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Sic Semper Tyrannis

Tuesday, June 03, 2008

SUVs siren song, not salvation of American auto industry

The other shoe has finally dropped.

After two decades of love/hate attitudes toward SUVs and a two-year period of doubled fuel costs, GM says goodbye to its Janesville plant - one of the oldest in the nation.
"These higher gasoline prices are changing consumer behavior and rapidly," said [GM Chairman and CEO Rick] Wagoner. "We don't think this is a temporary spike or shift. We think it is permanent."

Word is GM will take two years to peel off retirees and complete layoffs of the estimated 2,600 local employees. Janesville is one of the four plants to close, including Moraine, Ohio; Oshawa, Canada; and Toluca, Mexico.

I don't fault GM for curtailing its SUV production. You have to go with the market. There's little point in repeating the fact that GM should have worked to be ahead of the market in innovation so it could have changed with its market.

But simply closing plants is bad business. It's a waste of brainpower and existing networks and systems. Not to mention the loss of loyalty among angry workers and their families who've been chanting the 'buy American' mantra in the face of reason for decades.

GM says it "plans to roll out more fuel-efficient vehicles, including approval to start the production process on a vehicle that can run gas-free for trips up to 40 miles." Why not spend less money revamping plants and systems to accommodate this instead of closing working factories and losing loyal employees?

If your business people are telling you this is a better way, you need to get rid of bean counters and hire better administration.

And don't think the labor unions are blameless. But like the parasites they are, they'll just hop off this dead dog and find another one - one that lives in a different market.