. Com. ” Lincah. Com – New Car and Used Car Pictures. Web. 23 Oct. http://www. lincah. com/2012-holden-volt. “Green Technology & Alternative Fuels | Green Car. ” Electric Cars, Hybrid Cars & More | Green Car. Web. 23 Oct. 2009. http://www. greencar. com/alternative-fuels-green-technology. php. http://energytechstocks. com/wp/wp-content/uploads/2008/01/gm-logo-green330. jpg


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