The Mighty Also Fall

On June 1, 2009, General Motors filed for bankruptcy. Granted, it was Chapter 11 bankruptcy for protection against creditors while they produce a new organizational plan and business strategy to attempt to become viable again. But Chapter 11 reorganization does not mask the fact that the company has collapsed and no longer works for whatever multiplicity of reasons.

With General Motors, its collapse carries a different resonance than the failures of the innumerable financial institutions and mortgage companies we have witnessed. Those institutions were abstract entities removed from our sense of connection, done in by insatiable ambition combined with a no sense or responsibility to the general good for their decisions and conduct. But GM? This was a company cobbled together in the early 1900s from a series of mergers with various standalone individual car companies. Back when there were many car companies built by energetic entrepreneurs – Buick, Cadillac, GMC, Chevrolet, Pontiac. Henry Ford may have invented the assembly line and created a mass market for the automobile. But GM built that mass market to new levels of demand, and then became the predominant company to supply that demand. In the process, it became the largest manufacturing company in the world, and the biggest auto producer for over 75 years.

It was an institution that was synonymous with the American Dream, that was married to American’s love of the open road, that symbolized the growth of the middle class. Through its extended network of suppliers and franchised dealers, it anchored small-town America and its social fabric. Long before the Japanese form of life-long employment emerged, GM supported a multi-generational workforce with a rising blue-collar income, complete with something brand new: medical insurance to protect those employees and their families from debilitating illness. It was a cocoon of an economic sanctuary on a scale never seen before in America. And the company grew, and grew, a growth assumed to continue forever.

Forever ended on June 1, 2009. Now General Motors is just a shell of its former self. In 1962, GM had 51% of the US auto market and 464,000 domestic employees; in 2009 that had shrunk to 23% of the market with 92,000 domestic employees. When the car designers and the car builders lost out to the marketers and the accountants years ago, the vulnerabilities began to set in. Not readily visible, but a hole was opening, just waiting for someone new to fill it. Workmanship became shoddy. Buyers’ needs for cars changed, but GM wasn’t listening to them anymore. Greater societal demands grew, but “we can’t do it” became the corporate mantra instead of “we will get there before anyone else.” And for reasons I still fail to understand, Detroit married itself to the gasoline industry and thereby became dependently whiplashed by those rogue capitalists. So a company once known for innovation became seen as an unresponsive can’t do obstructionist. The door was now open to someone who could see this opportunity and exploit it – and along came Toyota (now the biggest automaker) and Honda to do just that.

So good old American competition got turned on its head in the 1980s, and the once biggest competitor got out-competed. The new guys saw the gaps in the market no longer being served by GM, so they were happy to draw that market away by good products that lasted, better prices, appealing designs, and responsiveness to the safety and fuel goals that GM said could not be done.

Management stood lead-footed and blamed everyone else for its woes. Employees, now conditioned to expect lifetime job security, stuck their heads in the sand and remained dedicated to job security and rising incomes disconnected to market realities.

Now it has all come home to roost, like so many other course corrections Americans are experiencing. There is an incomprehensible chorus of protests being voiced: that now the US government has nationalized the auto industry; that the government is running the company, closing plants and dealerships, throwing employees out of jobs; that the government is inappropriately dictating new car directions and fuel standards that GM fought for years. And of course, President Obama is a socialist overly involved and now dictating the US economy.

What GM managers, workers, apparently some Congressmen/women and some of the general public seem to have forgotten is that last fall GM said it was broke, with enough money to last only a few months. It was GM that came to Washington looking for a handout to stay alive, not Washington traipsing to Detroit looking to give away money. Without such bailout money that was provided, GM would have disappeared and been completely out of business six months ago. Today a lot of people are still employed, not because of what GM leaders and workers did but because the American public bailed them out at their request. It is only right in such a circumstance that there are strings attached to that help, a refusal to simply underwrite business-as-usual failure. If you are insistent upon driving off a cliff, please don’t ask me to fill the tank of your car so that you can accomplish that goal.

Failure can come from several causes. The causes are often different for the new ventures in our lives than for the breakdown of an established order. For an established order, whether it is we as individuals or a collective organization, failure usually comes from an unwillingness to hear, a resistance to new learning, resulting in an inability to adapt. Such we have seen in the demise of General Motors. There is a shared sadness in all of these events. In the end, companies are simply groups of people moving together en masse. And when this many people move downhill at the same time, even if as a result of their own folly, and when a familiar icon is no longer what it once was, some part of all of us goes with them on that sad trip.